Bangkok: The growing influence of foreign capital in Thailand's real estate sector, particularly in tourist hotspots like Koh Samui and Koh Phangan, has raised significant concerns about the broader impact on the country's economic and social structures. With foreign investment in some companies reaching up to 67-68%, there is an urgent call for government intervention to address the resulting legal and economic challenges.
According to Thai News Agency, Pornnarit Chuanachaisit, President of the Thai Real Estate Association, emphasized that the issue extends beyond mere investment, affecting the entire Thai economic ecosystem. A prevalent method involves the use of nominees, where companies are registered solely for real estate ownership without engaging in other business activities. This practice spans multiple nationalities, including Russian, French, Chinese, and Israeli investors. Despite existing laws, enforcement remains weak, with penalties often limited to fines, allowing the continuation of these practices.
The situation is particularly acute in the Eastern Economic Corridor (EEC), where Chinese investment has led to "zero-cost real estate" operations. These involve Chinese groups managing every aspect, from project ownership to construction, largely excluding Thai involvement. Payments through platforms like VCAT Pay or cryptocurrency ensure that funds quickly return to the investors' home countries, minimizing local economic benefits.
The influx of foreign capital has also driven up land prices, making it challenging for Thai citizens to purchase property. Additionally, foreign investors are encroaching on occupations reserved for Thais, such as hairdressing and real estate brokerage, with foreign brokers earning significantly higher commissions due to their international client networks.
Despite a challenging year marked by stricter lending policies and high loan rejection rates, certain sectors within the Thai real estate market have found ways to adapt. The sale-and-leaseback and mortgage business has seen growth as entrepreneurs, facing liquidity issues, seek alternative financing. Additionally, the apartment rental market is flourishing, with high occupancy rates as more people opt to rent rather than purchase condos.
Nevertheless, the unchecked expansion of foreign capital through legal loopholes poses a long-term threat to Thailand's economic sovereignty and land independence. Without stricter enforcement of nominee laws and protection of reserved occupations, the country risks losing valuable economic opportunities and control over its real estate sector, even as foreign capital temporarily supports market stability.