Breaking Stereotypes About Real Estate in Thailand

Breaking Stereotypes About Real Estate in Thailand

Thailand consistently ranks in the top 5 destinations for foreigners. While it may not always appear as a prime investment option, it remains in the top 10 regions for foreign investors. If you're considering investing in high-yield properties in Thailand, it's essential to understand how it differs from real estate in other parts of the world before making a purchase.

CONTENT:

1. You Can Buy a Villa in Thailand
2. Buying Real Estate Does Not Automatically Grant a Residence Permit
3. Buying Expensive Property Can Help You Apply for a Visa
4. Foreigners Can Buy Apartments
5. You Cannot Use a Mortgage — Payment Must Be Made Upfront
6. There Are No Tourists During the Rainy Season
7. Real Estate Demand in Thailand Is Declining
8. Serious Investors Avoid Cheap Housing in Thailand
9. High Market Competition Reduces Profitability
10. Transferring Money to Thailand from Some Countries Is Difficult

Conclusion

1. YOU CAN BUY A VILLA IN THAILAND

There are frequent discussions online and in the media about purchasing mansions in resort countries. However, only wealthy foreigners can buy a house in Thailand under special conditions.

An alternative when purchasing a villa is a leasehold. Essentially, this allows for long-term rent — up to 30 years. The tenant can then resell their lease rights or legally rent out the property to tourists. This arrangement is advantageous as the buyer doesn't need to pay property taxes. For many investors, this is a sufficient option.

2. BUYING REAL ESTATE DOES NOT AUTOMATICALLY GRANT A RESIDENCE PERMIT

In many countries, purchasing real estate can lead to a residence permit for foreign nationals. For instance, in Turkey, buying almost any property qualifies you for residency. However, this is not the case in Thailand.

Thailand offers the possibility of obtaining a Thai Elite visa, but only when buying property worth more than THB 10 million ($306,025).

3. BUYING EXPENSIVE PROPERTY CAN HELP YOU APPLY FOR A VISA

Purchasing high-value real estate in Thailand allows foreigners to apply for a visa that grants a stay of 5 to 20 years. The Thai Elite program offers more than just a regular visa. Here’s how it differs from a residence permit:

• It does not grant citizenship.
• It is valid for up to 20 years.
• You can use a dedicated line at the airport, access waiting lounges, and enjoy airport transfers.
• It provides discounts and privileges at various establishments.
• You receive assistance with bureaucratic issues.
• You can visit medical facilities.
• You gain access to sports complexes and spas.

The Thai Elite visa is more of a VIP privilege than a standard visa.

4. FOREIGNERS CAN BUY APARTMENTS

Foreign nationals can purchase condominiums in Thailand regardless of their income or investments in the economy. However, there are some legal restrictions on such purchases.

Foreigners can only buy property in a condominium when 51% of the units have been purchased by Thai residents. As a result, housing in new developments becomes available to foreign investors only after a certain percentage of sales to Thai buyers is achieved.

5. YOU CANNOT USE A MORTGAGE — YOU HAVE TO PAY IMMEDIATELY

In many countries, investors can easily access local mortgage loans, but in Thailand, obtaining a loan from a bank is quite challenging for foreigners.

However, there are alternative options for financing when purchasing property in development projects in Thailand. For example, foreign investors can arrange installment plans directly with the developer. In this case, the initial payment is typically 20-30%, and the remaining amount can be paid over several years.

6. THERE ARE NO TOURISTS DURING THE RAINY SEASON

This myth is inaccurate in two ways. First, the rainy season does not affect the entire country. While in Phuket it may rain for several consecutive days, other parts of the country, such as Pattaya and Bangkok, only experience rain in the mornings during these months. Therefore, the rainy season does not have a significant impact on demand in these areas.

Second, in recent years, there has been an increase in expatriates renting properties for extended periods (1 year or more), partly due to the introduction of Thailand's LTR visa program, which allows freelancers with stable incomes to stay in the country.

7. REAL ESTATE DEMAND IN THAILAND IS FALLING

Statistics from the first 9 months of 2022 revealed that real estate prices dropped by 2.65% over the year. However, housing sales actually increased. This indicates that the price drop was due to the local purchasing power of Thais, while the demand for luxury properties remains strong.

8. SERIOUS INVESTORS DO NOT INVEST IN CHEAP HOUSING IN THAILAND

The idea that serious investors avoid affordable housing in Thailand is a myth. Although low-priced properties are available, they are not usually intended for investment purposes.

For investment properties, the minimum price threshold is around $100,000, similar to other countries. Additionally, Thailand offers numerous high-end and ultra-luxury projects. For instance, Bangkok has more than 400 apartments priced at over $1 million, and in Phuket, it is easy to find mansions costing several million or even tens of millions of dollars, complete with stunning sea views.

9. HIGH COMPETITION IN THE HOUSING MARKET REDUCES PROFITABILITY

There are plenty of investment opportunities in Thai real estate, but rental yields remain stable, especially on the islands. In 2022, even when tourist numbers were a third of those seen in 2019, the average rental yield in Phuket was 6.77%.

In 2023, the government anticipates a surge in tourist arrivals, potentially more than double the previous numbers. As a result, property yields in Thailand are expected to increase, potentially reaching average values of 8-9%.

10. IT IS IMPOSSIBLE TO TRANSFER MONEY FROM SOME COUNTRIES TO THAILAND

After sanctions were imposed, initial restrictions made money transfers difficult, but the situation has since improved. Some governments, such as that of the Russian Federation, have relaxed strict bans on transactions, and developers have begun accepting payments in rubles and cryptocurrencies. Therefore, investors can always find ways to complete their purchases, and experienced realtors can suggest the best options.

CONCLUSION

Buying property in Thailand, like in any foreign country, is surrounded by myths. This article dispels some of the most common misconceptions and highlights how real estate investments in this resort destination can be highly profitable.