Foreigners attracted to Thai 'rose of the north'
An increasing number of foreigners are buying property in Chiang Mai. According to the website 1stopchiangmai.com, some 20,000 expats from dozens of countries are living in Thailand's 'rose of the north', and for good reason: it's cooler than southern Thailand, more affordable than coastal areas and apparently more laid back. Not to mention the great golf courses that have opened up in recent years.
As noted in www.property-report.com, Chiang Mai has not enjoyed a high profile among foreign buyers, but that could change now that economic forces have reined in spending for many. As Andrew Batt, publishing director for Ensign Media, publishers of Property Report South East Asia, points out, 'property prices in Chiang Mai are at least one third cheaper than Bangkok, and villas can be as much as half the price of similar-sized properties in the traditional investment hot spots such as Phuket and Koh Samui. Retirees make up a significant proportion of buyers. Some people set their sights on retiring in Thailand, but are simply unable to afford property elsewhere in the kingdom'.
Locals savour their quality of life. Chiang Mai was ranked second in World's Best City 2010 by Travel+Leisure magazine, behind Bangkok, and has consistently been named as one of the most livable in Asia by various publications. Batt puts this down to the city's 'laid back, unhurried character, impressive history and culture, cooler weather and lovely nature areas nearby that attract the outsiders'.
The charms of Chiang Mai have not been lost on Hong Kong and mainland visitors, who make up the second biggest tourist arrivals, behind India, as guests at the Four Seasons hotel.
James Knowles, head of sales and marketing at the Minor Group, developer of Four Seasons residences located within the resort property, says visitors tend to fall in love with Chiang Mai, which sometimes results in property sales. Hence, a number of expatriate communities have sprung up in the region, including a Chinese village.
While it's not straightforward for a foreigner to buy property in Thailand, it is possible. Desmond Hughes, deputy CEO of Limcharoen Hughes & Glanville, an international law firm, outlines the options.
'Land purchases by foreigners are generally restricted in Thailand, with some exceptions which allow, for example, Board of Investment companies [wholly foreign-owned Thai companies] special privileges to acquire land for authorised business purposes, the Condominium Act permitting foreigners to own up to 49 per cent of a condominium building, and the Foreign Business Act, applying to certain companies.'
In order for foreigners to acquire property in Chiang Mai, they need to carry out procedures with the same caution and attention as they would in their home jurisdictions.
'In Thailand, the land underneath the target property would need to be checked right back to the first time that a title ever existed. This is different to say, Hong Kong, where generally the case is that only 15 years of history need be checked.
'The zoning of the land should be checked to ensure the correct footprint [or building-to-empty-space ratio] has been utilised and to look at any other restrictions such as building distance from the nearest temple or height of building restrictions,' Hughes says.
Chiang Mai has a large number of national parks and historical sites - local searches of these should be part of an investor's due diligence. If the property is a condominium, check its legal registration. For a villa or single dwelling, verify also the original construction permit and transfer papers.
Hughes adds that, subject to the appropriate checks and reviews, real estate investment for foreigners in Thailand can be conducted securely and safely.
'The laws in Thailand are generally developing to be clearer where there have in the past been grey areas, and the real estate market has benefited from clearer rules in recent years.'
What to buy? Gai Suwan, owner of Chiang Mai Properties (www.houseinchiangmai.net), says a renovated studio in an older condominium costs as little as HK$60,000. She says foreigners are buying condos for their investment return, which can be as much as 6 per cent to 10 per cent per annum.
But who wouldn't want a Four Seasons property in their portfolio? The last three villa residences at Four Seasons Resort Chiang Mai offer a new level of indulgence in homes offering 755 square metres of indoor luxury, set on individual plots of land measuring 1,700 to 2,000 square metres. In addition, these select 'landed properties' share access to 4.85 hectares of private parkland.
James Knowles, of Minor Group, describes their luxury as 'off the scale', but the price is to match - at US$5 million each. More affordable are the Four Seasons condominiums, at US$2 million each, which have sold so well only two remain.
The buyers, including Hong Kong and mainland investors, enjoy personal use of their Chiang Mai haven. But with luxury accommodation at a premium, many also get a return on their investment by placing their home in the hotel's rental pool.