Property investments in Thailand

Thailand is one of the most attractive locations for foreign property purchases. Famous islands like Phuket, Koh Samui, Koh Lanta, but also beach cities like Hua Hin and Pattaya belong to the most desired investment locations worldwide.

Foreign legal ownership in Thailand’s real estate

Foreigners are prohibited from acquiring legal ownership in Thai real estate. The two exceptions to this rule are condominiums and villa ownership, separated from the land through a registered superficies.

The acquisition of a condominium unit is deemed to be the easiest property investment in Thailand. In a condominium complex, 49% of the condo units can be acquired by foreigners. The purchase price has to be paid from abroad in foreign currencies.

Property ownership through a Thai corporation

The traditional foreign investment strategy is to set-up a Thai corporation (Co., Ltd.) who holds the land title in the property. To qualify as Thai person, the company has to have majority Thai shareholders. Most of Thailand’s beach and island villas are owned by such structure.

It is obvious that a property investment whereby a Thai partner permanently holds the major share needs a sophisticated corporate design. Thailand’s investors are infamous for neglecting this essential point and in the end risk to lose the total investment.

Long-term rent of land and villa

Due to the foreigner restrictions to own real estate, a leasing industry has been established which offers a common-law type leasehold interest in Thai land. This requires a 30-year-lease agreement, extension options, fully prepaid rents and is sometimes combined with a construction contract for the villa on leased land.

The leasehold structure typically offered results in a rather weak legal status of the investor, because the leasehold has no legal basis in Thailand’s laws. The limit the risks a secured lease structure would be required. However, typically the investors are not aware of the risks and weak points involved and do not ask for a substantial protection mechanism.

Would you like to know more? Contact the Bangkok investment law firm for a consultation.