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there is some confusion about the law for foreign purchase in Thailand. Most developers and government officials agree that foreigners can have up to 49% of the units in a particular condo building. However, the law limiting foreign ownership to 40% and this was down to 49% on a 5-year basis. The 5-year period has now expired and so legally the limit should be returned to 40%. Most people are still on the 49% rule, which means that many new units, perhaps condominiums are sold to illegal aliens.

For the rest of this article, we should assume that the law actually 49% (as is the common belief). Recently I visited a very nice, luxury condominium in the Sukhumvit area. It is a low rise 8 buildings that exceed the maximum amount that the law allows given the width of the road into the premises. Each unit in this new luxury condominium project has 4 bedrooms and measures 300 square meters All I can say is that it is an impressive building, very stylish. However, it also has a very high price tag, with each unit sold in more than 40000000 baht.

The developer has this concept of a deluxe condominium in which all owners are affluent and high net worth individuals. But the developer has now a problem. They have sold 49% of the total external rate for foreign buyers, but they have sold only about 10% of the remaining 51% to Thai nationals, some of which are employees of the developer. The problem is now the developer is that they can not find enough of Thai nationals to buy the remaining units, which means that they are stuck with them. As a developer, this represents a very high percentage of the profits of this development.

Thai law prohibits non-Thai nationals from owning land, condominiums, then the obvious alternative for foreign investors. However, if you are a Thai National, then you can take a very big house for 40000000 baht, so why should you have that much on a 300 sq.m. condominium unit?

For this reason, there are a number of new condominium buildings in Bangkok on the high-end market that the entity the foreign quota and now struggling to sell large and expensive units Thais.

There are not that many Thais in Bangkok, which would or choose to buy a condo unit Baht 40,000,000 +. If you have some of the research, you would discover that new condominium projects offering small studio, 1 and 2 bedroom units sell like hot cakes, and most of the buyers are Thai Nationals.

Here is a thought that perhaps a developer wanted a luxury condo with the Grade A only large and expensive units to the construction of another condominium in an adjacent plot, with small units, and register both areas as 1 condominium (like Tower 1 and Tower 2, but the brand as two separate units). In this way they could more Thais to smaller units and the luxury units sell foreign investors. Maybe they could even separate buildings with a wall and have separate entrances to, just a thought.

Or maybe the government might reconsider the 49% foreign ownership limit. The law has in the past allowed up to 100% foreign ownership of shares in a condominium building, but that was when the economy is the system and additional funding in the economy.

So, why 49% now? Well, technically as the owner of a condominium unit, you are personally affected by the voting of the building and a part of the country. So, in theory, if there are more than 50% foreign ownership in a condominium, there would be more than 50% ownership of the country. What does this mean that the foreign owners could together agree on the Thai owners and sell the land? Nor, the Condominium Act 2522 requires unanimity of all 100% of the co-owner of a condominium building. It also requires a 75% co-owner approval to sell common area land of the condominium. So the real question is, should the government, this 49% rule, because that's really hurt some developers.

Author: Neil Simmons, a Director of Ideal Homes Real Estate Co., Ltd Tel: (02) 714 3832 -3 http://www.property-bangkok.net

Bio

Neil Simmons, a co-director for Ideal Homes Real Estate, lives in Bangkok almost 7 years and worked in the property market in Bangkok in the last 4 years. The company's website, http://www.property-bangkok.net will give you an idea of what Neil has.