Boosting the Economy through Increased Foreign Ownership Quotas

Boosting the Economy through Increased Foreign Ownership Quotas

In a bid to invigorate the economy, developers are advocating for a hike in foreign ownership quotas for condominiums, particularly in areas with burgeoning demand from overseas buyers. Brenton Mauriello, the chief executive of Raimon Land, a developer listed on the Stock Exchange of Thailand (SET), suggests raising the maximum foreign ownership quota for condos to 60% from the current 49%. Mauriello emphasizes that such a move could have a significant positive impact on the country’s economy without adverse effects.

Mr. Vichai Viratkapan, the acting director-general of the Real Estate Information Center (REIC), echoes Mauriello’s sentiment, noting that many sought-after destinations for foreign buyers, such as Phuket and Pattaya, are witnessing fully occupied foreign ownership quotas in several projects. According to Mr. Vichai, these locations often fail to attract domestic buyers, making it imperative for the government to consider increasing foreign ownership quotas to stimulate economic activity, especially given the reliance of the condo market in such areas on foreign demand.

To address the issue of fully occupied foreign ownership quotas, some projects, like Laguna Lakelands in Phuket, have introduced innovative solutions. They have reserved units in each condo project for leasehold contracts, offering them at prices 10-15% lower than freehold units. This strategy aims to accommodate the substantial interest from foreign buyers while promoting accessibility to the market.

The REIC reports a notable surge in condo transfers by foreigners in 2023, totaling 14,449 units valued at 73.1 billion baht, marking a 25% increase in units and a 23.5% increase in value compared to pre-pandemic levels. Several factors have contributed to this surge, including the positive impact of the country’s reopening in 2021, the introduction of free visas for Chinese and Kazakhs, and ongoing geopolitical conflicts.

Chinese nationals accounted for the largest share of condo transfers, representing 45.8% of total units and 46.7% of total value, followed by Russians, Americans, and Myanmar nationals. The most favored price range among foreign buyers was 3 million baht and lower, while the preferred unit size ranged from 31 to 60 square meters.

Chon Buri emerged as the leading province for condo transfers by foreigners, comprising 41.1% of the total nationwide, followed closely by Bangkok at 38%. Together, these two regions accounted for 85.4% of the total value of condo transfers. Notably, the proportion of foreigners receiving condo transfers nationwide has steadily increased, reaching 13.4% in terms of unit number and 24% in terms of value in 2023, compared to 10.8% and 20.5% in 2022, respectively. To see how the Thai government are simulating the economy click here!