Property Sector Welcomes 99-year Leases
The private sector has expressed support for the government’s plan to extend long-term 99-year land leases to foreign investors.
“If the government opens up the opportunity for foreign buyers to hold residential leases for up to 99 years, like Singapore and Malaysia do, it will boost residential demand, as the country is the gateway to the ASEAN Economic Community [AEC],” said Thai Condominium Association president Prasert Taedullayasatit, who is also president of Premium Market at Pruksa Real Estate Plc. He said longer lease contracts for both residential and commercial property were better for businesses because foreign investors would have confidence to expand on investments in Thailand. “Although the current law allows a 30-year lease contract and a renewal for another 30 years, long-term leases are more reassuring for foreign investors,” he said.
Suphin Mechuchep, the managing director of the property agency Jones Lang Lasalle (Thailand), agreed recently that the plan would boost foreign investors’ confidence to expand property investments in the special zones. The government’s plan would extend leaseholds in the special economic zones of the Eastern Economic Corridor (EEC) from 30 to 99 years, with an initial lease of up to 50 years and a renewal of up to 49 years. When foreign investors have leasehold contracts for only 30 years, they are concerned about the future even though landowners may promise them that they can renew for another 30 years, real estate experts have said.
There is always uncertainty because of the possibility that landowners will change their mind |in the interim period. Issara Boonyong, chief executive officer of Kanda Group and an adviser of the Business Housing Association, said the extended leasehold contracts from 30 years to be 99 years, which is limited to the EEC zones, would be seen by foreign investors as a key reason to expand their investments. It will not have any effect on local investors because the leaseholds would not involve the sale of land to foreigners, Issara said. However, Issara warned that conditions attached to the leases in regard to what foreigners are permitted to do must be clarified.
– The Nation