1. 30-year lease terms

Thailand has one of the shortest lease terms available to foreign buyers across ASEAN, according to the Nation, at just 30 years. Singapore and Malaysia are the most generous with 99-year terms for state land; then Vietnam with 50-70 years; and even foreign buyers in the Philippines, Cambodia and Myanmar enjoy 50-year lease terms. We know that the longer the lease term, the more attractive the market is to investors and developers as the duration of the term dictates their level of expected return.

2. ’30 Plus 30 Plus 30′

Developers in Thailand have attempted to circumvent these restrictions by offering a ’30 Plus 30 Plus 30′ contract to foreign buyers whereby after the first 30-year term is registered with the Land Department, the developer contractually agrees to extend the 30-year lease term twice upon the expiry of the first term.

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3. ‘Secured 30-year lease’

In the last couple of years, it’s become en vogue for developers to offer a seeming improvement on this with the so-called ‘Secured 30-year lease’, reports the Bangkok Post. With this, we see the contractual agreement of ’30 Plus 30 Plus 30′ but now the developer and buyer enters into a share, sale and purchase agreement whereby the developer sets up a separate, new company which owns the plot of land upon which the property is built. The shareholders of this company sell their shares to the foreign buyers (the ‘lessees’) who then pass control of the company to the lessees. This means the lessees can then force the developer to make good on their extension promises they made in the original ’30 Plus 30 Plus 30′ agreement.

4. Invalid lease contracts

Although this does, indeed, sound more secure, the Phuket Provincial Court and the Court of Appeals have recently found ‘Secured 30-year leases’ to be invalid and void. 

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What’s more, the ‘Secured 30-year leases’ also invalidates the original ’30 Plus 30 Plus 30′ agreement, too. The matter is currently before the Supreme Court of Thailand although it could be a number of years before a solution is found.

5. Lease extensions

Developers and investors alike are keen for the Thai government to extend the lease terms for foreign buyers and make the market more competitive against its Asean counterparts. Steps are being made in the right direction: the government approved the extension of leases of state land for industrial and commercial use in the country’s 6 economic zones from 50 to 99 years earlier this year.

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Regardless of the legal wrangling, developers are still going full steam ahead in Bangkok as can be seen from the joint venture between BTS Group Holdings and Sansiri which is launching 25 separate condominium projects, worth a combined THB100 billion (USD2.8 billion) between now and the end of 2019, reports the Nation.

“We are confident that the demand for condominiums is continuing to grow from both domestic and foreign buyers,” said Sansiri CEO Apichart Chutrakul.

 Image is by Transformer18 and is used under a Creative Commons licence