Businesses back 50-year leases for foreign investors
Real estate firms and other businesses voiced strong support last week for a move by the Minister of Finance to amend laws and allow foreign investors to lease land in Thailand for up to 50 years, an increase from the current maximum of 30 years, and a period that would increase Thailand’s competitiveness in the region.
“We’re studying the possibility and the chances are high that related laws can be amended to that effect. If we can do that, we can expect another property boom,’’ said Minister of Finance Apisak Tantivorawong. Despite the rapidly changing skyline of Bangkok, the Kingdom hasn’t had a true real estate boom since the Asian economic crisis of 1997.
The strict rules governing whether foreigners can buy land or lease lands have been a source of heated debate in the Kingdom for decades. Many economists who advocate for freer markets have argued that loosening restrictions on foreign ownership or lengthening maximum lease periods to be more attractive will benefit the economy and produce higher growth through investments. Some others, however, have raised concerns about foreign firms buying up prime lands and agricultural land while some Thais remain landless.
“Allowing leasehold will unleash demand from around the world. It will also change the structure of the property market in which foreigners will become customers alongside Thais,” Apisak said.
The government takes a strong interest in the real estate sector, he said, because “when the economy is about to hit a slump, the property sector always shows early-warning signs. When the economy picks up, the sector is always the first to show a sign of life.”
The government has been attempting to stimulate the sector by launching projects of its own, from housing for low-income people and senior complexes to developments in the Eastern Economic Corridor (EEC), which will drive housing demand in the three provinces that compose the corridor: Chachoengsao, Chonburi and Rayong.
Thai Condominium Association president Prasert Taedullayasatit said that, “when the revised act comes into effect, it will open up the opportunity for foreign buyers to hold residential leases as they do in Singapore and Malaysia. It would boost residential demand when the country is becoming the gateway to the ASEAN (Association of Southeast Asian Nations) Economic Community.”
The law would put Thailand on par with Cambodia, Myanmar and the Philippines, which also offer 50-year leases. Viet Nam recently amended its laws to allow foreigners to apply for an additional 50-year lease after their first lease expires. Singapore and Malaysia lead the region and allow leases for a maximum of 99 years.
Photo courtesy of realestatethailand.com