Buying Property in Thailand

[khaolakguy]

I understand that lawyers and estate agents have long persuaded farang potential purchasers of property, that it is safe to do so under the guise of a limited company, in cases where they are unable to buy outright in their own name.

 

This would certainly be the case in purchasing freehold houses, or condos where the 49% quota for foreign ownership has already been taken up, or in buying apartments that are not officially designated as condos.

 

However it seems that there has been a sea change, this year, in the governments approach to these limited companies, that have been set up specifically to circumvent the law on foreign property ownership. It appears that there is an intention to investigate companies, that are not otherwise trading, eg having more than four paid employees, to examine whether they are in fact bona fide companies.

 

One of the giveaways of front companies is having the same lawyers

[khaolakguy]

 

 

Amongst all the experts on this forum, no one has an interest, a point of view, any anecdotal information, guidance??!! On a topic that must be of great importance to most expats and would be expats?

[Guest Kregger]

I agree, it isn't a good idea at this time to buy a Thai property with a shell company.

 

For buying houses, long term lease arrangements are becoming more popular.

 

My general impression is that Thailand property is rather high priced right now relative to the extreme political instability in the country. Hint, the King isn't getting any younger ...

[Guest luvthai]

One should buy property in thailand only if one can afford to take a huge loss on it.

[khaolakguy]

"* From today, companies that are majority-owned by foreigners and their Thai nominees will have 90 days to report their ownership structures to the Commerce Ministry.

 

 

Once the changes become law, these firms will have one year to reduce their foreign share ownership to below 49 percent."

 

 

 

 

http://investing.reuters.co.uk/news/articl...HIP-FACTBOX.XML

[Gaybutton]

The following appears in the BANGKOK POST:

_____

 

Foreigners Rip New Rules on Ownership

 

FDI Likely to Fall as Investors Ready to Flee

 

POST REPORTERS

 

Foreigners yesterday poured scorn on moves by the Thai government to regulate foreign businesses by dismantling the widely used practice of using local nominee shareholders. ''If this government's aim is to scare away foreign investors, then I think they are doing a very good job here; they have the perfect strategy in place to do this,'' said Lance Depew, the portfolio manager of Quest Capital, a $250-million fund management company that has been very positive about Thailand even at the peak of the economic crisis in 1997.

 

''They are wreaking havoc on foreign investors, and investors are going to vote with their money on where they want to invest,'' he said.

 

The military-backed government's attempt to place restrictions on foreign ownership by clarifying the poorly understood 1999 Foreign Business Act has been bitterly opposed by most foreign investors. They claim restrictions would only exclude Thailand from the booming foreign direct investment flowing into the region.

 

''In the face of competition from so many other countries, this is nothing but negative for Thailand, and we may have to do more research on what the impact of these measures would be before deciding on the sovereign ratings,'' said Kim Eng Tan, an associate director for sovereign and international public finance ratings at Standard & Poor's.

 

''I have a feeling that things are not going to be very rosy from here on,'' he said, noting that S&P was studying the country's rating and there was a ''strong chance'' that the outlook could be lowered.

 

Under the changes that have made markets jittery, foreign investors will be given one year to sell down their holdings and up to two years to reduce voting rights to less than 50%.

 

The laws redefined alien business classifications, and gave a 90-day deadline for firms that use Thai nominees to disclose their holdings. A one-year deadline was set for them to comply with revised limits.

 

This move comes as the country's investment climate is already suffering from political instability, foreign ownership probes and recent capital controls.

 

Mr. Tan said many previous investments in Thailand would have to be restructured. Some investors will leave altogether, even if the majority stick around.

 

Peter Van Haren, the chairman of the Joint Foreign Chambers of Commerce, said: ''We are very disappointed with the moves, but we still have a ray of hope that things will be amended when it goes through the various processes before it becomes a law.''

 

The cabinet will refer the changes to the Council of State, the government's legal advisory body, and it could be months before the law is formally enacted.

 

But the moves are seen as a step backward at a time when competition is intense for foreign direct investment. Thailand, which is already facing a protracted political crisis, saw investment applications in the first nine months of 2006 halved to $5.4 billion from the same period in 2005.

 

''What is Thailand doing? Countries like Vietnam are looking to relax foreign limits, and we are looking to tighten them?'' Mr. Depew asked.

 

Other analysts were more vocal, saying that the interim government's poor understanding of business could have long-term implications.

 

''The main problem with this army-sponsored government represented largely by retired army generals is lack of experience in politics. ... Ministers are using a 'learn on the job' method. The result is simple _ confusing policies exposing their inexperience and hurting foreign investment, investor confidence, domestic consumption and the country's image [further],'' Vikas Kawatra, head of institutional sales at Kim Eng Securities, said in a note to clients.

 

''Imposing restrictions on FDI is simply wrong _ even though the intention behind the move is to punish the deposed PM Thaksin Shinawatra. I think these two steps aren't the last silly moves expected from this government.''

 

Citicorp Securities said hopes of a possible compromise were shattered, and called the moves the ''worst-case scenario''. It recommended its clients remain underweight in the Thai equity market.

 

Mr. Tan of S&P agreed. ''Even in the best-case scenario I would say it is negative news for Thailand.

 

''In the short term people are going to pull out of Thailand and you will see less interest from foreign investors into Thailand,'' he said, adding that most foreign investors were looking for majority stakes to increase the efficiency of the companies in which they invest.

__________

 

And this, from TNA:

_____

 

Thai Finance Minister to explain amendments to foreign investors

 

BANGKOK, Jan 9 (TNA)

 

Deputy Prime Minister and Finance Minister Pridiyathorn Devakula said he will meet urgently on Wednesday with foreign business representatives in Thailand to explain the amendments to foreign business ownership rules in Thailand which were endorsed by the Cabinet Tuesday.

 

Cabinet approved amendments to the Foreign Business Act imposing a strict 50-per cent cap on foreign investment and voting rights in companies operating in Thailand.

 

Share prices dropped by 2.69 per cent as foreign investor confidence fell in response to another blow from government after the Cabinet acted to roll back foreign business procedures which had come to be accepted over time.

The Stock Exchange of Thailand (SET) composite index lost 17.07 points, falling to 616.75, while the bluechip SET 50 index shed 12.44 points to close at 428.73 .

 

On Monday, foreign businessmen said they opposed the measure on the basis that the new rules would undermine investor confidence and may trigger withdrawal of foreign investment activities from Thailand.

 

Depending on the sectors in which they operate, foreign investors will be given one to two years to reduce their ownership and voting rights in compliance with the new regulations.

 

Speaking after the Cabinet meeting, Pridiyathorn said he believed the amendments would bring more clarity and thereby greater confidence in Thailand's investment climate.

 

He said the session on Wednesday will provide a forum for those concerned to raise questions which he will answer.

 

The finance minister said the amendments approved by the Cabinet Tuesday remain subject to further scrutiny by the National Legislative Assembly which may alter certain details.

 

(TNA)-E007

 

 

[khaolakguy]

CB Richard Ellis Thailand urges property buyers not to panic

 

 

 

The Thai branch of international real-estate and property-investment firm CB Richard Ellis has urged foreign property owners and prospective buyers of Thai real estate not to panic or abandon their interest because of proposed changes to the Foreign Business Act.

 

It says they should focus on foreign quotas for condominium ownership and leasehold properties developed by well-known and established companies.

 

 

http://www.nationmultimedia.com/breakingne...newsid=30024191

[Guest luvthai]

Buying property inThailand? DON"T do it!

[Gaybutton]

Buying property inThailand? DON"T do it!

 

I wouldn't go quite as far as that, although if it were me I might consider waiting until we are quite clear on where all this is leading and what the exchange rate is going to do. At this point I don't know if anyone thoroughly understands what any of this is all about and I would even go as far as guessing that many Thai officials are also not certain what all of this means. Nevertheless, as far as I can tell, foreigners can still safely buy condos under the 49% rule.

 

I do not have any expertise in this field whatsoever, so I can only state my personal opinion based on what I have been reading. If it were me, unless there was a necessity for buying at this time, then I would wait before committing to anything in Pattaya. With all the construction that has been going on for the past few years and all the construction going on presently, I would gamble that a real estate crash has a good chance of occurring in Pattaya, eventually making it a true buyer''s market.

 

Even if I did need to buy a condo, I would not buy one still under construction, other than from a completely reliable company such as View Talay. Even then, I would first try to check to find out if there is any significant difference between promised completion dates and actual completion dates at sites recently occupied before I'd sign on the dotted line.

 

If one buys a condo at which construction is not complete, then what can you do if the company goes under and construction is halted? I would not buy anything, no matter who the builder is, without first consulting a competent Thai attorney who is well versed in Thai real estate law.

[khaolakguy]

So do you rent then GB?

 

It would be interesting to know many of the residents who post here rent or buy. And how many are within the allowable 49% foreigner ownership of condos, and how many bought through limited companies?

[Gaybutton]

So do you rent then GB?

 

I do not want to get into my personal financial affairs on a message board, but I do hold a long-term pre-paid lease on my home, since as a "farang" I was not able to buy in my own name. Suffice it to say that I am fully legally protected for the rest of my life, without having had to go through the Thai corporation route, and there is no possibility that I will ever involuntarily lose my home.

[Guest fountainhall]

I bought a new Bangkok apartment in a then-recently completed condo around 7 years ago. At that time the market was near the 'bottom' of the recession generated by the 1997 economic crisis. The purchase was in a block with over 80% Thai owners and personally registered at the Lands Department.

 

I would be reluctant to purchase in Bangkok now as I see dozens of condo blocks going up and concern being expressed in many quarters about who will buy all the new apartments. Like Gaybutton, I see a crash of sorts coming. I'd rent until the situation is more clear. Richard Ellis has to make comments about 'not panicking' to try and protect its core business!

[Guest travelerjim]

CONDO PRICES ARE DROPPING...

 

Hello GT Friends,

 

Yesterday I posted a discussion thread on this same subject of buying property in Thailand on the Sawatdee Forum.

 

There have been several good replies and I wish to share them with you - as many of us are unsure of just what to do ... Buy now or later???

 

http://www.sawatdee-gay-thailand.com/forum...pic.php?t=10424 .

 

I for one - am carefully watching the marketplace and hope to buy when the "buyers market" truly appears - which I think is coming in the months and year ahead to the Thailand Real Estate property market.

 

TravelerJim

 

[Guest Kregger]

It is always better to buy in a soft market. Why would you want to buy in a crazy bubble market when you might be buying the top of the bubble? So if people want to buy a condo to live in, it does look like good times are coming for buying.

 

I still think Thailand is a good long term bet. It will probably get worse before it gets better, but the royalty will continue after you know what, there will be a new constitution, there will be new elections, and Thailand is well positioned to benefit from China'a ascendency.

 

There are safer investments in the world than a Thai condo. But for most Thaiphiles, safety isn't at the top of their priority list.