The property outlook in Thailand this year has been dampened by recent developments, including a spate of New Year's Eve bombs in Bangkok and proposed amendments to the Foreign Business Act, international property firm Jones Lang LaSalle said on Monday.
The property outlook in Thailand this year has been dampened by recent developments, including a spate of New Year's Eve bombs in Bangkok and proposed amendments to the Foreign Business Act, international property firm Jones Lang LaSalle said on Monday.
"Thailand has unexpectedly experienced a number of events over the past one month, all of which have negatively affected sentiment for the economy and the Bangkok property market despite strong market fundamentals," said Suphin Mechuchep, Managing Director of Jones Lang LaSalle in Thailand.
Recent events that have affected the property market's outlook include the December 19 enforcement of capital controls on foreign currency coming in to the country, eight explosions set off in the capital of New Year's Eve and the January 9 announcement of proposed amendments to the Foreign Business Act that could affect the methods by which foreign investors purchase property in Thailand.
The FBA amendments have redefined alien ownership of companies and properties as entities in which the shareholdings and voting rights are majority-held by foreigners.
Because of loopholes in the Foreign Business Act, in the past foreigners could hold majority voting rights in companies that were classified as Thai, because the foreign shareholding was less than 50 per cent.
In the property sector many shell companies with Thai nominees have been used to purchase houses and condominiums to avoid Thailand's tough laws prohibiting foreigners from owning land.
"As the legislative process proceeds, other issues, such as application of the Land Code under the Interior Ministry, will need to be addressed. The law is very specific in that, with few exceptions, foreign entities are prohibited from owning land in Thailand," said Dan Tantisunthorn, Head of Research at Jones Lang LaSalle.
The firm noted that Thailand's capital controls, although investments in real estate and condominiums have been exempted, have also created a wait-and-see attitude among investors.
"Many property sale and leasing transactions planned for the first half of 2007 may be postponed to the second half of the year as buyers and tenants wait and see what happens next," said Suphin.
Bangkok Post Jan 07
