Further Reading:
Rumours of Pending Legal Changes
Over the last four months of the high season, I have used this column to go over the general rules of property rights and ownership in Phuket with particular reference to foreign nationals. Before reverting to my previous format of question and answer (please fax or e-mail your questions to Ask William!!) I would like to review the last four high season months.
It’s been a curious period, one full of contradictions in the market and rumours of legal changes. Lets first deal with the rumours.
As much as it has been discussed and covered in the press and despite the instructions of the prime minister for the cabinet to review it as a matter of urgency (it’s viewed as a tool to increase foreign confidence and investment in Thailand), no changes to the land code or condominium regulations have been made as yet.
Consensus of those in the business is that the percentage of foreign ownership (currently 40%) allowed in condominiums will be increased, almost certainly to a figure in excess of 50%. The other rumour in this department, the allowance of freehold ownership of land plots up to one rai in size by foreign nationals, seems less likely to come about, or if it does, is likely to be so restrictive as to be of little practical use. I still believe it will happen, but probably not for a few more years. One interesting issue that this discussion has brought to light again is the ownership rights of the Thai spouses of foreigners - this inequality could suddenly look even worse, if the foreigner partner in marriage could own land and yet the Thai partner could not !!
What is definitely going to happen, within the next one to five months, is the issuing of a new set of planning regulations for the whole of Phuket. Generally speaking the rules currently employed on the West coast of the island (three zones measured from the coast starting with low density (25%) low height (5 meter maximum) construction on the beach and easing as you move further away from the beach (to a maximum of 75% density and 12 meter height), will be extended to cover all parts of the island currently exempted from or with less onerous restrictions. Most likely two additional zones will be added. A fourth starting 650 meters from the beach - where (controversially) high rise buildings may again be allowed, and a fifth covering all mountainous parts of the island (which will have an 8 meter maximum building height).
I repeat, the details of this remain to be finalized by the committee reviewing the codes, but if you do have property that you were thinking of developing, and might be affected by the pending changes, now is the time to dust of those plans and submit them for planning approval.
I will report on both of these issues again as and when rumour becomes fact under law.
O.K. now for the contradictions of the last four months. The Thai stock market is in sharp decline, rumours of a devaluation of the Baht are rampant (well, it’s already been allowed to slip 4% against the dollar - so it may well be a gradual rather than an overnight thing), in the country generally, business confidence is low and property is depressed ….. yet our office in Phuket has just been through it’s busiest high season since 1988-89.
You might think much of this pick up in Phuket is attributed to foreign money (indeed it is) but the figures hold just as true for Thai investors. This pick up is not restricted to my office. Look around the island and you will see more new large hotel construction starts, (particularly along the north shore of Patong Bay), than have been seen in a similar period.
Along with these new hotels there are serious feasibility studies and initial land investment (although admittedly no start ups yet) into tourist infrastructure development projects such as theme parks, zoos, marine theme parks, cable car systems and public jetties.
My advice, don’t be too quick to fall for the pessimists tales of doom and disaster in Thailand, (No, I am not telling you that there aren’t serious financial issues to be worked out in the country in general), but Phuket seems to be well placed for a new period of expansion, and that devaluation of the Baht (if it’s ever allowed to happen) can only serve to speed the process up.