The Thai 49% Rule On Foreigners Legally Owning Condominiums

[pkrv]

I have been contributing to other threads on the Thai High end Condominium market, but do not wish to confuse issues so have started a new thread.

I note the 49% rule on legal foreign ownership of a Thai condominium. I do however have some questions that I cannot answer.

Is there a similar rule in Malaysia?

Is there a similar rule in Hong Kong?

Is there a similar rule in Singapore?

A lot of high-end Thai condominiums achieve day one 40-50% sales. Is this a coincidence?

[pkrv]

Title Should have said "Is this Good For Economic Growth, or does it Stunt it? Is it Good or Bad for Thais?" - got truncated...

[CRUNCHER]

I have been contributing to other threads on the Thai High end Condominium market, but do not wish to confuse issues so have started a new thread.

I note the 49% rule on legal foreign ownership of a Thai condominium. I do however have some questions that I cannot answer.

Is there a similar rule in Malaysia?

Is there a similar rule in Hong Kong?

Is there a similar rule in Singapore?

A lot of high-end Thai condominiums achieve day one 40-50% sales. Is this a coincidence?

As for Hong Kong there are no restrictions. If you have the money you can buy what you want, where you want and as much as you want.

All land in Hong Kong is owned by the Government. All flats, houses etc are effectively on leasehold or rather the land on which they are built is. Almost all leases are good until 2047. Of couse all flat, house owners etc pay Government rent every quarter. Could be the way for Thailand to go, but I doubt it.

[anthonyaus]

Well it's their country, why wouldn't they be able to have 49 % ownership anyway, why would they not want to.

The foreigners, if they want to live here still can.

I see it as immaterial

[pkrv]

CRUNCHER - I must confess I did consider the old trading port on the Chinese main land (all be it involuntarily by Chinese standards), but there all property is owned by the state and your right to continue to own it appears to be rubber-stamped.

Has the same happened of Hong Kong or was it always leasehold?

Thailand does offer free hold condominiums admittedly under a 49% rule.

[Maigo6]

CRUNCHER - I must confess I did consider the old trading port on the Chinese main land (all be it involuntarily by Chinese standards), but there all property is owned by the state and your right to continue to own it appears to be rubber-stamped.

Has the same happened of Hong Kong or was it always leasehold?

Thailand does offer free hold condominiums admittedly under a 49% rule.

PKRV,

Isn't it wise to buy a house instead, what happens if the condo falls down, goes into disrepair, gets old and is no longer financially viable, people don't pay the monthly charges for security, the lifts break down........

Would you buy a house if you could instead, or would you stick to buying condos?

[CRUNCHER]

CRUNCHER - I must confess I did consider the old trading port on the Chinese main land (all be it involuntarily by Chinese standards), but there all property is owned by the state and your right to continue to own it appears to be rubber-stamped.

Has the same happened of Hong Kong or was it always leasehold?

Thailand does offer free hold condominiums admittedly under a 49% rule.

Basically it has always been that way (there are a very few minor exceptioons in the New Territories). Leases used to variable, but after the handover to China in 1997 all leases were extended to 2047 on the basis that China promised no changes fo 50 years. What happens in 2047 is anyones guess at the moment.

The system works well, but prices - WOW!

[pkrv]

Well it's their country, why wouldn't they be able to have 49 % ownership anyway, why would they not want to.

The foreigners, if they want to live here still can.

I see it as immaterial

Opps before we go way off track here foreigners are only able to own 49% of a Thai condominium - Thai ownership by law is 51%, it not a question of their country, we are all guests and if we forget that we are fools, it is an open question. I note Australian laws for example on UK ownership of condominium property, investment is now immaterial what are the other countries doing?

[pkrv]

Oddly replies have been mixed up over a very short time.

Maigo6 - This is a thread about the 49% Ownership in Condominiums, the only legal way for a foreigner to buy freehold property in Thailand all other considerations are sadly secondary.

CRUNCHER – I understand about the new territories, but not that all was leasehold else where!

Anthonyaus – Apologies I think you got hold of the wrong end of the stick here, email posts etc, all difficult stuff. I trust no misunderstanding?

[jumnien]

I own 4 condos and shudder at the thought of living in a building with 100% foreigner ownership. The Thai owners and Japanese, as well, provide a grounding to the atmosphere that would evaporate if "les farang bizarres" took over completely. Same with the illegality of farang owning land - the law protects us farang living here far more than it hurts us. If farang could own land, most of us farang would move elsewhere.

[backflip]

"A lot of high-end Thai condominiums achieve day one 40-50% sales. Is this a coincidence?"

A coincidence of what? Thais are allowed to buy 100% of a condo building, and are not limited to 51%.

Since you are "in the know" and are a frequent contributor to the forum concerned with the "high-end condo market", I'd like a list of condominiums that have sold 50% of its units to Thais in one day. Thanks.

It's incredibly easy to get early information on, and to get first pick of, condo developments...and you don't have to be Thai! Too, while farangs dawdle over the size of bathrooms and the color of the walls, Thais buy quickly.

[dada]

I favor the Thai system over that of HK at least foreigners can buy outright here.

I agree also on: Who would want to live with abunch of another farangs anyway.

The 49% rule is a good idea and in noway unfair.

Edited May 2, 2007 by dada

[Abrak]

lot of high-end Thai condominiums achieve day one 40-50% sales. Is this a coincidence?

In my experience of Thai condo sales it is the mid to low end - typically condos of Bt1-2m each - that achieve day one sales of 45-50% or even more. These units are bought almost exclusively by Thais and so the 49% foreign ownership rule is a moot point.

I can hardly think of a high end condominium - average price say over Bt6m - that has achieved 40% sales in a couple of days. Certainly not in recent years in any case.

(Of course in Thailand there are always projects that claim 30% sales before they are even launched but that is no more than normal pre-sales pitch to would be buyers).

[anthonyaus]

Oddly replies have been mixed up over a very short time.

Maigo6 - This is a thread about the 49% Ownership in Condominiums, the only legal way for a foreigner to buy freehold property in Thailand all other considerations are sadly secondary.

CRUNCHER – I understand about the new territories, but not that all was leasehold else where!

Anthonyaus – Apologies I think you got hold of the wrong end of the stick here, email posts etc, all difficult stuff. I trust no misunderstanding?

No we're cool, my post was confusing anyway. I agree with the Thais wanting to control 51%. Offering the foreigner up to 49% ownership of of a condo bloc is a fair concession.

Selling out that quick though???

I have no experience with the new unit market.

[pkrv]

I own 4 condos and shudder at the thought of living in a building with 100% foreigner ownership. The Thai owners and Japanese, as well, provide a grounding to the atmosphere that would evaporate if "les farang bizarres" took over completely. Same with the illegality of farang owning land - the law protects us farang living here far more than it hurts us. If farang could own land, most of us farang would move elsewhere.

Sorry the responses have been very complex - As in effect I/we am/are exploring new things I guess I need to make a reply to each post.

mdeland

The words cultural integration comes to mind slow but steady?

[pkrv]

"A lot of high-end Thai condominiums achieve day one 40-50% sales. Is this a coincidence?"

A coincidence of what? Thais are allowed to buy 100% of a condo building, and are not limited to 51%.

Since you are "in the know" and are a frequent contributor to the forum concerned with the "high-end condo market", I'd like a list of condominiums that have sold 50% of its units to Thais in one day. Thanks.

It's incredibly easy to get early information on, and to get first pick of, condo developments...and you don't have to be Thai! Too, while farangs dawdle over the size of bathrooms and the color of the walls, Thais buy quickly.

backflip - I guess here I was exploring the economic issues from a foreigners perspective. When I have been looking at the high-end market from past experience I have seen that the 49% foreign ownership quota can sell out relatively fast (and I guess there have been legal consequences for this). I was just wondering if this is what is being reported as a part of the sales reporting process. Does this clarify this aspect of the question?

[pkrv]

I favor the Thai system over that of HK at least foreigners can buy outright here.

I agree also on: Who would want to live with abunch of another farangs anyway.

The 49% rule is a good idea and in noway unfair.

dada - I must confess it is difficult for me to understand why anyone would now buy in Hong Kong, commercially Thailand is a far better bet.

I agree by the way on the 49% rule, however I have a feeling that there may be a foreign 'pent up demand' within the Thai condominium market which if not acknowledged could theoretically cause problems for everyone (foreigners and Thais together)

Edited May 2, 2007 by pkrv

[dada]

If there is indeed pent up demand then the market can respond if it wants to by creating zones where the 49% rule does not apply

[pkrv]

If there is indeed pent up demand then the market can respond if it wants to by creating zones where the 49% rule does not apply

I somehow think that ghettos are not perhaps the correct answer. If theoretically what I have said is true what would be the minimum % sale on a condominium for it to guarantee to break even? (And hence steady the course)

[quiksilva]

I assume you mean how many units should be sold in a project, if so you can use a rough figure of 60% b/e point.

I think the system works just fine as it is by the way.

Edited May 2, 2007 by quiksilva

[pkrv]

Thanks quicksilva (and indeed Abrack) for the comments all thought provoking.

Any news on how Malaysia and Singapore handle the ownersip of condominums issue?

[Meerkat]

dada - I must confess it is difficult for me to understand why anyone would now buy in Hong Kong, commercially Thailand is a far better bet.

I think HK is still not a bad place to invest. Foreigners can buy anything they like, and whilst properties there are all leasehold (the only freehold land in HK is St. John's Cathedral in Central - I'd love to know what that's worth now, at least in theory!), the leasehold is usually 999 years rather than the 50 as was mentioned above. There's no CGT, money is still pouring in from the mainland, and space is comparatively limited. Law is largely based on the the English model and at an everyday level, corruption is low.

The biggest downside I can see is the often-high entry price. Of course you could just buy REITs to gain exposure that way instead (and expect to see other property derivatives coming on-stream in the next year or so too).

[Meerkat]

Any news on how Malaysia and Singapore handle the ownersip of condominums issue?

Foreigners in SGP can buy condos, but not land. Actually there is provision for foreigners with PR status to buy land, but it needs specific government permission and there are certain restrictions (so I've been told by a mate in the industry over there). Leases are usually 99 or 999 years, and again I'm told that it's a fairly simply process to extend a leasehold if necessary.

[Naam]

Who would want to live with abunch of another farangs anyway.

[pkrv]

Any news on how Malaysia and Singapore handle the ownersip of condominums issue?

Foreigners in SGP can buy condos, but not land. Actually there is provision for foreigners with PR status to buy land, but it needs specific government permission and there are certain restrictions (so I've been told by a mate in the industry over there). Leases are usually 99 or 999 years, and again I'm told that it's a fairly simply process to extend a leasehold if necessary.

Thanks Meerkat - From what I have seen the only freehold option is actually in Thailand (or are Singapore condo's freehold?). Something I forgot, but am unsure if is correct, is that the 49% rule was introduced to mop up some of the mess of the '97 crash. If that is the case it shows quite a healthy/dynamic profile to change and adversity.

[Naam]

Leases are usually 99 or 999 years, and again I'm told that it's a fairly simply process to extend a leasehold if necessary.

not exactly simple for the original lessee

[donx]

Any news on how Malaysia and Singapore handle the ownersip of condominums issue?

Foreigners in SGP can buy condos, but not land. Actually there is provision for foreigners with PR status to buy land, but it needs specific government permission and there are certain restrictions (so I've been told by a mate in the industry over there). Leases are usually 99 or 999 years, and again I'm told that it's a fairly simply process to extend a leasehold if necessary.

Thanks Meerkat - From what I have seen the only freehold option is actually in Thailand (or are Singapore condo's freehold?). Something I forgot, but am unsure if is correct, is that the 49% rule was introduced to mop up some of the mess of the '97 crash. If that is the case it shows quite a healthy/dynamic profile to change and adversity.

My understanding is that the 49% rule has been in effect for quite some time. I may not have this right but I believe the percentage of ownership of some condos in Bangkok were increased to 100% as a result of the '97 crash. I believe these special provisions are no longer in effect. I wonder what happens when one of these condos is sold. Are they allowed to sell to a foreigner? Can these projects remain higher than the 49% ownership rule? How many projects actually ended up being owned beyond the 49% limit?

pkrv, you never responded to the post by Abrack about not knowing any high end condos being 49% sold in the first few days of a project's opening. Can you identify any such projects?

[CRUNCHER]

dada - I must confess it is difficult for me to understand why anyone would now buy in Hong Kong, commercially Thailand is a far better bet.

I think HK is still not a bad place to invest. Foreigners can buy anything they like, and whilst properties there are all leasehold (the only freehold land in HK is St. John's Cathedral in Central - I'd love to know what that's worth now, at least in theory!), the leasehold is usually 999 years rather than the 50 as was mentioned above. There's no CGT, money is still pouring in from the mainland, and space is comparatively limited. Law is largely based on the the English model and at an everyday level, corruption is low.

The biggest downside I can see is the often-high entry price. Of course you could just buy REITs to gain exposure that way instead (and expect to see other property derivatives coming on-stream in the next year or so too).

I have owned a number of properties in Hong Kong. None of the leases go beyond 2047. There are a few exceptions in NT I believe, but I do not know details.

Until the Sino/British agreement few leases extended beyond 1997. This made banks jittery on the question of mortgages and of course property delopers in investing in new developments. This was one of the reasons why the British Government pushed the Chinese into talks on Hong Kong's future. When the leases were extended it was done unilaterally by the HK Government - no cost. Presumably that will happen as 2047 draws near, but nobody knows at this time.

HK is a good place to invest in property if you can afford it. Like anywhere else you need to understrand the market.

Some people in the business in Pattaya were recently predicting that farang ownership of condos would soon be increased to 70%, but that rumour seems to have died a death

[Meerkat]

Quite an interesting (if you like that sort of thing!) paper from one of the HK universities about the relative valuation of long-term (999 year) leases in HK versus short-term ones here:

http://www.citb.gov.hk/cib/psdas/content/d...aper_KWChau.pdf

[cuica]

I wonder what happens when one of these condos is sold. Are they allowed to sell to a foreigner? Can these projects remain higher than the 49% ownership rule? How many projects actually ended up being owned beyond the 49% limit?

If anyone can shed some light on these questions it would be most appreciated. What I think donx is asking is whether a Thai owner of a condo can resell it to a foreigner and upset the 49% limit? I have always wondered about that.

Regards.