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Located in the heart of Southeast Asia, Thailand has served as a trade and business hub for centuries. It was a buffer zone between colonial powers because of its strategic location. As a result, it was the region’s only nation that wasn’t colonized.

Thailand (and its property market) is still able to reap the rewards from its strategic placement on the map today, yet in different ways.

Its capital of Bangkok is just an hour-long flight from four rapidly growing frontier markets. Namely Vietnam, Cambodia, Laos, and Myanmar.

These countries are among the world’s fastest growing and give Thailand easy access to cheap labor along with almost 200 million consumers – not to even mention its own decent-sized population of 67 million.

Of course, the Thai economy isn’t just dependent on its neighbors for growth.

You’ll find Thai exports in any supermarket in any Southeast Asian country. While stores in Thailand stock themselves with products from Japan and the US, stores in Asia’s frontier markets fill their shelves with Thai exports.

Brands such as Red Bull (which as a little-known fact originates in Thailand) are sold globally as well.

If you open up your computer and read the label on your hard drive, it’ll probably have a sticker which says “Made in Thailand” on it. This is because Thailand is one of the world’s top makers of hard drives and memory.

Not only is Bangkok the most heavily tourist city on the planet (beating out Paris and London in Mastercard’s latest survey), but also one of the world’s largest exporters of automobiles, electronics, and hardware.

Besides manufacturing and exports, Thailand has a large services sector considering it’s an emerging market. The Thai startup community is also seeing rapid growth and great success.

These factors led to steady growth which has continued for about 30 years, transforming Thailand into one of Asia’s most dynamic countries.

Naturally, this extends to the Thailand property market as well. A middle class which barely existed a few decades ago is now much more prominent. They’re capable of buying into the countless new condos and housing projects being built.

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The Condominium Act of 1979 is restrictive of foreign ownership of condominiums in Thailand, but generally allows it for foreigners who permanent residents, or those who have entered the country on an investment promotion visa, or for those who have fulfilled certain requirements related to the transfer or withdrawal of foreign currency. In regards to those foreign currency requirements, the Land Department Regulation Re: Foreign Ownership of Condominium Units of 2004 defines the foreign currency requirements below.

The foreign purchaser must provide evidence of either (1) remitting foreign currency into Thailand, or (2) withdrawing Thai baht from the bank account of a person who is domiciled outside of Thailand, or (3) withdrawing money from a foreign currency account in an amount no less than the purchase price of the condominium unit that is intended to be purchased.

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Chinese demand for real estate in Thailand is at an apogee, but the Beijing government’s drive to control capital flight could hinder such demand, according to a new report by Financial Times Confidential Research (FTCR).

Surveying 108 investors, FTCR found that Chinese buyers, mostly only “moderately wealthy” and put off by skyrocketing values in the mainland, are scouring the kingdom for residential properties. Buyers from China now account for 10 to 20 percent of total sales in the tourist hubs of Chiang Mai, Pattaya, and Phuket, and 5 percent of those in Bangkok.

However, such foreign demand is likely to recede soon. “The immediate outlook for Chinese investment flows into Thailand is negative,” FTCR stated in its report.

“In this new climate, we expect investors to delay plans to purchase more Thai real estate, at least until the dust settles, if not until the Chinese government loosens up again.”

Thailand is now the fifth most popular destination for real estate investment by the Chinese, FTCR pointed out. In 2010, almost no Chinese were buying homes in Thailand.

That year, Chinese tourist arrivals in the country topped 1.22 million, according to the Thai Immigration Bureau.

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Bangkok is the ever pulsing heart of investments and development in Thailand. Demand for homes close to the mass transit system is expected to grow strong. More consumers will express interest in developments near the city’s edges, prioritising locations close to the BTS and MRT stations for commuting convenience.

When the government starts to invest in infrastructure projects, these automatically open new opportunities for property developers to plan residential projects. This will challenge property developers to invest in the new locations along the new mass transit route from Bangkok to the suburbs.

Investment in infrastructure such as railways, motorways, and several new mass transit routes will make Thailand a regional transport hub within the ASEAN Economic Community. They will boost demand to buy homes in Thailand, both in Bangkok and in the provinces. Foreign companies that invest in Thailand consider the country as a gateway to many other ASEAN nations.

More: Bangkok’s Thonglor in high demand from buyers and renters

The ratio of property prices to income remains a big issue for majority of Thai locals though. The income inequality in Thailand is truly visible; household debts are rising and banks are not willing to provide credit.

The fact is that most condominium units are priced beyond their budgets. The result is that the majority of the households are shifting, choosing locations that are part of the new mass transport expansion and suitable to their budget.

Surprisingly these factors do not affect the great majority of the prime positioned developments. The reason for this is that the positive influx of foreign investors have stimulated developers to continue with new, innovative projects.

Buy-to-let segment must grow

A key factor for property investment returns is buy-to-let. Looking at other prime cities such as Singapore, London and New York, long-term buy-to-let programmes are self-evident. Real estate agencies in Thailand are trying to fill up those gaps by aggressively renting out units at any price level, a practice that often disadvantages the owners.

By not screening their tenants accordingly, this often results in short-term lease and early contract terminations. My advice is to carefully select your agent and place your demands clearly on the table.

In 2015, the average gross rental yield (before expenses and taxes) for Bangkok downtown condominiums was approximately 4.8 percent, a drop from 5.4 percent in the previous year. This decline is in line with the price increase of new condominiums that exceeded the growth in rents. The good news is that the number of expatriates in Bangkok has increased by 10 percent, year-on-year.

The expatriate market is the key rental market for mid- to high-end downtown condominiums. Two- and three-bedroom condominiums are the most popular types of units rented out to expatriate families, while demand for one-bedroom units is driven by singles and young couples.

Investors in Thailand often assume that one -bedroom units are more rentable. Are they really? The only answer to this is both “yes” and “no.” Rentability in Bangkok is highly dependent on the location and price-size ratio. One may find two 1-bedroom units located on the same street, built in the same year, at the same size but with a 20 percent price difference.

The expatriate rental budget has not increased in all locations, while condominium prices have risen on average by 8-10 percent per annum for mid-range grades, and by 15-20 percent for luxury grades. Tenants are willing to spend their budget on smaller units with a higher per sqm rent if it is well located, well decorated and newer.

More supply

New buildings with smaller units therefore have a higher chance of being rented out than older buildings. The building facilities are also an important consideration. A building should offer a range of modern facilities, such a well-equipped gym, large swimming pools, and attractive common areas.

While Sukhumvit is the most popular area because of easy access to the BTS Skytrain and proximity to schools, hospitals, retail and leisure amenities, the area also has more supply than central Lumpini and Sathorn/Silom.

Yield levels have declined in 2015 on average against rising property prices. However, given the prevailing market preferences, picking the right property, unit size, and location will increase your chances of success as a buy-to-let investor.

For investors with a mortgage, the rent may not fully offset the loan repayment, but the combination of a consistent yield from a growing expatriate market and the potential for future capital appreciation can still make a buy-to-let investment a worthwhile consideration.

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Setting Up Company Partnerships under Thai Law

Siam Legal International | October 10, 2016 | Business in Thailand, Civil and Commercial Law, Company Law, Company Registration

The Civil and Commercial Code of Thailand provides for the formation of partnerships as is found in the laws of other countries. However, partnerships are normally not formed by foreign investors due to particular difficulties that arise due to the Foreign Business Act of 1999. Generally speaking, the formation of a limited company is more advantageous to foreign investors since majority Thai-owned companies with foreign directors are still considered “Thai nationals” for the purposes of the Foreign Business Act. In contrast, partnerships, even if formed with majority Thai capital investment, are still considered “foreign nationals” if the managing partner is a foreign national. Nevertheless, it is possible for foreign nationals to operate business in Thailand as a partnership in certain cases, such as if they are operating a business that is unrestricted by the Foreign Business Act, or if they have obtained a Foreign Business License or a Foreign Business Certificate under the Thai-U.S. Treaty of Amity. A few of the notable points regarding the operation of a partnership is as follows:

There are three forms of partnerships: an unregistered ordinary partnership, a registered ordinary partnership, and a limited partnership.
As for the unregistered ordinary partnership, it refers to a business partnership arising from a contract and does not constitute a juristic person. The partners are jointly and unlimitedly liable for the obligations of the partnership and are bound to each other by the terms of their partnership agreement. If an ordinary partnership is then registered, it will have the status of being a juristic person. Nevertheless the partners are still personally liable to third parties.

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There’s more to life than money, and the same goes for buying real estate.

In an increasingly unstable and uncertain world of shifting political regimes, climate patterns and economic powers, many investors are finding themselves asking what constitutes real value.

All eyes on the Andaman as the nation’s second-highest office issues directive on the ‘Riviera’

The coast of mainland Thailand facing the Andaman Sea has got the shorter end of the tourism stick, compared with its eastern counterpart.

Addressing this imbalance, the Tourism and Sports Ministry will be proposing the Riviera Thailand project during a Cabinet retreat in Phetchaburi on Tuesday. The announcement was made at the request of Deputy Prime Minister Somkid Jatusripitak, revealed Tourism and Sports Minister Weerasak Kowsurat on Sunday.

The Riviera, a coastal stretch that includes such towns as Phetchaburi, Prachuap Khiri Khan, Chumphon and Ranong, has long been overlooked for tourist spots along the Gulf of Thailand, the deputy prime minister reasoned.

“The Andaman has been ignored by Thais because it doesn’t have the legacy of Hua Hin nor road access, and the hotels are about beaches, while most Thais prefer more urban-type destinations,” said Bill Barnett, managing director of hospitality consultancy C9 Hotelworks.

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