Thailand’s plan to allow foreigners to own land may worsen oversupply of flats in Bangkok

The Thai government plans to allow foreign nationals to own up to 1 rai (0.16 hectares) of land from September if they invest 40 million baht (US$1.09 million) for three years

The inventory of unsold flats in Bangkok stood at some 47,000 units in the first half, with more supply to come on to the market in the next few months, Colliers said

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Buyers from mainland China and Hong Kong were the largest group of foreign investors in flats in Bangkok in the first quarter. Photo: Handout

Published: 8:30am, 27 Jul 2022Updated: 8:12pm, 27 Jul 2022

Thailand’s plan to allow wealthy foreigners to own parcels of land may exacerbate the glut of unsold flats in the capital Bangkok, as investors are likely to find landed property more appealing than units in high-rise buildings, according to analysts.

Under the proposed measure, foreign nationals will be allowed to own up to 1 rai (0.16 hectares) of land from September if they invest 40 million baht (US$1.09 million) for three years. The government has been mulling this option to shore up the country’s economy which was slowing down even before the Covid-19 pandemic. The economy contracted by 6.2 per cent in 2020, and only grew by 1.6 per cent last year, one of the slowest in Southeast Asia, according to World Bank data.

“The market [for flats] has been [dragged down] by some of the old supplies that were still remaining,” said Phattarachai Taweewong, director for research and communication at Colliers Thailand, noting that sales had also slowed because there were hardly any foreign buyers due to pandemic-related travel restrictions.

Thailand’s real estate market has been struggling with an oversupply of flats in recent years. In the first half of this year alone more than 24,500 new units have been launched in Bangkok, taking the number of unsold units to 47,000, Colliers said, adding that supply is set to increase in the coming months.

A suburban train passes a building construction site in central Bangkok in this file photo from December 4, 2018. Photo: AFP

Thai developers frequently come up with various promotions and discounts to offload their inventory. Freebies such as luxury cars, hotel and restaurant vouchers, and even free transfer fees, have become common to drum up sales.

Buyers from mainland China and Hong Kong were the largest group of overseas investors in flats in Thailand in the first quarter, accounting for 45 per cent of the total sales, according to Colliers.