Thailand entered the TOP-10 most sought-after locations for Russian relocation in 2022. In the same period of the previous year, the kingdom held the 20th spot in the rankings. In this country, people purchase homes for residing and as investment tools. In this article, we’ll review the risks of buying a home in Thailand.
Thailand is one of the leading countries in Southeast Asia, with the most significant ports in the area. Asia's biggest transit hub is the Bangkok International Airport. Major global corporations have their offices here. Thailand has one of the highest GDPs in the Southeast Asia region. The country has achieved this thanks to a large tourist influx, active trade, and developed infrastructure. The country continues to hold the interest of international investors.
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Benefits of current real estate investments in Thailand
There are several reasons why you should pick Thailand for real estate investment right now:
- The best Thai baht to Russian ruble exchange rate. The Thai baht is currently holding at a low rate against the Russian ruble, which is good for Russians looking to buy real estate, even when recalling the 1:1 exchange rate. For many years, a conversion rate of roughly 1 Thai baht = 2.5 rubles was considered standard, e.g., 2021. Currently, the exchange rate is maintained at 1 Thai baht to 1.62 rubles.
- Stable exchange rate of the Thai baht against the US dollar. The general atmosphere in the country is peaceful, and the population's standard of living is rising despite the internal political processes (a change of monarchy and anti-government protests). The Thai baht is still amongst the most stable currencies in the world. In 2010, one US dollar was equivalent to 33.37 Thai baht; at the end of 2019, it was 30.15. And as of November 2022, one US dollar is equivalent to 37.44 Thai baht.
- Rising housing prices. Thailand's real estate is growing more expensive, particularly in Bangkok and the resort districts. The new land prices, which will lead to an increase in price, will be announced on January 1, 2023. The new high-speed electric train lines are also being developed in Bangkok, as well as intercity links like those connecting the nation's three airports: Suvanabhum, Don Mueang, and U-Topao in Bangkok and Pattaya.
- Brand-new projects. Many projects were put on hold once the pandemic was over, and developers essentially stopped working. At present, construction firms take on all new projects. As a result, you can buy off-plan real estate at a discount. Developers attract customers with incentives and favourable instalment terms, attractive to overseas investors.
- Political conditions. Russia and Russians are not subject to sanctions in Thailand. Direct flights between countries are starting up again. You don’t need to worry about the government having unfavourable attitudes or placing limits on you when purchasing property in Thailand. Foreigners who buy real estate and reside there are not viewed negatively in the kingdom.
- Country development. In the sphere of cutting-edge technologies, Thailand is actively developing. Digital aggregators and innovation incubators have been opened in the country. Many worldwide freelancers come to Thailand. The Kingdom ranks first on the list of countries for digital nomads. Thailand offers a wonderful climate, a fast internet connection, and a great lifestyle at a reasonable cost. One of the top 20 cities for freelancers is Phuket, where the government is considering the creation of a unique IT zone on the island to attract global companies and experts.
- High demand for real estate. One of the most frequently visited destinations in Thailand, ensuring the tenant demand for real estate is guaranteed throughout the year. Additionally, the quantity of real estate is limited on islands like Phuket and Koh Samui, making them special. The islands have little land available for development, and a part of the area is a national reserve. Additionally, as very large structures cannot be built on the islands, there’s a particularly strong demand for local real estate. Due to a shortage of fresh projects, prices will keep rising.
- High return. The annual return on real estate investments in Thailand is set at around 5-8%.
- Low taxes. The low tax rates make this country attractive to investors who are deciding whether to make a purchase. Depending on the property's appraised value, the residential property tax might range between 0.03 and 1%.
Risks when purchasing a home in Thailand
It’s impossible to forget to discuss the drawbacks. There are some limitations on foreign ownership of local real estate in Thailand. Until recently, foreigners were not allowed to buy land here. It was exclusively available for long-term lease. The Thai government did, however, issue a new long-term resident visa in September 2022. The holder of this type of visa may, under some restrictions, own land in Thailand for their use.
Another restriction that is still in force is the 49% ownership limit on foreign ownership of property in multi-storey buildings and cottage villages.
Thailand now rates several common real estate risks as low, such as the loss of a part of the unit's value or the developer's inability to uphold its agreements. According to experts, government investments in sizable infrastructure facilities, mainly transportation facilities, would cause real estate prices to go up even further. The developer's activities are rigorously governed by the law.
By having the right insurance coverage, you can eliminate the risks related to potential natural disaster damage.
Before the Coronavirus outbreak, foreigners had long flocked to Thailand to purchase real estate. The nation's attractive and stable economic environment, ongoing real estate price growth and good returns on residential real estate investments all serve to draw tourists. It’s now a favourable time to enter the Thai real estate market, as several buyers have not yet returned to the kingdom following the end of the pandemic (this particularly concerns the Chinese investors).
