New Law to allow falang ownership of land

[prchunter]

    While this new law may not be for everyone, it might actually be a better opportunity then most think.  Of course to play this financial game you need a min 3 mil usd min of net worth to play.   Note that this will be a long term investment and I'm really just thinking out loud about this.   I welcome discussions to adjust this model, but I will not respond to trolls.  

 

     First off from my limited research locals prefer to buy land and build houses over buying condo's which are perceived by locals as expensive.  (This is why it's difficult to sell 2nd hand Condo's even in prime Bangkok locations, but that's another topic).  So land in prime areas are actually much more liquid then condos.  Secondly people need to realize we are in a recession so despite Condo prices holding, land prices actually have fallen.  Third point is the Thai Baht is actually at a multi year low.  Many expect the baht to fall to around 42 to 1usd.  As the world slowly recovers we might see 30 to 1 usd in 8-10 years time.  That's a 40% gain.  For the sake of math we will say 4% a year.  

 

    The price of admissions is to invest 40 mil into something in thailand.  This can be put into a stock investment for or a real estate fund.  A basket of thai blue chip stock that yields cash dividends will net you somewhere in the neighborhood of 4% a year (PTT stock yields north of 7% so this is realistic).  On top of that you can expect a 4-10% increase in share price per year just due to inflation.  So you are looking at your 40mil investment netting 4% currency +4% div +2-5% capital increase = 10-13% per annum.

 

    The land itself let's just say you buy near Banga for another 40 mil.   Land usually appreciates with inflation which historically has averaged 3.9% for the last 45 years.  You are looking at 4%+3.9% for a steady 7.9% per year. 

 

   For your 80 mil a blended return of 9%-10.5% a year.   More if you get lucky with your land location for your stock picks.  This is not for everyone but for a financial investor this is actually not a bad return for your efforts.  

[In the jungle]

Have at it and good luck.

[ezzra]

40 mill, 80 mill.. you're talking telephone numbers here that non or very, very few on this forum have access to this kind of cash...

[Onerak]

54 minutes ago, prchunter said:

 First off from my limited research locals prefer to buy land and build houses over buying condo's which are perceived by locals as expensive.  (This is why it's difficult to sell 2nd hand Condo's even in prime Bangkok locations, but that's another topic). 

Agree. Every Thai workers who worked in my condo said they had already bought or would buy only houses. Not condo. I think most Thais (if they have money after buying houses) buy condo as an investment for rental properties.

[Maha Sarakham]

Most people come to Thailand for an affordable retirement, where they can get more value from their money than they can in their home countries.

 

I'd imagine very few people are sitting on 40 mil baht let alone looking to invest that aggressively at this stage in their lives.

[nobodysfriend]

When I was young , I was poor , but more happy than today .

Now , being old , I own too much ... too much I have to care for .

That means I have to spend a lot of precious time to keep things ( in good condition ) .

I would prefer to spend this time on something else .

" Downsizing " is the word for me now . Just what I really need . And not too much . Time is becoming more precious the older you get .

And I do not want to waste it caring for ' things ' .

[Peterw42]

OP, some great "theoretical" numbers in your post.

Maybe you can explain why these numbers are not reflected in the real world ?

Thai wife owns a house in suburban Bangkok, 2 story, 4Br, 2 bath, moobaan etc. She has owned this house for 15 years, in those 15 years, the value hasn't gone up 4%pa (to realisticly sell it would be the same as original purchase price) , the yield hasn't increased (still around 2-3%), the house next door has had a "for sale" sign on it (and no tenant/yield) for 6 of those years (asking what it was purchased for 5 years prior).

I can pull up an historical SET (thai stock market index) chart, and 10 years ago, the value was around 1500-1600, the same as today. 

Am I missing something

[rwill]

The law has is not in effect yet.  There are also those trying to keep it from happening.

[Smokey and the Bandit]

11 hours ago, ezzra said:

40 mill, 80 mill.. you're talking telephone numbers here that non or very, very few on this forum have access to this kind of cash...

Quite so, even if they did, who in their right mind would invest that much money knowing that the Thai government could change their mind again next month, or they could be kicked out of the country?

[LukKrueng]

Looks great on paper, but....

 

https://aseannow.com/topic/1276728-foreign-land-ownership-proposal-can-be-canceled-if-thai-people-don’t-agree-says-the-minister-of-the-interior/

[hotchilli]

14 hours ago, prchunter said:

Note that this will be a long term investment and I'm really just thinking out loud about thi

Rent long term and keep your money in your bank... 

[Dogmatix]

Meant for Chinese, not falangs.

PTT div yield is 5.25% net of 20% withholding tax, not north of 7%.

 

I don’t think you can invest in stocks. Govt bonds or REITs only most likely. Listed REITs pay high divs and not bad.

 

What makes you think land prices in urban areas eligible for this scheme have been falling? They did in the Tom Yung Kung crisis of 1997 which was devastating for Thailand but not in the 2008-9 GFC and not that I have seen during COVID.

 

I seem to recall that the 2002 ministerial regulations required construction to commence within 1 year on raw land and would expect something similar to prevent speculation on raw land. Of course you could buy a ready made house. 
 

The capital appreciation potential for structures is different from raw land, as most rich Thais want to demolish the house, even if in good condition, and build their own design. You might only get the value of the land. So best to build a modest shack.

 

no rights of inheritance for foreign heirs but they get the sales proceeds. The estate must sell the land within 12 months, if heirs are Thai.

 

Hidden costs. You need the minister’s approval for each transaction. Better factor in a signing fee. Since you will have to wait for God knows how long for the paperwork, sellers are likely to charge a higher price, if Thai buyers are interested, and you could be gazumped by a Thai buyer while waiting anyway.

 

These were all factors that came to mind when the law was passed in 1999 but when the ministerial regs came out in 2002, the qualifying investments were no longer available. Anyway I had already gone the company route in 2000.
 

[shackleton]

Only the wealthy need apply the rest of us can only dream ????

[Laphroaig27]

If I had that sort of money I would be waiting for the US RE bubble to burst and looking at coastal property in US - Florida. Property here is still 30-50% overpriced. Even with the US X rate around 38 it's barely an incentive. The only positive thing I can think of is lack of property taxes. But in the end it will never happen, be too much hassle to maintain or have the rug pulled out like last time in the 00s. Remember? Of course not ????

[Laphroaig27]

On 11/4/2022 at 12:47 PM, shackleton said:

Only the wealthy need apply the rest of us can only dream ????

Dream of <1 Rai. That's not much of a dream.

[w5phot]

On 11/4/2022 at 7:16 AM, nobodysfriend said:

When I was young , I was poor , but more happy than today .

Now , being old , I own too much ... too much I have to care for .

That means I have to spend a lot of precious time to keep things ( in good condition ) .

I would prefer to spend this time on something else .

" Downsizing " is the word for me now . Just what I really need . And not too much . Time is becoming more precious the older you get .

And I do not want to waste it caring for ' things ' .

Well said.

 

Happy to pay the premium for renting to avoid owner's corporation meetings and the pains of selling when moving.