THAILAND Trends and Developments Contributed by: Shunsuke Minowa, Yosuke Konno, Poonyisa Sornchangwat and Natthapa Jirathawong, Nagashima Ohno & Tsunematsu
Nagashima Ohno & Tsunematsu 34th Floor, Bhiraj Tower at EmQuartier 689 Sukhumvit Road Klongton Nuea Vadhana Bangkok 10110 Thailand Tel: +66 2 302 4800 Fax: +66 2 302 4899 Email: shunsuke.minowa@nagashima.com Web: www.nagashima.com/en
Overview and Recent Trends in Thailand’s Real Estate Sector Thailand’s economic growth has been driven signifi - cantly by the real estate sector. However, recent fluc - tuating market conditions have affected Thailand’s real estate sector in various ways. Despite the changing trends in Thailand’s real estate sector, both Thai and foreign investors have contin - ued to pursue new real estate development projects in Thailand. In recent years, Thailand’s real estate sector has continued to attract foreign investors, reflecting a growing trend in inbound investment. Thai investors, being more familiar with local proce - dures, may find it easier to navigate the system. On the other hand, foreign investors must be diligent in understanding the local market conditions and adher - ing to the Thai regulatory framework, which, in some cases (eg, the foreign land ownership restrictions), is even stricter than that applicable to Thai investors. Therefore, foreign investors must carefully consider the appropriate approach to entering Thai’s real estate market. In particular, they should be mindful of occa - sional amendments to the regulatory framework, which could impact operations in the real estate sec - tor. This article further elaborates on key recent issues of note for foreign investors in Thailand’s real estate market.
Right to Hold Real Property in Thailand: Notable Core Insights for Foreign Investors Restriction on foreign ownership of land Prohibition on land ownership It can be challenging for foreign investors to invest directly in Thailand’s real estate sector given the various practical and legal constraints, especially the stringent restrictions on land ownership by foreign investors. Under the Land Code of 1954 of Thailand (“Land Code”), a limited or public limited company is considered a foreign entity if (i) more than 49% of its registered capital is held by foreign nationals, or (ii) half of its shareholders are foreign nationals. If a company is considered a foreign entity under these criteria, it is generally not permitted to own land in Thailand unless a statutory exception applies. In practice, most foreign investors opt to invest in Thailand through a locally incorporated company ‒ often in the form of a joint venture with local develop - ers ‒ so that the joint venture company can legally own land in Thailand. Since foreigners generally cannot own land, stan - dalone ownership of buildings is practically and legally limited. Limitation on foreign ownership of condominium units While foreigners generally cannot own land in Thai - land, under the Condominium Act B.E. 2522 (1979), foreigners can own condominium units subject to the “49% Foreign Quota,” which allows foreign investors
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