Investing in Thailand property isn’t an easy exercise. Despite a fantastic positive growth trend, the Thailand property market is full of surprises for the unsophisticated foreign investor. Here are 10 things you need to know and some common mistakes that can turn your investment dream into a nightmare.
1. Can Foreigners Invest in Thailand properties?
The short answer is YES, but one commonly overlooks the barriers one has in order to be eligible to invest.
A foreigner may own 100% of a condominium in his/her own name only. All other investment property purchases are governed by another set of rules.
If the foreigner wishes to acquire land and build a house, he/she must obtain a long-term lease on the land (for a period not exceeding 30 years for each term).
Overall property laws and buying a home in Thailand has its own specifics but basically is not much different from buying real estate in other countries like Germany, Australia, or the US, except foreigners may not own land in Thailand.
Land ownership in Thailand is governed by the Land Code Act. Foreign land ownership restrictions in Thailand refer to the land only, not the building on the land or condominium registered under the Condominium Act.
The land and the structure on the land could be owned independently by separate persons, and Foreigners buying a home in Thailand can do this through a 30 year land lease agreement (and optional right of superficies) with the house owned as a separate personal property.
2. Make sure you investigate the Title thoroughly.
The title search will trace the land to its first possession. It will reveal any registered interests on the land such as mortgage or liens. This investigation will also verify the rights to access your property, the residential zoning, and environmental and planning codes applicable in the area. It is also a good idea to make sure that you can build a structure on the land.
Too often we see inadequate searches on title prior to deposit on purchases which can lead to diminished or ineffective investment returns.
3. Get the right legal advice from a qualified Lawyer who specializes in foreign investment purchases.
Before you sign any deposit agreement or contract, you should sit down with a lawyer or solicitor to discuss the legal parameters. Onyx can assist you to find the right firm specific to your needs, and assist with the whole process.
A comprehensive examination of title deed recorded at the Land Department should be done. You need to verify that the Seller has clear and legal title of the land before you enter into a contractual agreement.
It is absolutely critical to follow the correct legal process in Thailand for a foreigner to acquire property.
4. Get an Independent review of any Contracts of Sale.
The Seller will generally have the Contracts of Sale prepared for you. Since the Seller will have their own legal representatives draw up the contracts, it is highly recommended that you have a local lawyer or solicitor review the terms and conditions. You will want protection for your interests should there be a delay in the property being built or exchanged.
Once you have the Contract of Sale approved by your Thai local lawyer, you should then have this vetted by a Lawyer in your own county as a cross check. Whilst we can assist you to find the right Lawyer for you in Thailand, the nominal expense of getting the Contract of Sale checked in your home country will assist you in knowing that your property investment purchase is legal and the transfer will go through as expected.
5. You need to find the right Real Estate Agent. Not one who just want to sell you a property, but one who knows the market and looks for great capital growth opportunities.
Since you will be looking for property in a foreign country you need expert local assistance. Don’t make the mistake of making a purchase decision based on what you see and read on a website. The agent knows how to communicate in Thai and they’re familiar with the geographical area. The agent will save you valuable time in selecting and showing you properties in your price range, and that meets your needs.
Don’t make the mistake of purchasing directly from a developer as this isn’t going to save you money when compared to buying it with the help of an agent. Note: A quality property is generally offered at a fixed price by the Seller, and the major benefit of using an agent is they act as an experienced buffer between you and the Seller/Developer.
The right Agent knows the market and will negotiate fiercely on your behalf. They will also obtain a better price for you, and represent your best interests throughout the entire process. A skilled Agent diminishes the effect of a Buyer’s emotional based decisions, thereby ensuring the best possible investment entry price.
6. Check out the property first hand. Never buy without first viewing the property and talking to those who are actually in the know.
This is perhaps more relevant to those who are looking to buy a condominium rather than a luxury investment property (as we tend to show luxury property face-to-face).
We cannot stress enough that you need to view the properties you’re interested in, view the geographic location, and hear the views of an experienced Real estate Agent as to why this is the best fit for you.
We are happy to arrange your itinerary and accommodation, and show you all the available investment opportunities.
7. How good is the Thailand Property market with regards investment opportunities for great capital growth?
The luxury residential real estate is a very fast growing asset class in Thailand. Over the last few years there has been a definite upscale trend in property values.
As government property cooling measures have taken effect in Hong Kong and Singapore, the region’s property sector is set to benefit from ASEAN integration. With a greater ease of capital flow and investments, the level of real estate investment activity is expected to rise in the untapped Southeast Asian markets as investor appetite grows.
The level of capital flow in ASEAN countries is also likely to rise once regulatory barriers are removed. Across South East Asian real estate markets, this increased activity is enhancing the pace of transparency improvements in Thailand. Thailand ranks among the top 10 improvers globally in overall transparency scores due to greater availability of market data and incremental changes in the regulatory and transaction processes.
Given the huge increases in economic activity and wealth in the Asia-Pacific region, the medium term forecast for prime residential property remains unanimously positive.
8. Make sure Current Key Property Trends are on the way up.
Over 6% of the world’s UHNW population have relocated to a different country from which they originated.
U.S. cities like Los Angeles, San Francisco, Washington D.C. and Dallas show how significant industrial clusters can be in driving residential real estate trends.
Branded Residences are now definitely the new upscale trend in South East Asia, and has definitely become popular across the region.
Hotel-like services such as concierge desks, security and room service provided by a luxury brand will help maximize the value of a development… the more exclusive the brand, the higher the price, and the bigger the premium.
In short, the luxury property market in Thailand will continue to be a haven for capital growth minded investors.
9. The Thailand Property market has enormous capital growth opportunities.
The Koh Samui Property Market is very strong, coupled with a huge tourism demand for luxury properties. The properties in Thailand represent a “safe-haven” for investors, and Koh Samui is an excellent place for property investment as it holds great potential in terms of rental yield, and in particular, the luxury real estate segment. (Not to mention the beauty of the island and the penultimate tropical lifestyle).
Businesses are increasingly international, with numerous branches in various locations around the world. As the wealth creation cycle shifts from West to East, more and more individuals and Companies are increasing their presence in Asian property markets.
10. So what is the first step you need to make before you go on the property investment journey in Thailand?
We strongly suggest you first do your research on what you can afford. Whilst we understand that the premium end of the luxury property market has attractive pricing when compared to your local country, there may still be pricing issues you have not fully taken into account.
You then need to engage an expert Real estate Agent to represent you. You need an Agent with a proven track record in acquiring and facilitating foreign property investment strategies.