Thailand’s real estate reforms aim to boost economic growth beyond 4%

Government initiatives aim to finance foreign investment and stimulate the real estate market to ensure sustainable growth

Thailand’s economy is expected to grow by just over four percent this year, fueled by new measures approved ont April, which aims to revive the real estate sector, according to information from the Ministry of Finance, which was reported Reuters Agency. The government’s strategic move is expected to generate significant economic activity, translating into THB 800 billion (USD 29.6 billion) in real estate, THB 400 billion in investment and THB 120 billion in consumption.

Pornchai Thiraveja, head of the ministry’s fiscal policy office, noted that the stimulus measures would boost the country’s economic growth by an additional 1.7 to 1.8 percentage points. “These measures will see the economy grow by just over four percent this year,” Thiraveja told a briefing.

The real estate initiatives, approved by the Cabinet, include reduced transaction fees for homes worth up to THB 7 million. Transfer fees and mortgage registration fees have been reduced to 0.01 percent, from two percent and one percent respectively. The government also plans to offer THB 30 billion in mortgages through state banks, along with tax breaks for some real estate developers and tax deductions of up to THB 100,000 for home builders.

Deputy Finance Minister Krisada Chinavicharana highlighted the Cabinet directive for relevant agencies to consider easing rules on foreign ownership of Thai properties. The ministry also plans to ask the central bank to ease loan-to-value (LTV) rules, a move supported by Prime Minister Srettha Thavisin.

Prime Minister Srettha stressed the need for a significant economic stimulus, in line with the government’s broader action plan, which includes a delayed flagship THB 500 billion “digital wallet” programme aimed at boosting consumption in the last quarter of 2024.

Foreign investment in Thailand’s real estate market is set to see a significant increase in 2023. According to the Real Estate Information Center (REIC) of the Government Housing Bank, reported NationForeigners spent more than THB 73.16 billion on 14,449 apartments, up 25 percent from a year earlier. REIC Director Wichai attributed the increase to a recovering tourism industry and government policies that lifted visa requirements for visitors from China, Kazakhstan, India and Taiwan. Chinese nationals led the purchases with 6,614 apartments, followed by Russians, Americans, Myanmar and Taiwanese.

In the same year 18th PropertyGuru Thailand Property Awards distinguished developers contributing to the growth of the sector. Sena Development received the award for Best Developer, while Habitat Group Co., Ltd. was named Best Lifestyle Developer. In the south, awards were given to Phuket9 (Best Developer (Phuket)), Botanica Luxury Phuket Co., Ltd. (Best Luxury Developer (Phuket)), Wallaya Villas Development (Best Residential Developer (Phuket)), MontAzure (Best Mixed-Use Developer (Phuket)) and Andaman Asset Solution (Best Boutique Developer (Phuket)). Riviera Group and Patta Development Co., Ltd. received awards for Best Apartment Developer and Best Residential Developer, respectively, on the east coast, while PNP Real Estate Co., Ltd. was named Best Breakthrough Developer in Hua Hin.

Marciano Birjmohun, Vice-President of the Singapore and Thailand Chamber of Commerce and Jury Member of the Competition PropertyGuru Thailand Property Awards shared his thoughts on the government’s new measures. He suggested a phased approach to increasing foreign ownership of homes and extending leases, while monitoring the impact on affordability and prices. Birjmohun also recommended geographic restrictions to manage foreign investment without burdening the core housing market.

“Reducing bureaucracy and offering a transparent market with an efficient process for foreign investors to acquire and manage real estate are essential steps,” Birjmohun said. He also stressed the importance of tax breaks or exemptions for foreign residents or retirees and suggested that the country invest in infrastructure projects near residential areas to attract long-term foreign residents.

To boost the housing sector in the long term, Birjmohun stressed the need for upskilling opportunities in international project marketing for developers and agents. “There is a lack of cross-cultural communication, soft skills development and cultural compatibility, which is why it is necessary to leverage the profession of real estate practitioner.” He also called for the elimination of FET/TorTor3 (Foreign Exchange Transaction Form) requirements for foreign buyers, which he said had led to the creation of an underground economy of money handlers and money changers.

With these comprehensive measures and strategic initiatives, Thailand’s real estate market is poised for rapid growth, laying the foundation for a dynamic and stable economic future.

Do you know of any award-worthy residential, commercial or industrial projects in the Kingdom? Nominate them for the 19th annual PropertyGuru Thailand Property Awards by 5 July 2024. To find out more, visit AsiaPropertyAwards.com/Award/Thailand/.

Gynen Kyra Toriano, Digital Content Manager at PropertyGuru, wrote this article. For more information, email: (email protected).