Local real estate executives have expressed support for proposals to extend land-lease periods to as long as 99 years, saying the change would be conducive to attracting more foreign investment.
Representatives of seven real estate organisations met with officials of the Department of Lands and related agencies to discuss changes to encourage real estate purchases by foreigners, Issara Boonyoung, honorary president of the Housing Business Association, said on Saturday.
Another significant change, confirmed on Friday by Deputy Prime Minister Phumtham Wechayachai, is a proposal to raise the proportion of foreign ownership allowed in condominiums from 49% to 75%.
The seven organisations include the Housing Business Association, the Thai Condominium Association, the Thai Real Estate Association, the Home Builder Association, the Real Estate Sales and Marketing Association, the Thai Real Estate Brokers Association and the real estate development committee of the Thai Chamber of Commerce.
Mr Issara said the discussions were prompted by a cabinet resolution in April, aimed at stimulating the economy through the real estate sector and preparing the country to become a global industrial hub.
Following up on the resolution, the Ministry of Interior, which oversees the Department of Lands, was authorised on June 18 to study the feasibility of two amendments, according to Mr Phumtham.
The first amendment involves extending lease periods from 30 years to 99 years by amending Section 4 of the Rights over Leasehold Asset Act, changing the maximum duration from 30 years to 50 years. Once the initial term ends, the property owner and the rights holder can agree to extend the lease for up to another 50 years. The agreement must be in writing and registered with the authorities. It would apply to low-rise residential projects and condominiums and would benefit both Thai and foreign nationals.
The second amendment involves allowing foreigners to own more than 49%, but not exceeding 75%, of the usable space in a condominium. Conditions could include forfeiting voting rights related to condominium management if foreign ownership exceeds 49%.
Mr Issara said the higher foreign ownership would be applied selectively in areas popular with foreigners, such as Bangkok, Phuket and Pattaya. The policy was previously implemented for a period after the 1997 financial crisis to stimulate the market.
Pattaya as viewed from Phra Tamnak hill in June 2023. (Photo: Pattanapong Hirunard)
Peerapong Jaroon-ek, honorary president of the Thai Condominium Association, said the legislative changes could take one to two years to pass and take effect.
Extending lease terms to 99 years and increasing foreign condominium ownership would significantly boost the real estate market, which is currently struggling with high bank loan rejection rates of 50% to 60% and declining purchasing power, he said.
According to Mr Peerapong, without such policy interventions, the real estate market is projected to contract by 15% to 20% in 2024.
Extending lease terms to 99 years, he said, would make urban land more accessible, reduce development costs, make city properties more affordable for Thais and bankers more amenable to approving loans. It would also provide long-term residence options for foreigners, thereby boosting foreign confidence and investment.
Currently, foreigners can lease land for residential purposes for a maximum of 30 years, with one 30-year extension possible if both the landowner and lessee agree. Leases of 50 years are available for approved commercial and industrial projects.
The challenges facing the property sector are underlined by data showing the number of land allocation permits nationwide dropped by 19.7% in the first quarter of this year, the largest decline in nine quarters, as low-rise house transfers fell.
Sales of new townhouses in Greater Bangkok plummeted in the first quarter to a 12-year low, nearing levels following the severe floods of 2011, largely attributed to weak demand in the middle and lower-end segments.
Meanwhile, the Real Estate Information Center (REIC) has pointed out that foreign ownership quotas for condos in many popular destinations, such as Phuket and Pattaya, are fully occupied in several projects.
It said condo transfers by foreigners in 2023 totalled 14,449 units, up 25% from the year before, with the value rising 23.5% to 73.1 billion baht, higher than pre-pandemic levels.
Chinese buyers topped the table for condo transfers, accounting for 45.8% of the total units and 46.7% of the total value, followed by Russians, Americans and Myanmar nationals.