Dr.Sopon Interviewed by the Asian Property Review
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Recently, the Asian Property Review interviewed Dr.Sopon Pornchokchai, President, Agency for Real Estate Af
fairs. Please have a look.
Questions on Thailand from Asian Property Review (Oct 2022)
1. Is now the right time to buy property in Thailand?
Dr.Sopon: Actually, there is always right time to buy properties even in a bust period if we can buy properties at an ample discounted price. However, in the case of Thailand today, land price and house prices are still up for some 3-5 per cent per annum, it is very fine to buy properties to have both return on and of investment.
2. Which segment (residential, commercial, industrial) has the greatest potential for returns?
Dr.Sopon: Residential properties in the case of condominiums may have a return on investment of some 4-5 per cent and the return of investment (capital gain) at some 3-4 per cent. This might be the best sector to buy. Commercial properties such as office condominiums and shopping might have a higher return; however, we need expertise to manage except we buy through properties fund. Industrial properties particularly warehouse and factories for rent might have the highest return of some 7-8% but we also need to manage professionally.
3. Who are currently the biggest buyers of property in Thailand – domestic or foreigners?
Dr.Sopon: Thai buyers are of the largest proportion at some 94 per cent in terms of units and 91 per cent in terms of value of the development of condominiums in Bangkok.
4. Among foreigners, which are the top 3 nationalities who buy property and for what purpose?
Dr.Sopon: Major foreign buyers are those from India, China, Singapore and the like.
5. What types of property are in demand by foreigners and which cities in Thailand are most popular with foreigners?
Dr.Sopon: Condominiums are the major target to buy particularly in Bangkok. Bangkok is still the most attractive destination for investment, say over 60% of the properties. Other destination can be Pattaya, Phuket, Samui, Hua Hin, Chiang Mai and the like. For cities outside Bangkok, landed properties are also of interest for for foreigners.
6. Do you think the new long-term visas will attract more foreigners to Thailand?
Dr.Sopon: Not exactly. It would be good if it is Singapore because Singapore needs a lot of professional workers with incentives. Malaysia has the program of Malaysia my Second Home (M2H). It is not really successful either. Under the current circumstance, not many people are really interested in buying properties to really live in Thailand except for speculation.
7. Do you think Thailand should extend freehold ownership of land to foreigners?
Dr.Sopon: It can be but there should be some measures to benefit the country such as In the case of Malaysia, they have minimum priced to buy such as at lease 1-2 million ringit (USD 211,000 to 422,000) per unit. This will help protect local buyers.
- Singapore taxes foreign buyers at around 30-35 per cent of the sale prices. This will have cash for local developments. Thailand should have this buyers’ tax.
- Many countries have property tax at around 1-3 per cent of the sale prices but Thailand tax at 0.02% for property above Baht 50 million (USD 1.316 million) of the assessed value (which can be USD 3.3 million) which is still extremely low. So we do not get tax from foreign buyers.
- Capital gain taxe in Thailand is also very minimal compared to 20% of the gain in the USA
- Inheritance tax is also extremely low and there are a lot of loopholes.
If we can cure these loopholes, Thailand should allow foreigners to freely buy properties.
8. How long do you think the current supply overhang especially condos can be absorbed by the market?
Dr.Sopon: According to the latest survey of the Agency for Real Estate Affairs (www.area.co.th) which is the largest real estate information centre in Thailand, we expected that condominiums must need some 25 months. But cheap condominiums (Baht 26,000 – 52,000 per units) will need only 18 months. However, in the case of detached houses, semi-detached and townhouses, they need some 54, 48 and 45 months to go.
9. What is the outlook for the property market for Thailand in 2023?
Dr.Sopon: For 2022, it is a recovery year. In 2023, it should further be recovered after a period of stagnation (few supplies in 2020 and 2021). However, a gigantic number of newly launched projects might cause oversupplies in 2024).
10. What is your advice for foreigners wishing to buy property in Thailand? Tips and things to look out for.
Dr.Sopon: Before buying properties, they should employ a reliable valuer with accredition from the Securities and Exchange Commission (SEC) to value properties. A professional valuer can deliver the open market value, an assessed value, a forced sale value as well as any limit(ation)s on the uses of the properties and zoning. Do not just hire an international consultants who are mainly brokers with conflict of interest to value properties.
11. What is the proportion of property ownership by foreigners compared to locals in Thailand?
Dr.Sopon: As mentioned earlier, foreign buyers of condominium at some 94 per cent in terms of units and 9 per cent in terms of value of the development of condominiums in Bangkok. In the past during 2017-2019, they bought at around 12-15% of the value of the development of condominiums in Bangkok. In other cities, the proportion might be a lot lower except in Pattaya and Phuket