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Raising the Cap on Foreign Condo Ownership: A Potential Game-Changer?
Currently, in many countries, foreigners are allowed to own a certain percentage of condominium units in a single development. This limit varies, but it is typically around 40%. The rationale behind this restriction is to ensure that locals have access to property ownership and to prevent foreign speculation from driving up prices.
The Thai government is considering changes to real estate laws to attract more foreign investment. Proposed amendments include extending land lease periods to 99 years and increasing the allowable foreign condo ownership quota to 75%.
- Proposed changes to extend land-lease periods to 99 years and increase foreign condo ownership quota to 75% aim to attract more foreign investment and stimulate the real estate market in Thailand.
- These proposed amendments could significantly boost the real estate market, making urban land more accessible, reducing development costs, and providing long-term residence options for foreigners.
- The challenges facing the property sector include declining purchasing power, high bank loan rejection rates, and a significant drop in land allocation permits and new townhouse sales in Greater Bangkok.
These changes are intended to stimulate the real estate market, boost foreign confidence and investment, and address the decline in property sales. The amendments would also provide long-term residence options for foreigners and make city properties more affordable for locals. The real estate sector is currently facing challenges, including high bank loan rejection rates and declining purchasing power. The changes are expected to take one to two years to pass and take effect, and would benefit both Thai and foreign nationals.
Currently, in many countries, foreigners are allowed to own a certain percentage of condominium units in a single development. This limit varies, but it is typically around 40%. The rationale behind this restriction is to ensure that locals have access to property ownership and to prevent foreign speculation from driving up prices.
However, raising the foreign ownership could potentially revitalise the condominium sector. This move could attract more foreign investors, increasing demand for condominium units and helping to reduce the oversupply.
Foreign investors are often drawn to the stability and potential high returns of real estate investments. By allowing them to own a larger share of a development, they may be more inclined to invest. This could lead to an influx of foreign capital, boosting the condominium market and the wider economy.
Moreover, raising the foreign ownership limit could also benefit local buyers. Increased demand from foreign investors could lead to increased supply, giving locals more options to choose from. It could also stimulate competition among developers, potentially leading to better quality developments and more affordable prices.
Nonetheless, balancing the potential advantages of increasing the foreign ownership cap with the protection of local purchasers is crucial. Implementing measures like more stringent foreign ownership regulations and enhancing transparency in the real estate market can help maintain a market that is equitable and open to everyone.
The suggestion to raise the foreign ownership quota for condominiums to 75% could have significant implications for the real estate industry. As Bangkok’s skyline continues to evolve with new construction, Mr. Korn Narongdej, Director and Chairman of the Executive Committee of Raimon Land, proposed this solution to rejuvenate the sector after the pandemic. By allowing more foreign ownership, developers hope to attract investment and stimulate growth1.
In contrast, the Philippines currently restricts foreign ownership of condominiums. The law stipulates that foreigners can own up to 40% of the total and outstanding capital stock of a condominium corporation. This means that foreign individuals or former Filipino citizens who are now foreign nationals can own condominium units, as long as the total foreign ownership in the corporation does not exceed 40%.
Another amendment would extend lease periods from 30 to 99 years by amending Section 4 of the Rights over Leasehold Asset Act. The maximum duration is changed from 30 to 50 years, and after the initial term, the property owner and 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. This amendment applies to low-rise residential projects and condominiums, benefiting both Thai and foreign nationals.
It’s interesting to see how different countries approach foreign ownership in the real estate market. If Thailand were to implement this change, it could indeed revitalize the sector and potentially attract more international buyers. However, careful consideration of the impact on the local market and housing affordability would be essential.
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