Thai developers eye leasehold extension

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Thai developers eye leasehold extension 
Bangkok Post: 25 Jan 2011
Developers eye leasehold extension
50-year period could spur more investment

If an attempt to extend property leasehold periods to 50 years is successful, more developers will choose this alternative to make new projects more affordable for Thai buyers.

It will also help to attract new investment, reduce nominee issues and increase demand for property ownership.

Patima Jeerapaet, managing director of property consultant Colliers International Thailand, says the country should be ready for the launch in 2015 of the Asean Economic Community, which will create a major change and a great opportunity for Thailand. In the property sector, there will be huge movement and new investment across the region. An extension of the leasehold period would promote overseas investment in Thailand.

"If we are not ready for it, how can we compete with others?," Mr Patima says. "An extension of the leasehold period will help boost the property market as a longer term is more secure than a shorter one."

Tomorrow Mr Patima will meet Kiat Sittheeamorn, president of the Thailand Trade Representative Office, to discuss a proposal to amend the definitions of zones in the Hire of Immovable Property for Commerce and Industry Act.

"If our proposal is approved, it will become a ministerial regulation under the act," he says.

Wittaya Luengsukcharoen, a partner at international law firm Baker & McKenzie, says an extension in leasehold property ownership to 50 years would reduce the number of nominees holding a property for foreigners.

"The current leasehold contract with 30 years is not attractive among some foreign buyers as an option to renew is not secure," he says.

Yuthachai Charanachitta, president & CEO of Amari Estates Co, a property arm owned by the Charanachitta family, agrees with the attempt to extend the leasehold period, saying it would increase interest in property ownership among both local and foreign buyers.

"In some prime locations, land plots are scarce, pushing selling prices for a new residential unit so high. Leasehold helps reduce the ownership price to be more affordable, but a 30-year period is less attractive," he says.

Prices for a 30-year leasehold unit may rise by 30-50% if the period can be extended to 50 years at one registration, says Mr Yuthachai, the eldest son of Nijaporn Charanachitta, Thailand's 28th-richest person last year ranked by Forbes magazine and the second-largest shareholder of construction firm Italian-Thai.

Amari Estates plans to launch Amari Residences Phuket worth more than 2 billion baht at Patong beach on the southern resort island.

The project will be located on a beachfront, hillside 18-rai site on a 70-rai plot the company has at one end of the beach. It will comprise 10 villas and 190 condominium units.

Unit prices for a villa and a condominium unit will be 30-50 million baht and 8-10 million baht, respectively, under a 30-year lease contract with a renewal option and a leaseback programme.

"Thai people's perspective on leasehold property will improve if the project is supported by a hotel management service," Mr Yuthachai says. "Selling prices for freehold may skyrocket to 100 million baht for a villa [at the Phuket project], which would be more difficult for Thais to afford."

Amari Estates also plans to launch two more leasehold projects each worth 1 billion baht in Phuket and Pattaya next year.

The Phuket project will comprise a condominium and a hotel on 15 rai of Nai Han beach, while the Pattaya project will be on 10 rai of Wong Amat beach.

http://www.bangkokpost.com/business/economics/217996/developers-eye-leasehold-extension