Opposition to foreign land ownership in Thailand

The government scheme to allow foreigners to buy one rai of land may have been met by enthusiasm in the expat community but not everyone has welcomed the idea.

The Interior Ministry’s proposal to allow foreigners to own a bit of land if they invest 40 million baht is seen by many as a short-term fix to the kingdom’s economy after more than two years of Covid-19 stagnation and decline.

The Federation of Thai Industries (FTI) is backing the proposal. It believes foreign ownership of land would give the economy a boost and at the same time help the ailing tourism sector. The FTI said it would help and support real estate businesses also affected by the Russia-Ukraine conflict.

Thailand has been hit harder than most in terms of the rising cost of energy and raw materials since the war between the two former Soviet nations kicked off earlier this year but the government believes offering foreigners a little bit of land would help the kingdom get back on its feet.

The FTI chairman, Kriengkrai Thiennukul, believes the plan will be good for the economy and investment in the long term because wealthy foreigners, notably businesspeople, will enjoy a long stay here after their retirement.

“Domestic tourism operators will benefit if the plan can attract more foreigners. Thailand is among the world’s major tourist destinations. The country is rich with natural resources such as beaches and coastlines, and the cost of living is not too high.

“One rai is not much. This should not harm national security.”

But there is opposition to the scheme.

Wallaya Chirathivat, president and chief executive of developer Central Pattana Plc, believes the government should introduce other measures to boost the economy via foreign investment. She says leasing land for 30 years, 60 years, or 90 years would be a better policy.

“This remains a sensitive issue among Thai people. The government must ensure that most locals can afford to have their own houses before launching such a measure. There are still many local people that want to buy a house. Additional aid for locals, such as mortgage loans, may help them.”

Nipon Poapongsakorn, a distinguished fellow at the Thailand Development Research Institute, is another dissenting voice. He believes the scheme would only attract investors looking for short-term gains.

“I personally see the potential land purchase of only one rai by foreign investors as just for speculative purposes. What Thailand needs right now is not a stack of short-term foreign capital, but long-term investment, startups, and service development to support the country’s economic development in the long run.

“The Eastern Economic Corridor scheme is currently the only selling point to draw foreign investment, unlike Vietnam which boasts much clearer investment stimulus strategies and promotes overseas investment in several areas nationwide.”

Thai residential property purchasing still remains popular among foreigners, under the old system

The Real Estate Information Center (REIC) revealed the Chinese, despite the impact of the recent Covid lockdowns on the mainland, had a 45% market share in foreign condo ownership in the first quarter of 2022, despite a year-on-year decline in the number of condo units transferred to them.

REIC’s acting director-general Vichai Viratkapan said the decrease was caused by the difficulty to travel to Thailand.

“As soon as China eases travel restrictions, Chinese buyers will definitely come back.”

During 2018-20, the number of condo units transferred to foreigners totalled 34,653 units, worth a combined 145.6 billion baht.

In the first quarter of 2022, Bangkok and Chon Buri were the most popular places where condo units were transferred to foreigners, with 829 units (39%) and 677 units (32%), respectively.

The other three provinces included Samut Prakan (230 units), Phuket (164 units), and Chiang Mai (97 units).

The top five provinces for Chinese buyers were Bangkok (51%), Chon Buri (22%), Samut Prakan (19%), Chiang Mai (4.8%), and Phuket (1.5%).

For Russians, the top locations were Phuket (55%), Chon Buri (39%), Prachuap Khiri Khan (4.5%), and Rayong (1.5%).

Americans chose to buy in Chon Buri (58%), Bangkok (15%), Chiang Mai (11%), Phuket (8%), and Samut Prakan (2.6%).

SOURCE: Bangkok Post