Bangkok has a property glut with up to 300,000 unsold properties as foreign buyers, mostly Chinese, are still trapped behind their own borders. There are currently a range of proposed schemes mooted linking not only visas to condo property purchases but permanent residency. None has so far been confirmed. The latest raft of initiatives is being directed at Finance Minister Arkhom Termpittayapaisith.
A slew of new proposals since October has emerged which would shower new condo purchasers from abroad with visas to live in Thailand. The latest proposal, unveiled early last week, would see purchasers of expensive condominium units receive free, tailored Thailand Elite card memberships and associated visa privileges. The initiative follows an internal government proposal in October from the Centre for Economic Recovery, that provided for any foreigner who purchased a condo and maintained it debt free for five years, to be granted permanent residency. Another proposal lodged with the Ministry of Finance, in early December, proposed 5 and 10 year visas for condo investments above ฿3 million with permanent residency for condos purchased by foreigners at prices of ฿10 million or higher. The impetus behind these moved is a depressed property market in the kingdom with up to ฿1 trillion in unsold realty and an estimate of 300,000 unsold properties in Bangkok alone by a senior official with Bangkok Bank.
The Housing Business Association, Thai Real Estate Association and Thai Condominium Association (TCA) have proposed to the Finance Minister, as well as seeking reductions in property transfer charges and an extension of concessions on property transfer fees introduced last year to boost homeownership demand, that foreign investors purchasing condo units with a value in excess of ฿3 million be entitled to apply for a five-year visa to live in Thailand.
The property industry bodies are also proposing that investment in condos costing between ฿3 million to ฿10 million be supported with 10 year visas while condo investments of over ฿10 million should come with the right to permanent residency in the kingdom.
Proposal submitted to the Minister of Finance in early December on property valued over ฿3 million
These proposals are understood to have been sent to the Minister of Finance, Arkhom Termpittayapaisith, in early December by TCA Chairman, Chairat Thampeera.
A raft of plans has also emerged associated with the Thailand Elite Card which has already announced that it plans to increase its fares by 20% from January 2021.
The basic entry-level card will now be ฿600,000 while the upper-tier packages will be ฿1.2 and ฿2.4 million respectively.
Already, the Thai cabinet has before it a plan to allow cardholders at the higher tier to apply for work permits in Thailand if they can show an investment in excess of $1 million.
Elite card offering flexible visas to live in Thailand from 5 to 20 years, sees a surge in demand during 2020
The Thailand Elite Card grants its holder flexible visas, with added benefits, to live in Thailand for between five and twenty years depending on the tier purchased as well as a range of ancillary benefits such as airport privileges and golf club concessions.
During 2020, however, many cardholders expressed frustration at being among the last among foreigners, with ties to the kingdom, to be green-lighted for entry Thailand by the Ministry of Foreign Affairs while latest reports suggest that, so far, up to 1,400 Elite cardholders have arrived back to Thailand since the country’s borders shut down in early April this year.
Notwithstanding this, the card itself has seen a spike in demand.
In the first quarter of 2020, sales of the card were up 60% netting ฿276 million for the company running the scheme. The company is on target to generate record income this year even though entry to cardholders was only approved in July.
It is anticipated that 3,000 Thailand Elite Cardholders will enter the kingdom in 2021.
Partnering with Thai property development firms
Last week, the company announced a new scheme, in association with up to thirty Thai real estate firms, which will see long term visas issued to those who purchase higher-priced condo properties in Thailand.
The Elite Cardholder scheme is run by Thailand Privilege Card (TPC). It’s President, early last week, Somchai Sungsawang, confirmed that one of Thailand’s leading property developers, Raimon Land, a stock exchange listed firm, has already incorporated the card into three luxury property development projects which will see over 200 new Elite cardholders gain visa rights.
These cards and the visas will be for five-year terms.
The board must, first of all, approve the move
Mr Somchai said that the board of his firm must, first of all, consider the matter as well as the cabinet which is also considering other submissions to encourage foreigners to purchase both the card and property in Thailand.
Mr Somchai said that surveys have shown that 70% of those canvassed about such a scheme expressed a positive attitude with nearly all seeking residential property in Thailand, mostly for retirement.
‘Most are large listed companies, with a lot of suggestions offered to increase customers and encourage more sales. The suggestions will be put to a board meeting for further consideration,’ he said.
Simpler scheme for debt-free condo properties over 5 years mooted and being developed in October by the Centre for Economic Situation Administration
In October, it was reported that Deputy Prime Minister, Supattanapong Punmeechaow and the Centre for Economic Situation Administration were looking at an alternative scheme which would have promised permanent residency to anyone who invested in a condominium unit and held it debt-free for over 5 years
The measures tell us something about the government’s heightened interest, of late, to encourage well off foreigners to come to live, work and invest in Thailand during the Covid 19 pandemic but also about the declining situation in Thailand’s property market.
A Thai Daily News report in October suggested that the country could be sitting on up to ฿1 trillion worth of unsold property.
Up to 300,000 unsold properties in Bangkok
Recently, Phairach Sakwit, a senior Vice President with Bangkok Bank estimated that there could be up to 300,000 unsold property units in the Greater Bangkok area alone between unsold condos and low rise residential property units.
Since the end of 2018, Bangkok property developers have been cutting back on lower value condo developments and focusing more on low rise residential property which is now where a new glut has developed.
‘Developers should think twice when they want to launch a low-rise project as the number of low-rise supply spikes,’ Mr Phairach said. ‘Today seeking a land plot for condo development is easier than for low-rise houses, as many developers have shifted from the condo to the low-rise market.’
A survey conducted by Ms Risinee Sarikaputra, at the end of 2018, was the first to highlight the issue. Even then, Ms Risinee, the Director of Research at property firm Knight Frank Thailand, suggested that there were 100,000 unsold condo units in Bangkok.
Removal of Chinese buyers has left the market depressed with reports in September of many unclosed sale contracts relating to condo units
This September, Dr Apha Atboonwong, who is President of the Thai Condominium Association in an interview with Channel 3 TV revealed that the closure of the country to Chinese buyers was having a devastating effect on the local condo market.
She said that 98% of foreign buyers, in more recent times, were from China and indicated that unclosed sales on up to 10,000 condos existed after Chinese buyers halted stage payments.
It should be noted that many of the schemes being promoted or discussed, some of them which require cabinet scrutiny, have yet to receive full approval before being offered to foreigners interested in buying property or settling in Thailand.