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articles relating to the property market in Thailand and
Bangkok for the 'Your Money' section of the Bangkok Post.
He is a co-director of Property Bangkok. |
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| Kingdom set to be new home for foreign retirees |
Kingdom set to be new home for foreign retirees
This article has been included within our articles section
The research report found costs of both property and general living were increasing in Europe while at the same time the quality of life was rising in Thailand, David Simister, chairman of CB Richard Ellis Thailand, said last week.
One example is healthcare, where international-standard hospitals are available in Bangkok and some of the main resort destinations.
Thailand now has the necessary infrastructure to satisfy many foreign retirees, long-stay tourists and second-home purchasers.
According to the report, flying has become more and more affordable, and distance is no longer a barrier.
The emergence of low-cost carriers within Asia has grown dramatically, and it is feasible to fly from Hong Kong or Singapore to Phuket for the weekend.
It is also feasible for someone to live in Europe and fly to Thailand several times a year to use their holiday home.
Although individuals have been constructing holiday homes in Phuket for many years, the first significant development targeting foreign purchasers was the Allamanda condominium launched in Bang Tao Bay in 1991 and marketed overseas by CB Richard Ellis. The majority of purchasers were based in Hong Kong and Singapore.
The financial crash in 1997 halted development in resorts, but activity resumed in 2000 and has been growing rapidly ever since.
Simister added that that there were significant benefits to local economies from second-home developments.
Owners and people who rent properties stay longer and visit more frequently. They are significant users of services, including retailers, maintenance companies and other locally based businesses. Local authorities benefit from property tax on rentals.
Ownership of property reduces volatility in visitor arrivals as there is an incentive for owners to use their own property rather than choose an alternative destination.
There are challenges in the growth of resort property development, especially protecting the environment so that a destination remains attractive but without restrictions that are so onerous that development is not feasible.
Obstacles to the growth of the Thai resort property markets are restricted foreign ownership and a prohibition on lending to foreign property-purchasers.
Under Thai law foreigners are allowed to buy up to 49 per cent in area terms of a condominium.
Foreigners are not allowed to own land, and the maximum length of a lease is 30 years, although developers can offer options to renew the lease to 90 years.
In many resort areas there is not enough local demand for high-end resort condominium units, and so developers are unable to sell the 51-per-cent Thai quota of the building.
The main option open to the developers is to offer 30-year leases plus options to renew, on the Thai-quota condominium units.
Thirty-year leases are not as attractive as freehold or longer leases. They are relatively illiquid because of their shortness, and so there is a limited market in resale.
If offering unlimited ownership of condominiums or freehold land title is not acceptable, then in order to grow the resort property market it will be necessary to offer increased foreign ownership of condominium property and longer leases of 90 years.
If the lease period is changed from 30 years to 90 years, Thailand resorts will have more potential for strong growth, especially with demand from Asia and Northern Europe, Simister said.
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