Restricted foreign ownership and a prohibition on lending to foreign property purchasers are obstacles to the growth of the Thai resort property market, according to the international real estate consultancy CB Richard Ellis (CBRE).
David Simister, the chairman of CBRE in Thailand, said that currently under Thai law foreigners were allowed to buy up to 49% in area terms of a condominium but in many resort areas there was not enough local demand for high-end resort condominium units, so developers were unable to sell the 51% Thai quota.
He said the main option open to the developers was to offer 30-year leases, plus options to renew, on the Thai-quota condominium units. They are relatively illiquid because of the leases' short length and so there is a limited secondary market in resales.
Foreigners are not allowed to own land and the maximum length of a lease is 30 years, although developers can offer options to renew the lease terms twice, for a total of 90 years.
''If offering unlimited ownership of condominiums or freehold land title is not acceptable, then in order to grow the resort property market, it will be necessary to offer increased foreign ownership of condominium property and longer leases of 90 years,'' he said.
Foreign condominium purchasers are prohibited from borrowing money locally to purchase a condominium. Foreign ownership regulations state that all funds used to purchase a condominium must come from overseas in foreign currencies.
By contrast, CBRE said Malaysia had limited regulations on foreign ownership of property. Any acquisition of property by a foreigner requires the approval of the Foreign Investment Committee.
''However, this is a formality and rarely is approval withheld. The only restriction is that the property should be valued at more than 150,000 ringgit, or around 1.5 million baht. Foreigners are also allowed to borrow locally to fund property purchases,'' the company said.
Meanwhile, Malaysia is promoting a special programme under ''Malaysia My Second Home'', granting a 10-year visa to foreigners opening a fixed deposit at a Malaysian bank in the amount of 300,000 ringgit (about three million baht) and the right to buy up to two houses priced at more than 150,000 ringgit.
Vietnam offers overseas buyers 50-year leases and China offers foreigners a maximum leasehold period of 70 years for land intended for residential use.
Mr Simister said the key to Thailand maintaining its position as Asia's leading resort property market would be a combination of thoughtful environmental control and less restrictive ownership issues with greater foreign quota of condominiums, longer lease terms of 90 years, and the ability of foreign purchasers to finance property acquisitions. Bangkok Post