Longer property leases for foreigners to boost slumping market: REIC
Government Housing Bank supports Cabinet’s move to ease rules on property ownership as unsold units soar
The Government Housing Bank’s Real Estate Information Centre (REIC) has backed a move to reduce restrictions on foreign ownership in Thailand’s property market, saying it could help unload unsold units piling up due to a drop in Thais’ purchasing power.
However, the measures must be carefully implemented and regulated to prevent negative impacts on the property market in the long term, warned REIC director Wichai Wiratkapan on Monday.
The Cabinet agreed in principle last month to increase the foreign ownership ratio in condo projects from 49% to 75% and expand property leaseholds from 30 years to 99 years, aiming to attract foreign investors and boost the economy.
Wichai said the centre recorded 213,429 unsold units in the first quarter of this year, valued at around 1.21 trillion baht.
Unsold units have soared 36.5% from the same period last year and are expected to take 40 months to sell out, he said.
“Purchasing power of Thai consumers is now at a critical level, with more borrowers seeking housing loans of under 3 million baht being rejected by financial institutions,” he said. “Now the trend is spreading to a higher bracket of consumers, namely those seeking 10-million-baht housing loans.”
Banks have imposed stricter loan criteria since January under a Bank of Thailand measure to curb rising non-performing loans (NPLs).
The REIC director said that giving foreigners longer property leases and a higher ratio per building could help attract foreign buyers, especially multinational corporation executives and digital nomads.
“However, these measures should be implemented only in specific zones, such as major cities, special economic zones, and tourist destinations in EEC, Pattaya, Phuket and Bangkok,” he said.
Wichai added that the measures could be piloted first in certain zones or projects, allowing time for authorities to study their impact.
Or they could have a limited timeframe, just like after the Tom Yam Kung crisis in 1997, said Wichai.
He pointed out that foreigners had been permitted 100% of condo building ownership from 1999-2004 to revive the property market.
Pornnarit Chuanchaisit, president of the Thai Real Estate Association, calculated the property market would recover from its slump in the next three to six months.
He said government investment projects, the tourism high season, and the digital wallet handout scheme would boost the economy in the second half of the year.
