Starting in January and lasting until the end of 2022, foreigners will be able to obtain a Thai Elite visa by purchasing move-in ready (not under construction) units in designated property developments for THB 10 million or more. The new membership level, named “Flex One”, which was reportedly approved in November, aims to quickly inject capital into the country’s property development sector, which has been struggling with lower-than-budgeted sales in 2020 due to the pandemic.
“Developers have a lack of cash flow, some have high debt and the new program will help them not lay off staff,” the president of Thai Privilege Card Company, Somchai Soongswang, told Nikkei Asian Review. He also pointed out that the decision to restrict eligibility to ready-to-transfer units was intended to absorb the current oversupply of units and quickly improving the cash-flow situation. In November, the Thai Real Estate Association warned that thousands of property company jobs would be at risk in Q4 in the absence of government intervention.
How it will work in practice
The large, Thai property developers enrolled in the scheme (so far, at least four of the country’s biggest developers have signed up) will buy the THB500,000 Elite Easy Access memberships (this membership’s price will rise to THB600,000 from January) and bundle them together with real estate units that it offers for sale to prospective investors. As long as they invest at least THB 10 million, investors can choose to buy one or several units but, crucially, only from one developer per card.
Should the investor wish to upgrade from the Elite Easy Access included in their property purchase (for example to enable a longer stay), they would only need to pay the difference in price between the Elite Easy Access they received through property investment and the higher-level membership.
The Thai Elite program will now have nine different packages and more than 11,000 active members, 2,674 signed up during the fiscal year that ended in September, a record-number.
“Unlikely to have much success until normal travel is possible”
Reacting to the news, the head of Asia’s largest online real estate sales platform appeared bullish on the program’s prospects.
“For the applicant, it’s appealing because your money is going into an asset that can earn returns and you can sell again later,” said Georg Chmiel, Executive Chairman of Juwai IQI. “You can also live in the property. The other Thai Elite visas all require payments to the government that you never get back.”
Chmiel said the move amounted to throwing “a lifeline to developers who are drowning in unsold units due to the pandemic” and indicated that, in the medium-term, he remained bullish on the Thai property market.
“Thailand is an even more attractive place to live as a result of its excellent handling of COVID-19. Economic growth is likely to bounce back at very high rates after travel and trade recover. The outlook for the property market is good. Despite a surplus of stock now, many planned projects have been put on hold, so that the future pipeline of new supply is more limited than in recent years. That will tend to support prices.”
He tempered his optimism, however, by pointing out that we should not expect too much from the new policy as long as border-restrictions remain in place.
“Until normal travel is possible, it is unlikely this visa will have much success, except with foreigners already living in Thailand who wish to extend their stay and see an opportunity to obtain a pandemic bargain on real estate.”
What does THB 10 million buy you in the Thai real estate market? Right now, a move-in-ready two-bed, two-bath condo in central Bangkok or a 250 sq.m. house in the suburbs.
Henley & Partners, the program’s concessionaire since 2017, could not be reached for comment today.
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