There is no denying the appeal of Thailand – from a travel and tourism perspective, from a retiree perspective and theoretically from a property investor’s perspective. The country is under priced, it is stunningly beautiful, it has increasing numbers of visitors annually and slowly but surely it is building up an international retiree community…however, a great deal of the nation’s investment appeal has been taken away from the market for a number of reasons.
Firstly the government does not want short term speculation in any of its investment markets and this includes the property market. As a result there are very strict restrictions in place preventing an investor from owning land in Thailand for example or from owning over 49% of any particular development. There are of course ways around this restriction such as the use of a well structured Thailand special purpose company (or SPV) but for smaller or one time only investors the fact that you have to enter into legal contracts over and above those to buy property limits and reduces the appeal of Thailand property as an investment commodity. Furthermore, the knowledge that you’re investing in a country where the government is not too happy for investors to derive a good income or strong profits makes investors wary of commitment in case policies change in the future and make it harder for them to take their investment gains out of the country.
Secondly the Thai economy, just like many in Asia, is currently directly affected by the Chinese manipulation of their currency – and in a bid to remain competitive Thailand has recently had to exact incredibly strict controls on inward investment to prevent their currency from rising. This has of course helped Thai exporters – as was the desire of the government – but it has not helped the appeal of Thailand as a good location in which to invest. While the property industry is not affected by the new measures it has sent a shockwave through the international investment community who are concerned about what could happen next.
So – why are we even discussing property investment in Thailand I hear you ask!
Well, because there is just SO much appeal in Thailand.
Firstly, as previously stated there is demand for property in Thailand from many sectors and this demand is actually increasing. On the one hand there is residential demand in the main employment centres in terms of rental and resale property, there is massive tourism demand for accommodation across the nation and this is increasing annually, there is even huge commercial demand for property and because in recent history the levels of investment in Thailand have been relatively low there is actually an undersupply in many quarters representing instant investment appeal.
Add to this the fact that the real estate industry in Thailand is now actively taking it upon itself to promote the delights and opportunities available in Thailand and lobby the government for amendments to rules affecting investors and you could quite possibly have reached a perfect time to enter the market in Thailand with very carefully researched purchases that you are willing to hold for the long term.
There are definite and definable risks and rewards for a property investor in Thailand. It’s just up to the individual to decide which outweighs the other and make their decisions accordingly. Ultimately there is much to be gained from property in Thailand over the long term but investors should be aware that this is not a market for short term focus nor is it a market for amateurs.