Increasing foreign ownership limit for condos would boost economy
The Thai Real Estate Association is backing the government's proposal to increase the foreign ownership limit for condominiums as it expects such a move would boost the domestic economy, its president, Meesak Chunharakchot, said on Tuesday.
His comment was in response to the Interior Ministry's proposal to the cabinet to increase foreign ownership from 49% to 75%, with leases extended for up to 99 years.
In an interview with Nation TV, Meesak stated that he understands the government's goal of promoting economic growth in the country. If real estate can be sold in the country, it will attract more foreign investment.
He explained that there are many expats living in Thailand at the moment. This group already owns some properties and conducts business through domestic nominees, including many companies, with Thai shares stated at 51% and foreign shares at 49%.
He then cited data on registered companies in various prime locations throughout Thailand with a high percentage of nominee companies. They are:
Chonburi province - Out of 56,756 companies, 16,481 companies, or approximately 29.04%, are thought to be nominee firms.
Phuket - Of 26,292 companies, 7,548 or approximately 28.71% could be nominee firms.
Surat Thani - Out of 17,713 companies, 7,703 (approximately 43.49%) could be nominee firms.
Prachuap Khiri Khan - Out of 5,462 companies, 1,937 (or approximately 35.46%) could be nominee firms.
Given these data, he agreed with the government’s proposal.
However, due to the sensitive nature of the issues, he stated that he only supports the point that allows foreigners to buy residences but not to buy or lease long-term property for business purposes. He claimed that the move would jeopardise Thailand's economic structure.
Furthermore, he suggested that the government allow foreigners to buy housing in both condos and allotment houses so that the sector can benefit from the international capital inflow.
Currently, the Thai economy is slowing, domestic purchasing power is declining, household debt is rising, and there are population structure issues affecting bank loans to buy homes.
Concerns about the move favouring capitalists were addressed by Meesak, who argued that real estate companies are one of the businesses that have largely preserved Thai culture.
“If you think that it is favourable to capitalists, then surely you must also think that having the Board of Investment offer incentives to attract multinational companies to open industrial plants in Thailand is favourable to capitalists,” he commented.
Furthermore, he said allowing foreigners to own residences in Thailand will help stimulate all aspects of the supply chain, including building materials, roofing, floor tiles, furniture, and more.
“Those products are manufactured in Thai factories by Thai workers and sold to Thais, but now we will be able to sell these made-in-Thailand items to foreigners. Unfortunately, the move is viewed as being favourable to capitalists, despite the fact that real estate entrepreneurs are among the most taxed businesses in the system. I don't want it to be perceived as beneficial to capitalists because business is the engine of the economy, and capitalists are the people who do business and the taxes they pay then fuel the economy,” he said.
Regarding the comment that such a measure would raise Thai house prices, Meesak categorically denied this concern, citing the fact that the price level in each area and customer group varies.
If the government gives the green light for foreigners to buy more housing, this permission must be accompanied by clear and precise criteria, both in terms of the minimum price in each area and the belief that foreigners should buy housing at a higher price than Thais," he explained, adding that the criteria should prevent foreigners buying for speculation or renting out on a daily basis, similar to a hotel.
Meanwhile, he advised the government to consider new potential buyers other than the more affluent middle classes, the retired, or even those seeking to flee the chaos or threat of war and spend their lives in Thailand.
He emphasised Thailand's strengths in tourism, unique hospitality, Thai cuisine and advanced quality medical services, saying it is second to none in terms of being at the top of foreigners' minds.
“The government must make the right decision. And if the government can carry out what they have said, I am confident that the Thai economy will recover,” he said.
