Published: 9th September 2013
The property market in Thailand has fallen short and not achieved the same demand as other Asian markets, with the obvious exception of the boom in Bangkok in the early noughties. The sales in the Bangkok business district were mostly contributed to foreigners who were responsible for 35% of the sales prior to the crisis, this figure is now down by 20%.
The obvious reason for this is the lack of mortgages available to foreign buyers. However, the state of the European and US economies plus the strength of the Thai baht are partially to blame. Unless overseas buyers are in a position to pay cash there will be very little chance they will obtain a mortgage even if they have a large deposit.
The 1991 Condominium Act states that foreigners can buy up to 49% of a condominium development but the money must be transferred from abroad. This is a requirement from the Land Department that non-residents provide a Foreign Exchange Transaction form that proves the funds arrived in a foreign currency only then would the ownership of a property in Thailand be transferred. This makes it impossible for foreigners to obtain a mortgage in Thailand.
Unfortunately this law also applies to expatriates working in Thailand as they to have to provide a 50% deposit if they would like to purchase a property and provide a Foreign Exchange Transaction form. Therefore Thailand is not in a position to compete with markets such as Hong Kong and Singapore which allow foreigners to take out a mortgages for investment.