How Popular Are Thai Properties Among Hongkongers?
According to data from Thailand’s listed real estate developer, Origin Property, in the past five years, Hong Kong investors have accounted for 25% of all foreign investors, consistently ranking first. This is followed by investors from the United States and mainland China, who tie for second place.
Advantage 1: Freehold Ownership
Peerapong Jaroon-ek, CEO of Origin Group, mentioned in an interview that he believes the biggest advantage of Thai properties is freehold ownership. He explained that many places do not offer freehold property rights, but almost all condominium units in Thailand are freehold, which is a significant advantage.
Advantage 2: Affordable Prices
The second advantage of Thai properties is the affordable prices. Compared to Hong Kong, property prices in Thailand are generally lower. For example, an Origin Property project in Bangkok starts at THB 115,000 per square meter, which, at approximately 10.76 square feet per square meter, translates to about THB 10,700 per square foot (approximately HKD 2,452).
Advantage 3: A High Number of Tourists
Thailand is a popular tourist destination, with a large influx of tourists every year. Unlike most Hong Kongers who typically opt for short-term trips, many European and American visitors tend to stay in Thailand for weeks or even months. Post-pandemic, many individuals who can work remotely have chosen to move to Thailand, benefiting from higher foreign salaries while enjoying Thailand’s relatively low cost of living.
Four Restrictions on Buying Thai Property
Restriction 1: Only Apartments Can Be Purchased
Thailand mandates that foreigners can only purchase condominium units and are not allowed to individually own freehold houses (villas) or land. However, CEO Peerapong from Origin Group mentioned that some Hongkongers have previously used corporate ownership structures to acquire houses or land in Thailand. If Hongkongers wish to purchase a house or land in Thailand, it must be done through a company, with foreigners allowed to own no more than 49% of the company’s shares. In other words, 51% or more of the company’s shares must be owned by Thai nationals.
Restriction 2: Only 49% of Units Can Be Sold to Foreigners
In addition to only being able to buy apartments, Thai regulations state that no more than 49% of units in a project can be sold to foreigners. At least 51% of the units must be sold to local Thai buyers. In some projects, the proportion of units available to foreigners is even lower than 49%, so it’s important to check availability before purchasing a unit.
Restriction 3: Payment Must Be Made in Foreign Currency
Foreign buyers must transfer funds from an overseas account and pay in foreign currency. Additionally, the payer’s name must match the buyer’s name. According to industry insiders, since the down payment for Thai properties is usually just tens of thousands of baht, some developers allow buyers to pay the down payment by credit card.
Restriction 4: Tax on Properties Held for Less Than Five Years
Regarding sales, under current Thai regulations, if a property is sold within five years of purchase, the owner must pay a 3.3% Specific Business Tax (SBT). If the property is sold after more than five years of ownership, the owner only needs to pay a 0.5% stamp duty. It’s important to note that only one of these taxes needs to be paid, not both.
In addition to SBT and stamp duty, when reselling a property, depending on the holding period and tax registration of the property owner, a 1-3% income tax may be required. There are also other related fees such as management fees, major repair funds, and transfer fees.
Process for Buying Thai Property
Hongkongers can purchase Thai property through the following methods:
- Overseas agents of Thai developers
- Contacting Thai agents directly
- Directly contacting developers
Payment Process for Purchasing Thai Property
- Reserve the unit and pay a deposit, usually around THB 100,000 (approximately HKD 22,900).
- Pay the down payment within a week, typically 20-25%.
- Sign the purchase agreement within the designated time frame; if purchased through an overseas agent in Hong Kong, the agreement is usually signed at a Hong Kong law firm.
- Before the handover, buyers can arrange for loans through Thai or Hong Kong banks as needed.
- Upon handover, the buyer must pay the remaining amount after deducting the deposit.
(Note: The above information is for reference only and is subject to the developer’s requirements.)
Thai Bank Property Mortgages
Some Thai banks, such as UOB and Kbank, offer property mortgages to foreigners. UOB provides property mortgages to all foreigners in either USD or SGD. Kbank’s property mortgages are only available to permanent residents of Hong Kong aged 25 to 70, and the mortgage currency is in HKD.
How to Rent Out Your Property
After the handover, if you intend to rent out your property, you can contact local real estate agents in Thailand or register on platforms like Airbnb. Some overseas agents of developers also offer rental services, so buyers can choose based on their individual needs.
Popular Investment Areas in Bangkok
As the Thai city most invested in by Hongkongers, Bangkok has several areas particularly popular with Hong Kong buyers, including:
- Sukhumvit: Similar to Hong Kong’s Nathan Road in Tsim Sha Tsui, it offers convenient transportation, vibrant nightlife, and well-known restaurants.
- Paya Thai to Asoke: Close to the airport and tourist hotspots like Siam Paragon.
- Asoke to Thonglor: Ideal for those who enjoy a leisurely lifestyle.
Popular Investment Areas in Phuket
Although Phuket is a small island, it is the second most popular tourist destination in Thailand. Many foreigners enjoy purchasing properties in Phuket. According to Mr. Peerapong’s observations, since the outbreak of the Russia-Ukraine war, many Russians and Ukrainians have moved to Phuket, favoring beachfront properties.
For Hong Kong investors, convenience in terms of transportation and lifestyle is most important, so they tend to choose the eastern part of Phuket Island, where there are more shopping centers and restaurants.
Emerging Investment Hotspots: Chiang Mai and Pattaya
In addition to Bangkok and Phuket, Mr. Peerapong also pointed out that Chiang Mai and Pattaya have become rising hotspots for Hong Kong property investors. These cities are also popular tourist destinations among Hongkongers.
Rental Yield in Thai Properties
The rental yield in Bangkok is typically around 5-6%, while in Phuket it is about 8%. The main reason is that property prices in Bangkok are higher than in Phuket, but rents in the two areas are relatively similar. Additionally, rental contracts in Thailand are usually for one year, while in Phuket, contracts may need to be renewed every three months or six months.
How to Avoid Purchasing an Incomplete Project
Hong Kong investors in Thai properties usually purchase new or off-plan developments. However, many worry about buying an incomplete project. To avoid this, consider the following four points:
- Conduct thorough research.
- Pay attention to the documents you sign.
- Choose developers with a good reputation.
- It’s best to choose major developers or listed companies.