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Quota for foreign ownership of condos in Thailand being reviewed

 

Deputy Prime Minister Phumtham Wechayachai has announced that the government will be conducting a study to assess the feasibility of increasing the foreign ownership limit in condominiums. Currently set at 49% of a building’s usable space, the government is considering raising it to 75%. Additionally, the Ministry of Interior has been tasked with examining the possibility of extending the leasehold period for foreigners from 50 years to 99 years.

 

These proposals were initially discussed during a cabinet meeting in April, as part of the government’s efforts to boost the economy and attract foreign investment.

 

Local property industry executives have been advocating for an increase in the foreign ownership cap, citing a growing demand from foreign buyers. However, the property market has been impacted by high levels of household debt and stricter lending conditions, leading to a decline in demand from local buyers and increased caution among developers.

 

The Real Estate Information Center (REIC) has reported a significant decrease in the number of land allocation permits nationwide during the first quarter of this year. This decline of 19.7% marks the largest drop in nine quarters. The decrease can be attributed to developers adjusting their strategies in response to a consecutive decline in low-rise house transfers.

 

In addition, the REIC has highlighted that foreign ownership quotas for condominiums in popular destinations for foreigners, such as Phuket and Pattaya, are fully occupied in several projects. This indicates a strong demand from foreign buyers in these areas.

 

Vichai Viratkapan, the acting director-general of the REIC, has suggested that the government should consider increasing foreign ownership quotas in locations that do not attract domestic buyers. This would help stimulate the economy, as the condo market in these areas heavily relies on foreign demand.

 

To address this issue, some projects have reserved units in each condo project for leasehold contracts. These units are offered at prices 10-15% lower than freehold units, as they primarily target foreign buyers.

 

According to the REIC, the number of condo transfers by foreigners in 2023 saw a significant increase compared to the previous year. A total of 14,449 units were transferred, representing a 25% growth. The value of these transfers also rose by 23.5% to 73.1 billion baht, surpassing pre-pandemic levels.

 

Among the nationalities receiving condo transfers, the Chinese accounted for the largest share, representing 45.8% of the total units and 46.7% of the total value. They were followed by Russians, Americans, and Myanmar nationals.

 

Source: Bangkok Post