Real Estate Investment in Thailand is a major source of the inflow of foreign funds to the kingdom. Therefore, this contributes greatly to the Thai economy. Owing to the beautiful tourist spots in the country, this investment further channelizes more in the purchase of commercial properties. These structures are further modified to tourist accommodations and facilitation centers.
Thailand has less bureaucracy than the rest of emerging Asia for property buyers. Due to this reason, Thailand attracts more foreign property buyers than any other Asian country. Thailand is the most preferred choice among real estate investors worldwide for various reasons.
Can Foreigners Do Real Estate Investment in Thailand?
The business environment of Thailand is not as open as it is in some other Southeast Asian countries. Foreigners are only allowed to own up to 49% of practically any corporation. Although, this is not applicable for US citizens due to the Thailand-US Amity Treaty. This treaty allows Americans to 100% of a Thai company or property.
Despite this, property purchase under the Amity Treaty is a cumbersome process that involves clearance from numerous government authorities. Foreigners can only own a condominium unit above the ground floor in a building. Moreover, they can own only 49% of the total building unit.
The Thai law allows foreigners to acquire property if they invest at least 30 million Baht as of 2021. It does, however, necessitate specific authorization, and in practice, permission is rarely obtained. However, if you have connections with trustworthy Property Law Firms in Thailand, they will surely make your task easier.
Is Real Estate Investment in Thailand Safe?
The property ownership regulations in Thailand are strict. In other words, it is more stringent than that in other Southeast Asian nations. The kingdom follows a secure and computerized Title Search and Record System due to which it becomes easier to deal with government authorities.
The only source of insecurity or issues can be out of property development firms, real estate agents, or sellers. However, you can easily ward off these factors if you get in touch with a renowned Property Law Firm in Thailand.
However, if you are dealing with big property developers with a brilliant track record of completed projects, you will never fall into any trap. Perilous grounds emerges due to smaller development houses that are still working on their first project.
We always recommend that you must hire a third-party property inspector who can verify the authenticity of the property you intend to buy. These Thai inspectors will charge a fee for their services, but, you will receive a complete structure without any flaws.
Almost all condo developers provide at least a year or two of warranty coverage. However, if you bring up issues while the money is still on the table, before the transfer and the contract is finalized, they will be keener to resolve them.
Off-Plan Buying and Selling of Condominiums
Very often, property developers sell condominiums during the ongoing construction process. As a foreigner, if you proceed to purchase such property, expect to get hefty discounts. However, you have to wait for three to five years till the completion of construction to have full possession.
Now as you have purchased the condo unit at a discounted price, you can now resell the completed unit at a higher price to earn profits. Elsewise, you can rent or lease it to generate a steady stream of income.
To reserve a unit and sign the contracts, you often just need to pay a 10% down payment upfront, followed by another 10% over the course of a few years. Installments are usually due on a monthly basis.
Off-plan purchases, on the other hand, come with their own set of dangers. In the worst-case scenario, you’ll have to cancel the contract, forfeiting your own deposit and any remaining payments. To prevent from falling into any such type of issues, assure that you go for a Contract Review before signing the contract in association with a Thai Property Law Firm.
Property Taxes in Thailand
If you own a condominium in Thailand, you need not pay any annual property tax. Rather, you have to pay annual maintenance and management fees to cover the costs of the building’s upkeep, energy, staff, cleaning, and other costs.
Moreover, maintenance and management fees aren’t the same as property taxes. The size, structure, and standards of the condominium determine these fees. Such fees are around 500 baht per square meter for a mid-range Thai apartment.
However, Rental income taxes are quite inexpensive in Thailand if you choose to rent out your property because there are numerous deductions. The deductions you are eligible for determining the amount of tax you owe.
Best Spots for Real Estate Investment in Thailand
Thailand is a big kingdom with a population of almost 70 million. Therefore, you can monetize from your real estate investments in most cities and resort locations. But for a higher ROI, it will be advisable that you should focus on locations that succeed in attracting tourists.
Condominiums are the only units that foreigners can hold in Thailand, therefore, take a note that never focuses only on tourists, as condominiums can provide good commercial space for official and other business purposes as well.
Bangkok, Thailand’s capital and the largest city in mainland Southeast Asia, has a population of about 16 million people. Anything important in business, economics, or politics passes through Bangkok first. Chiang Mai, Thailand’s second-largest city, is also a good spot to invest in property. However, while many foreigners are flocking to resort destinations such as Pattaya and Phuket to buy condos, we believe investors should steer clear of tourism areas for reasons explained further below.
Hiring Real Estate Agents in Thailand
Real Estate Agents in Thailand are greatly a “Western Service”. The reason is that Thai people never need them for property purchases. They communicate directly with the property developer or a reputed property law firm for suggestions.
Real estate agents are for international purchasers who do not speak Thai, in exchange for a share of the sale price as a commission. Keep in mind that if you’re an investor, utilizing Thai realtors means you’ll lose a few percentage points of profit right away. If you’re buying a condo straight from a developer, there’s no need to hire a broker if the developer is trustworthy.
Is Real Estate Investment in Thailand a Good Idea?
Thailand’s advantageous location places it within an hour’s flight of four fast-growing economies. Cambodia, Laos, Vietnam, and Myanmar, in particular. This characteristic not only makes Thailand an excellent foundation for Southeast Asia, but it also benefits Thailand’s economy by allowing it to “piggyback” on less developed, faster-growing neighbors.
Thailand’s property may not have the highest capital growth potential in Asia (we believe this title belongs to Cambodia). However, in the last 10 years or so, the real estate market has proven to be extremely resilient. Furthermore, the Thai baht has been one of Asia’s best-performing and least volatile currencies in recent years, changing even less than established currencies like the Singapore dollar or Japanese yen.
Thailand’s future will undoubtedly be fascinating. Thankfully, the economy of the United States has a long history of rebounding back and renewing itself, even in times far more uncertain than now.
For all types of assistance in Property registration and Real Estate Investment in Thailand, email us at [email protected].
