Leading design firm Woods Bagot Thailand has now become 'The Beaumont Partnership', as a result of severing ties with the global design firm. I spoke to CEO Tim Beaumont yesterday who expressed a wider long term vision that after operating under a brand for 17 years, the company was now poised to move forward both here in Thailand and in the developing overseas market.
Here in Greater Phuket Woods Bagot worked on such high profile projects as Raffles and Northshore in Pattaya along with a number of residential, commercial and hospitality projects throughout the country. With nearly 100 staff in their Bangkok office the firm is targeting not only growth in the country but has earmarked China, Vietnam and India as areas to expand opportunities.
The recent visit by the Thai Director of the Land Department had our blog buzzing when a number of news agencies quoted him as saying 'foreigners were only allowed to own 40% of a condominium.' It seems something was lost in translation as we have checked a number of sources and confirmed the 49% threshold remains a fact of law.
I spoke to Desmond Hughes, Deputy Chief Executive Officer of the legal firm Limcharoen, Hughes & Glanville who are highly respected solicitors engaged in advising a number of condo project and he commented:
"The Condominium Act, (4th Issue), B. E. 2551 (2008) hasn't changed the foreign ownership quotas for condominiums, which are based on the registrable area of a condominium, and allow 49% of the registrable area to be sold to foreigners, directly"
Hopefully this is now clear to everyone who had reacted to the reports.
One of the islands international brand name real estate brokerage firms is going though some changes with Kamala's Engel and Volkers branch now named Philips Property. Established personalities Martin and Lyndon Philips have struck out on their own and have created an in-house brand focusing on property brokerage along with holiday rentals and yachts.
A new office and set of owners for Engel and Volkers recently opened shop in Cherngtalay at the entrance of Laguna Phuket. More consolidation and changes in the property business looks set for this low season and owners are reworking business models and looking at niche opportunities to address revenue shortfalls.
Reading the recent media stories about comments attributed to the Director of the Land Department Anuwat Maytheewibulwut which caused a considerable uproar has resulted in Mr. Anuwat clarifying the facts. First and foremost is that the Land Code itself has had no amendment nor any revisions regarding foreign ownership of land.
Secondly with over 5.5 million transactions annually there are less then 1,000 complaints, in which case the department does conduct investigations. As clarified in the blog previously that ownership remains confined to either 49% of the salable floor space of a condominium project or else in a BOI (Board of Investment) scheme which has high investment thresholds such as hotels over 100 rooms and cannot be residential property.
In cases where a foreign national is married to a Thai, the Thai spouse is to provide written notification to the department that the property is from personal funds and not held together with a foreigner. He concluded his comments that currently both the land ownership issue and maximum lease period of 30 years is law and any amendments would come from the Government, with the Land Department only acting on legislation as it becomes law.
International branded Engel & Volkers property agents have opened a new Phuket branch in Cherngtalay at the entrance of Laguna Phuket. Back of a master licensing agreement with Double 8 Realty and the European group they already operate in Hua Hin and here Managing Partner Bruce Davison is in charge of the local operation.
We spoke to Bruce on plans for E & V going forward here, with comments as follows:
"currently our model is to focus on the core brokerage segment and later to look at high end villa rentals. There are no plans to go into estate and property management. With Hua Hin and Phuket operating, the next focus will be opening in Bangkok over the next 6 months and then to expand back of licensed partners. Currently between the two offices we have more then 30 staff looking after various functions. Our dedicated Phuket web site will be up and running next week as content is currently being loaded."
With a declining overseas resort grade target buyer base for its condominium product the Watson Property Group has readjusted its strategies to changing conditions. Back of an inventory of 36 unsold units the pricing levels are in the range of THB 43,000 to 48,000 baht per square meter and unit prices averaging THB 4.9 to 7.7 million on its stock of condos.
A hospitality chain Hotelcorp was signed to manage the complex and operate it as a resort, which will spur buyers looking at short term rental yields. Guaranteed rentals for the first three years at 7% per annum have been implemented and the units are already fitted out to function as hotel inventory.
It will be interesting to see at this pricing level and the enhancements, if it's going to be an effective strategy to get property purchasers off the sidelines. We'd expect to see more hotel branding and other marketing programs such as locked in returns during the current slump in transactions. Certainly the biggest challenge remains matching buyer's expectations of large scale discounts with developers needing cash flow but with limited inventory looking to retain some semblance of project profit.
Real estate mogul Donald Trump's various litigation cases in the US involving purchasers of units in failed projects where he licensed his name may see the trigger of similar 'brand licensing' litigation here in Asia. There has been a wave of 'hotel branded' property sold all over the region and here in Thailand which has been sold back of pricing premiums for international operators and use of their names.
Historically both the US and Australia have seen consumer cases prosper against hotel operators who cite a variety of issues ranging from anticipated returns, to inducement along with selling of securities by non qualified real estate brokers. Donald Trump is now experiencing the downside of his predominate brand name where he often simply sold 'Trump' to projects being developed entirely by separate entities.
With more and more branded projects now stalled here in Asia, it will be interesting to see exactly how legal advisors of buyers are looking to take action against not only sellers but also the widening of liability claims.
The quietness on property launches so far this year is deafening. With the exception of Surin's "The Quarter' which hit the market in Q1 so far resort grade real estate entries have been muted. I'm in Bangkok today where leading developer TCC have announced two new condominium launches for H2 2009 at a consolidated valued over THB 4 billion. In the capital's dailies the TCC CEO has been quoted as saying "we will focus on Thai buyers rather then foreigners, as they still have no confidence in Thailand."
Its interesting to note another leading edge indicator with Thailand's largest cement maker SCG reporting a forecasted 10-15% drop in demand for the full year and stating they have reduced prices on some products by 10% to fuel revenue. At the same time they have cancelled plans for an expansion in Cambodia who is also feeling the strain of the economic slowdown.
We have received a number of comments on the site about the recently published reports quoting the Director of the Land Department warning that the use of a Thai spouse in owning land for a foreigner was illegal and possible revocation of the title was possible. A number of very nervous foreigners have asked for some clarification of the law and along those lines we spoke to Michael Greth of the International Law Office (ILO) here in Phuket who are one of the islands longest serving firms. His comments are:
'A recent article in the Phuket Gazette discussed the legality of land purchase by a Thai spouse with monies provided by her foreign husband attracted attention and concern in the foreign community residing in Thailand.
The article published in the Phuket Gazette quoted a statement made by a high land department official in Phuket that basically every land purchase by a Thai (spouse) not having sufficient funds to purchase land with her own monies but doing so with monies received by her foreign companion violates and conflicts with the relevant laws of Thailand. It was also stated that the authorities may investigate and in the event that it is disclosed that land had been acquired in the described way the land title may be revoked at any time. As a legal alternative, the official referred to the Condominium Act allowing foreign investors to purchase property in Thailand as long as the foreign freehold quota of up to 49 % of the sellable area in such project has not been sold out yet.
The above statement needs to be read very carefully as the wording used seems to be very broad and may not apply to each and every case. The prevailing view is that the applicable laws of Thailand, particularly the Land code, prohibit foreign persons to acquire freehold interest in land (except very limited exceptions). Further any legal structure which is ultimately designed to circumvent said laws such as "nominee landholding" through Thai citizens or use of Thai company's being a vehicle to acquire (indirect but absolute) control over land may be deemed as illegal.
However, it was also understood that a land purchase by a Thai national using funds which were given to him/her as a gift by a foreign national shall be in compliance with the applicable laws as long as the foreign national does not acquire (indirect) control over the land through execution of additional bogus legal documents between the Thai landholder and the foreign backer. Therefore, the statement made by the land department official may be nothing else than referring to the legal situation which always applied in the past that land purchase by Thai national is legal as long as no legal structure is implemented giving foreign person (indirect) freehold and/or absolute control over the land, and at the same time just "using" funds provided by such foreign investor to purchase land for the benefit of a third party rather than using "own" monies received as a gift enabling him or her to purchase land without acting as third party landholder.'
We hope this gives some level of comfort to those who find themselves in this type of land owning situation and as always recommend that individuals contemplating property purchases seek qualified legal representation.
