Thailand Property Investments 2019: A Safe Passive Income

Thailand is the worlds 50th biggest country by size and Bangkok city (Thailand’s capital) is the most  populated tourist destination in the world.

As you may expect, Thailand’s main exports are textiles and footwear, fishery products, rice, rubber, jewelry, automobiles, computers and electrical goods.

Famous brands like Red Bull (which originates from Thailand) are also distributed globally. Furthermore, if you open up your computer and check the label on your hard drive, it’ll most likely have a sticker that says “Made in Thailand” on it. 

Thailand is ranked within the top 15 countries in the world for exporters of cars, electronics, and hardware. 

Besides manufacturing and exports, Thailand features a massive services sector. Thailand’s startup community is additionally seeing rapid climb and continued success in recent years.

Over the past few decades Thailand has transformed itself into a central business hub in the heart of Southeast Asia. There  are no signs of it slowing down.

As of 2019 Thailand continues to maintain a very strong exchange rate and international export trade deals with the rest of the world remain solid.

The real estate market and Thailand property investment opportunities for local and foreign investors continues to grow. 

Thailand’s strategic placement within Southeast Asia has defiantly contributed to its success in interest of investors looking its real estate market.

Owning a piece of Thailand property has become very popular amongst local and foreign investors looking to own a second home or a secure a passive income.

Bangkok is only an hour or two long-hour flight from several rapidly growing developing countries. In particular in Vietnam, Cambodia, Laos, Myanmar, Philippines, and Bali.

Many of the above mentioned countries are amongst the fastest developing in countries the world. In Addition,  they also provide Thailand quick access to low cost labor.

These countries also provide Thailand with nearly 200 million customers combined.

Lots of these factors have led to continued interest with foreign investors looking at Thailand property investments.

With continued interest from investors over the past thirty years Thailand has cemented itself as one of Southeast Asia’s most dynamic countries.

Thailand’s steady economical growth has naturally extended to its property market and its not just foreign investors who are buying. 

A middle class citizen has emerged in Thailand which barely existed a couple of decades ago.

This new emerging class of citizens are capable of buying Thailand properties in the numerous new condos and housing developments.

 

Thailand Property

Thai law forbids foreigners from owning land in their own name. If a foreign investor is interested in buying Thailand property, they have just two options: either applying for a 30-year leasehold or purchasing the property through a limited company. The most common and easiest approach is to set up your own Thai limited company to own the land on your behalf.

Condominiums can be purchased by foreigners as long as a minimum of 51% of the building is owned by Thai nationals.

Leasing land in Kingdom of Thailand

As we already mentioned,  foreigners can lease land in Thailand for a minimum of thirty years. However, leasing isn’t a very common approach, in most cases this happens once an overseas man marries a Thai citizen: the Thai woman, as a Thai citizen, purchases the land and stipulates a lease agreement together with her foreign husband.

Regardless of who you lease from, be sure to check that all information on the deed is accurate and that the land you’re leasing has the appropriate title.

More often than not, the leasing contract states;

  • Duration of the lease
  • Buyers right to sell it
  • Registration fees

What are land titles?

Land can have completely different titles in Thailand, factors such as its location or whether or not it is leased to a foreigner or not. There are seven kinds of land titles however just 3 of them can be leased to foreigners :

  1. Chanot
  2. Nor Sor Saam
  3. Nor Sor Saam Gor

For more information on title deeds visit the department of lands website

Buying Thailand property through a Thai Limited company

The quickest and easiest way a foreigner can purchase Thailand property, is to set up a Thai limited company

Bear in mind that as a foreigner, you can’t retain more than half of the company’s shares. This means the company has got to be a minimum of 51% owned by a Thai national.

The chosen Thai citizen can then opt to give up their company rights to you. Note, that the Thai Immigration office is aware of this type of procedures and can definitely monitor your business so be prepared.

Foreigners buying condominiums

Due to the legal restrictions mentioned earlier, most foreigners opt to simply purchase a condominium or apartment in Thailand. However, a foreigner can only purchase a condominium in his/her own name, as long as a minimum of 51% of the building is owned by Thai citizens.

Thailand Property

Off-plan condominium investments arise when the developer of the condominium project sells the apartment units before and during the construction process.

Generally speaking it takes 3 to 5 years for the average condominium building to complete construction from the time sales initially begin. Due to this, there’s a market for investors in buying units off-plan, and selling them at a profit once the building is nearer to being finished.

In most cases investors can reserve units and sign contracts after making a deposit of 10%. Then another 10% is paid gradually over the course of a few years. Installments are payable on a monthly basis.

Over a short period of just a few years, property values should appreciate considerably. There are cases of individuals buying units off-plan and selling the contracts years before completion at premiums higher than 100%.

Investing in off-plan condominiums in Thailand also has its inherent risks. The worst-case scenario would be finding that your developer has abandoned the project and walked away with any payments you made.

There is also the possibility that you simply abandon the contract, and again lose your deposit and any installment payments previously made.

This could theoretically happen if, for instance, property values drastically decline or you don’t have cash available to complete the transfers in time.

The cost of property taxes in Thailand has to be taken under consideration when purchasing a property, regardless of whether it’s for investment purposes or not.

Property taxes can chip away at your return on investment, it’s best to get an understanding on the property tax rates before committing to any financial investment.

If you plan on investing in Thailand property you could also face the additional concern of taxes on your rental income.

 

Tax Who pays Amount
Transfer fee Buyer 2% of registered value
Stamp Duty Seller 0.5% of registered value
Withholding Tax Seller 1% of appraised value or registered sale value (whichever is higher)
Business Tax Seller 3.3% of appraised value or registered sale value (whichever is higher)

Thailand has rather solid property possession laws in place, and a secure, computerized title system. So legally speaking if you have the title deeds in your name you shouldn’t have any issues with the Thai government supporting any potential disputes with your Thailand property.

On the off chance that any issue is going to come up, it will be from the condominium developers. Its always recommended you have a legal expert check your documents before committing to any financial agreement.

When buying off-plan it would be wise to research the developers history and be confident they are able to complete the project they are proposing. 

That being said, there are many property developers in Thailand with great past histories with many completed projects under their belts. If investing into off-plan property in Thailand is something your interested in, then you shouldn’t have any issues finding reliable project developers to trust.

Thailand Property

With nearly 70 million citizens its fair to say that Thailand is a fairly large country, as such there are many  urban communities, towns, cities and resorts which are extremely popular with investors looking to own a piece of Thailand property.

The most common question we get asked is“Where is the best place to invest in Thailand property?”

Bangkok, a city of more than 16 million people, is the capital of Thailand and the biggest city in Indochina. 

Compared to other neighboring cities in the region, like Singapore and Hong Kong, Bangkok is more affordable for expats with easy access to cheap accommodation.

Chiang Mai, Thailand’s second biggest city, is additionally not an awful spot to purchase land.  While a great deal of foreign investors are buying up condominiums in popular tourist resort areas like Pattaya, Phuket, Hua Hin and Koh Samui. 

– Lumpini

As Bangkok’s most exclusive area, Lumpini Park and its encompassing streets (Wireless Road, Soi Langsuan, etc.) are also some of the most expensive neighborhoods of the city.

New property developments on Wireless Road, for instance, are known to reach prices as high as 500,000 baht per square meter.

The reason for these high costs is that Lumpini is incredibly central, yet its also rather quiet, clean and spacious.

Streets here are manicured, while Lumpini Park ( inner Bangkok’s largest green space ) adds a sense of calm hard to find elsewhere in central Bangkok.

The embassies found in Wireless Road help make the neighborhood safe, less noisy, and spacious. The American, Vietnamese, and British embassies among others are all close by.

Lumpini is positioned between lots of prime areas. Namely, the business districts of Silom and Sathorn, the commercial center of Thailand. Needless to mention, a BTS station isn’t hard to find.

– Silom/Sathorn

The Silom and Sathorn districts are where most of Bangkok’s financial institutions and multinational corporations are based. As such, the areas are popular with both rich locals and expats who work in Bangkok.

As it’s Bangkok’s central business district, costs of Thailand property here are expectedly high.

Residents of Silom and Sathorn do benefit from quick access to the rest of Bangkok due to close proximity to BTS stations.

A variety of international restaurants and other amenities are always within walking distance too.

– Sukhumvit

The section of Sukhumvit which runs through downtown Bangkok, specifically from Nana up to Soi Ekkamai including its BTS station is the most popular.

This strip of Sukhumvit is also one of the most popular expat areas with numerous international restaurants serving everything from Argentinian to Japanese food.

Thonglor, Asok, and Ekkamai make up the areas most desirable places to live and buy Thailand property.

Moving southeast on Sukhumvit, the Thai neighborhoods become rather more native. you’ll obtain a condominium in these areas for under half the price of those in Sukhumvit’s “downtown” section.

– Ratchathewi

Ratchathewi is arguably Bangkok’s most central district. It has several BTS stations together with an airport rail link.

Furthermore, Ratchathewi district is directly north of the Bangkok’s business hub Silom/Sathorn. It’s also directly west of Thailand’s political center of Dusit.

Despite these factors, costs here are cheaper than the other core locations in Bangkok. Occupancy rates in Ratchathewi are some of the city’s highest too.

The atmosphere of Ratchathewi is a lot more native and you won’t find as many expats as you would in Sukhumvit or Silom. Nevertheless, the area is close to government offices just like the united nations and is just a stone’s throw from most places in central Bangkok.

Soi Rangnam and the nearby Victory Monument are considered to be Ratchathewi’s most desirable residential areas to buy Thailand property.

The King Power complex, Bangkok’s largest duty free mall, is on the road along with countless restaurants and stores.

– Riverside

Bangkok’s chao phraya river has become popular among foreigners, retirees and second home owners in particular looking for Thailand property.

Luxury condos can provide some great scenic views on the riverside here.

Thailand property located on the west side of the river can be found at lower costs in comparison to the East side. That’s as a result of easier access to Bangkok’s central downtown from the east side.

If your located on the west side you must either drive across a busy bridge or take a boat in order to get to Bangkok’s city center.

Malls, hotel branded residences, and a few of the city’s soon-to-be tallest buildings being built here.

However, occupancy rates on the riverside are low when compared to other locations.

The general public and private sector are rejuvenating the area with countless developments of all kinds being built.

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