Impact of Foreign Business Act on Thailand’s Property Market

Following the Thai government’s proposals to amend the Foreign Business Act which restricts the rights of foreigners to own or operate certain businesses in Thailand, CB Richard Ellis Thailand has been carefully monitoring the Thai residential, resort and office markets to judge the market’s actual response from news of the proposals to amend the law on foreign businesses and other recent events.

CB Richard Ellis has also looked carefully at the real effect of the current proposals in conjunction with major law firms and has considered the psychological effect and the perception of foreign businesses in Thailand and foreign purchasers of Thai property. The danger of these proposals is that they may be seen as a rejection of foreign investments with large potential losses for both the real estate and construction sectors of the economy and what might been seen as poor public relations or presentation of Thailand internationally.

According to the CB Richard Ellis Thailand Managing Director, Ms. Aliwassa Pathnadabutr, “Our first advice to all clients is that these proposals are not yet law. Secondly, detailed reading of the proposals shows them not to be as harsh as the headlines have presented them. Most businesses that will be redefined as foreign will be, by virtue of list three, largely unaffected and allowed to continue with time to amend their structure if necessary. Therefore, most office tenants should not be affected although demand from incoming tenants may well be reduced.”

There is strong overseas demand for luxury real estate, both condominiums in Bangkok and resort properties in the price range of US$ 350,000 and above. There is also strong demand in the mid range market with prices of US$ 100,000 and above for holiday and retirement homes in destinations like Pattaya, Hua Hin and Phuket. It would be a major loss for the Thai economy to lose this substantial and long term sustainable market to other tropical countries as noted by Ms. Aliwassa.

In conjunction with the government proposal to restrict nominee-structured companies from owning landed property, CB Richard Ellis would like to see positive steps to support the real estate industry such as 90 year leases for villas and an increase in the ratio of foreign buyers in condominiums from 49. Properties such as Laguna Phuket have never had significant local demand but are targeted specifically at foreign buyers, such developments are major contributors to foreign revenue inflow, the construction industry and local economies. Foreigners buying such properties contribute income not just on purchase, but continuously over the life of the properties through the purchase of local services.

For any current owner of a house or villa with a nominee structure, CB Richard Ellis advises owners to monitor the proposals and seek expert legal advice on how to amend the company’s structure and comply with any changes. The proposals allow a period of one year to amend or change a company’s status. If the Government did move on extending leases to foreigners to 90 years, this would be an obvious route for such villa owners to convert to leasehold.

Existing foreign owners and prospective buyers of Thai real estate should not panic or abandon their interest in purchase. They should focus on foreign condominiums quota and leasehold properties developed by well known and established companies. For example, CB Richard Ellis is proceeding with two overseas sales campaigns with the launch of Condominiums at The Cove in Krabi which will launch sales in late January in Stockholm, Sweden and in February the launch of Leasehold Pool Villas at the Shangri La Resort and Spa, a west coast Phuket beach project.

Despite recent events, there is still sustained foreign interest in Thai real estate. In confirmation of this, CB Richard Ellis Thailand points to sale bookings over Christmas and the first week of the New Year on multi million dollar leasehold villas in Phuket and continued condominium sales in Bangkok and Pattaya.

Thai Perfumeries With Thailand New Year Traditions

Thai Perfumeries are comprised of several kinds of fragrant cosmetics. In the old days, ladies would wear perfume everyday while men would do in some special occasions. Thai Perfumeries could described into four categories as follows:

1. Water-based perfumeries: Nam-Ob Thai (eau de toilette ) and Nam- Proong (eau de cologne);

2. Oil-based perfumeries : Fragrant oils, Tani oil (thick body oil), and fragrant lip balm;

3. Powdered perfumeries: Fragrant talc, Sarapee talc (siamensis Kosterm), Poung talc, Kra-jae talc, powdered nutmeg, powdered Kamin (Curcuma domestica Valeton), and Juang;

4. Scent chewing herbs: Mak-Hom, Niam leaves, Ganploo (Syzygium aromaticum), and nutmeg. These perfumeries may be applied together with each other, such as Kar-Jae talc is mixed with Nam- Ob Thai, or individually used such as scent talc for powdering.

Pang-Ram (Scented talc)

Pang-Ram is made of naturally white talcum powder. It is ground into fine particles and mixed with other fragrant herbs or perfumeries, i.e., kameyan, Magrood (lime)’s peel (Citrus hystrix), Chamod ched (Viverricula malaccensis), saffron, alum and red cane sugar.

Ladies would directly powder their skin with dry Pang-ram, or melt it with Nam-Ob Thai before applying it. The Pang-ram could reduce skin irritation caused by heat or pollens. Thai people use Pang-ram after taking bath.

New year traditions

The most obvious celebration of Songkran is the throwing of water. People roam the streets with bowls of water, water guns or even a garden hose, and drench each other and passersby. This, however, is not the heart of this festival. Not many people, even the new generation of Thais, realize that Thai ancestors started this festival to teach their descendants some important things. This festival teaches people to come home to visit their parents, pay respect to them, and usually bring them a small gift. Mother and Father have given to their children so much, and this is the time that children show them that they recognize their parents’ favor. People also visit their older neighbors to keep the good relationships and to pay respect to the elders around the neighborhood. For these reasons Songkran days are also considered the family days and the elderly days.

People go to a wat to pray and give food to monks. They also clean Buddha images in temples with water and gentle Thai perfume (น้ำอบไทย), as it is believed that this will bring good luck and prosperity for the New Year. In many cities, such as Chiang Mai, the Buddha statues from all of the wats in the city are paraded through the streets so that people can wash them as they pass by. People carry handfuls of sand to their temple to in order to recompense the dirt that they carry away on their feet during the rest of the year. The sand is then piled into large, tiered piles and decorated with colorful flags. Later in the day, people also do community services. Going to wat and doing community service teach people to give, the most basic way to happiness in Buddhism.

Some people make New Year resolutions – to refrain from bad behaviour and to do more good things. Songkran is a time for cleaning and renewal. Many Thais take this opportunity to give their home a thorough cleaning.

The throwing water part was originated as a way to pay respect to people, by pouring a small amount of lustral water on other people’s hands as a sign of respect. The youths also do it in a more fun way. They splash others with water to relieve the heat, since April is the hottest month in Thailand (temperatures can rise to over 100°F or 40°C on some days). This has changed to water fights and splashing water to people on vehicles, a hallmark of Songkran as tourists know, as Thais assimilate more western cultures and technologies.

The use of plaster is also very common having originated in the plaster used by monks to mark blessings.

Nowadays, the emphasis is placed on fun and water-throwing rather than on the festival’s spiritual and religious aspects, which sometimes prompts complaints from traditionalists. In recent years there have been calls to moderate the festival as there are many road accidents and injuries attributed to some extreme behavior – water being thrown in the faces of travelling motorcyclists and elephant riding elders.