Thai plan to lift foreign condo ownership cap triggers backlash
The government has proposed letting foreigners own up to 75% of units, up from the present 49%
THAILAND’S bid to allow more foreign ownership of condominiums to revive the sluggish property market has triggered an uproar, with critics terming it as an attempt to sell off the country.
The Cabinet last week ordered the Interior Ministry to study whether to let foreign buyers own up to 75 per cent of condo units in a building, up from 49 per cent at present. It will also consider extending the lease period for land for foreigners up to 99 years, from 30 years now.
The main opposition Move Forward Party and the Thai Hotel Association have both criticised the review, which comes two years after a similar backlash forced the government to shelve proposals to let foreign individuals buy land for housing. The latest proposals would increase the proportion of units in a building that could be owned by foreigners, but only Thais could own the underlying land.
“It’s about long-term leases, not selling land. It has nothing to do with selling the nation,” Prime Minister Srettha Thavisin said on Tuesday (Jun 25). He also said the increased quota for foreigners will not come with higher condo voting rights, which will be capped at 49 per cent.
Srettha’s administration has unveiled a number of measures to boost the property sector as sales of new units and land remain sluggish. An estimated 213,000 residential units, including 85,000 condominiums, are available across Bangkok and its suburbs, worth about 1.2 trillion baht (S$44 billion), according to official data.
But overseas buyers represent a bright spot in the market. Condo sales to foreigners jumped 25 per cent last year to 14,449 units worth 73.2 billion baht, with Chinese and Russians topping the list of buyers.
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About 41 per cent of the condos were sold in Chonburi province, home to a number of beaches and industrial estates. Bangkok, Thailand’s capital city and a gateway for millions of tourists, accounted for 38 per cent of the apartment sales.
Higher foreign ownership “will incentivise demand, especially in popular travel destinations”, said Phattarachai Taweewong, director of research at Colliers Thailand. “Extending lease periods could reduce land costs and attract more developers. Thirty years is too short for foreign investors.”
“This is a master plan for sustainable growth of Thai commercial and residential property,” said Prasert Taedullayasatit, the president of the Thai Condominium Association, arguing that higher caps will also end “illegal practices” in which foreigners buy through Thai proxies.
But Sopon Pornchokchai, president of the Agency for Real Estate Affairs, opposes allowing foreigners to own 75 per cent of a condo. He said they should have to buy units costing at least 10 million baht apiece, and have to hold them for at least three years, so as not to impact local buyers. If the government pushes these changes, they should also hike taxes on foreign buyers.
Another critic, caretaker senator Somchai Swangkarn, questioned whether the policy created a conflict of interest for the government. He noted the family of Prime Minister Srettha, who previously ran Sansiri, still has an interest in the developer, and that other beneficiaries would include SC Asset, a developer majority-owned by the Shinawatra family that controls the ruling Pheu Thai party.
While Srettha has not responded to the criticism, Interior Minister Anutin Charnvirakul said the move won’t favour capitalists in particular but would help stimulate the overall economy. He said public concerns will also be taken into account while deciding the policy. BLOOMBERG
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