Property developments in Phuket and property developments in Pattaya have always been restricted by land ownership in Thailand. Many have gone with lease agreements however the lease agreements in Thailand for land is very short – 30 years. This normally cannot be done back-to-back however it is done in Thailand. The major problems has been the other countries in Asia have gone with 99 year lease agreements. In order for this to change would require and act of parliament and in Thailand developers and investors don’t see any hope in change.
The reasoning has always been that very few people will invest in a property developments if the lease is short as they will not be able to recover their capital investment in such a short period of time. This has been well documented in the many conferences held by property developers in Thailand. This year there was again debate and a proposal to government as the government allows a 50 year lease hold on industrial land but not residential land. They asked and proposed that both be 50 years in length however not much has changed since then. So here lays it in short with the relevant Thai laws.
Lease of Immovable Property for Commercial and Industrial Purposes Act (1999)
Section 3 : The lease can be for up to 50 years and the only permissible purposes of any lease under the Act are for commercial or industrial use.
Civil and Commercial Code
Section 540 : No lease may be for longer than 30 years
So if you wish to open a factory in Thailand or a shopping mall you can get a 50 year lease under Thai law. If however you want to build an apartment complex or a recreational center then you are only able to obtain a 30 year leased on the land. Some see this as a bit of a conflict and hope to even the playing fields between different types of developments rather than have longer lease for certain type of activities.
Question is will the CCC Act be amended in the future or not is not certain but it is looking better than what it did before. The main advantage is to allow development of larger more high end developments. The current property development in Thailand is nowhere near to what you would see in Hong Kong or for that matter Dubai as the investment in large projects is simply not there.
If you are looking at leasing land in Phuket or anywhere in Thailand speak to an attorney in Phuket as certain types of land with ‘no sell’ title deeds over land may not be rented or sold. Speak to us today for more information about renting, leasing or buying land in Thailand.