How Can You Benefit from Purchasing a Luxury Villa in Thailand?

How Can You Benefit from Purchasing a Luxury Villa in Thailand?

Thailand is a popular vacation destination that draws millions of tourists each year. This Southeast Asian country is also an attractive option for real estate investment. In this article, we explore whether foreigners can own villas in Thailand and why investing in property there can be advantageous.

CONTENT:

1. Current State of Thailand's Real Estate Market
2. Best Locations to Buy a Villa in Thailand
3. Benefits of Acquiring a Villa in Thailand for Foreigners
4. Promotions and Instalment Plans from Developers
5. Secondary Market

CURRENT STATE OF THAILAND'S REAL ESTATE MARKET

The demand for villas in Thailand’s tourist hotspots remains high year-round. As a prime vacation destination, Thailand attracts tourists from colder countries who often rent properties during the winter season.

Currently, real estate in Thailand is more affordable than in many other top vacation spots around the world. Villa prices vary depending on the location, level of comfort, and the size of the land plot. Coastal homes in tourist zones are the most lucrative, while properties located further from the ocean are less in demand and thus more affordable for investors.

The rise of remote work and the increasing number of “digital nomads” worldwide may further boost demand for rental properties in these popular tourist destinations.

BEST LOCATIONS TO BUY A VILLA IN THAILAND

The location significantly impacts the return on real estate investment. The islands of Phuket and Koh Samui are two of the most sought-after areas for luxury villas in Thailand.

Phuket is a prime area for buying real estate, with foreigners making up more than 73% of the demand for rental villas, offering a steady income for investors. Here are some example prices for villas in Phuket:

• 287 m² villa with two bedrooms: $271,000
• 508 m² villa with three bedrooms: $343,000
• 1,600 m² villa with five bedrooms: $557,000

Koh Samui is another popular tourist destination, ranking third in Thailand’s top vacation spots. The island’s housing mainly consists of villas, townhouses, cottages, and chalets. Some example prices for villas in Koh Samui:

• 126 m² villa with two bedrooms: $140,000
• 369 m² beachfront villa with three bedrooms: $615,000
• 750 m² villa with six bedrooms: $858,000

Bangkok, the capital city, leads in terms of housing demand and property value. Apartments in condominiums are the most common real estate type here, although villas, duplexes, and townhouses are also available. Example villa prices in Bangkok:

• 441 m² villa with three bedrooms: $683,000
• 360 m² villa with four bedrooms: $723,000
• 737 m² villa with five bedrooms: $1,656,000

How Beneficial Is the Acquisition of a Villa in Thailand for a Foreigner?

Villas, townhouses, and apartments are some of the residential properties available for purchase in Thailand's real estate market. The legal framework offers two main ownership options: leasehold and freehold.

Freehold allows a foreigner to fully own the property indefinitely, providing full rights to sell, inherit, or give away the unit. However, the only restriction is that foreigners cannot own the land on which the property sits.

Leasehold is a long-term rental agreement, typically signed for 30 years, with the option to renew for another 30 years. During this period, the non-resident owner can fully control the property, including making modifications or subletting it. By law, lease agreements can last up to 90 years in total.

A foreigner seeking to buy a villa will also want to own the surrounding land. While land ownership must be registered as leasehold, the building itself can be a freehold. In many countries, leasehold is a common form of ownership, and speaking with a real estate professional in Thailand will help ensure all rights are protected under Thai law.

Benefits of registering leasehold real estate include:

• Lower prices compared to freehold properties
• No sales tax when transferring ownership to another person
• Lower registration fees compared to freehold properties (1.1% vs 2–3%)

PROMOTIONS AND INSTALMENT OPTIONS FROM THE DEVELOPER

While getting a mortgage in Thailand is difficult for foreigners, some developers offer promotions and instalment plans. Payments can be made over time while the property is being built. Keep an eye on your preferred developer for any available offers.

SECONDARY MARKET

The secondary real estate market in Thailand often offers lower prices than new developments. Some properties may need renovation, but there are villas in excellent condition. It's advisable to hire a local lawyer to verify the documentation when buying a second-hand property.

Key Tips for a Successful Purchase:

• Properties in resort areas will generate higher income
• Leasehold registration fees are lower than freehold, making it a viable option
• Take advantage of developer discounts or instalment plans
• Keep an eye on attractive units in the secondary market