The Real Estate Law Review: Thailand

Introduction to the legal framework

iOwnership of real estate

Real estate under Thai law includes the land and property permanently fixed to land or forming a component part of the land. Real estate also includes real rights in relation to the land, the property fixed to the land or the property that forms a component part of the land. Real estate is mainly governed by the Civil and Commercial Code (CCC) and the Land Code (the Land Code). Joint ownership of real estate is also allowed under the CCC. The fundamental forms of real estate and the corresponding differences between the types of ownership and the title documents are outlined below.


Land can either be freehold land or land with a right of possession.

Title to freehold land is represented by a land title deed. The land title deed is the most secure and marketable title document in Thailand.

Owners of land with the right of possession are permitted to use or occupy the land for specific purposes and under certain conditions as described by the Land Code. The title for the land possession right is issued in different forms such as a certificate of utilisation, certificate certifying the usage of the land or claim certificate. Land with a certificate of utilisation is generally recognised as marketable land as it can be upgraded to be a land title deed.


Generally, the CCC treats land and buildings located on land as a piece of real estate. This is because the buildings are permanently fixed to the land and form a component part of the land. It can therefore be assumed that either the landowner is considered to be the owner of the buildings constructed on their land or that the building owner has the right or is permitted to use the land, for example in a form of a land lease. If the building owner does not own or have rights over the land, the land and buildings shall be considered separate and independent real estate and the buildings would not be included as a component part of the land. However, under Thai law the building owner would not be issued with a building title document. In practice, a construction permit or the official building sale contract is prima facie evidence of ownership of a building.


Ownership of a building registered as a condominium shall be divided into separate parts of ownership comprising exclusively owned individual units and common property shared among the owners of the individual units. The registered rights to ownership of the individual units and common property are the main feature differentiating a condominium from other types of real estate. A title deed of a condominium unit (similar to the land title deed) will be issued to a unit holder as evidence of ownership of such unit. In addition to the CCC and the Land Code, condominiums are also governed by the Condominium Act.2

ii System of registration

As a general rule, Thailand operates on a system of land and building registrations where real estate transactions shall be conducted in writing and registered with a registrar at the Land Department. Nevertheless, this system is subject to certain exceptions under relevant laws. If these procedures are not followed, the transactions shall be valid between the parties, but the parties would not be able to assert their rights and titles over the real estate with any third parties. In addition to the registration, certain formalities may be required in accordance with the relevant laws and regulations, for example, a public announcement prior to the registration of certain real estate transactions. A transaction registered with the registrar will be recorded on the title documents of such real estate. The registered particulars and relevant documents are open to public inspection.

iii Choice of law

The parties can freely choose and specify an applicable governing law in their contracts. However, the Conflict of Laws Act3 provides that if the subject matter is real estate, the law of the jurisdiction in which the real estate is located shall be the governing law. Therefore, in practice, the parties to the agreement with respect to Thai real estate usually opt for Thai law as property rights in relation to real estate are governed by Thai law.

Overview of real estate activity

After the Tom Yom Kung financial crisis in Asia, the real estate market gradually recovered. Several measures were launched by the relevant authorities to boost investment in the Thai real estate market. One of the instruments that supported investment into the real estate market is the property fund for public offering (PFPO). The PFPO market has been growing consistently for more than a decade. The success of the PFPO led to another real estate evolution in 2012 with real estate investment trusts (REITs) being launched to replace the PFPOs.

Over the past decade, Thailand's property market has experienced a slow but consistent upward trend. A key reason for the upward trend has been the increasing number of foreigners who have visited or decided to live in Thailand, whether workers or retirees. Other factors have included a better economic outlook resulting in higher take-up and occupancy rates. However, the market performance differs somewhat between different cities in Thailand.4

Since 2019, the real estate market has faced significant changes globally. The office market has been changing with the trend of agile workplaces and co-working spaces. Another example is the shift towards e-commerce and online shopping.5 Although this trend has reduced the demand for retail space, the demand for warehouses and factories in the Thai market has increased to support online activities. The Thai real estate market was heavily impacted by the spread of coronavirus (covid-19) (in part because Thailand relies heavily on tourism and expatriates living in major cities). The new supply of real estate development was reduced by more than 73 per cent in the second quarter of 2020.6 Most of the leading Thai developers saw a reduction in profits during the first quarter of 2020. As investors from mainland China and Hong Kong have been unable to travel due to travel restrictions, the demand continues to be lukewarm.7 With such an uncertain environment, concerns about cashflow and supply chains, together with the difficulties buyers face in conducting inspections, have all contributed to a fall in demand for most types of property.

As a result of Thai financial institutions tightening mortgage lending for property developments, local developers have been driven to source funds by forming joint ventures with foreign partners. Since 2018, there were more than 20 joint ventures formed between Thai and foreign partners to develop residential and commercial projects in Bangkok. More than 75 per cent of the total joint ventures projects in Bangkok were formed with Japanese companies.8 Fundraising methods that have been widely used in recent years among real estate developers in Thailand include issuing bonds or trust units via the establishment of publicly listed REITs to the public.

Foreign investment

Certain business activities, including construction businesses, real estate development and trading, and other relevant service businesses are reserved for Thai nationals under the Foreign Business Operations Act (FBOA).9 Under the FBOA, foreign participation is not generally allowed if the share capital held by the foreign investors exceeds 50 per cent or more. This foreign capital restriction can be waived if a Foreign Business Licence is granted, or such foreigners qualify for an exemption under a treaty to which Thailand is a party or by which it is obligated to abide. Currently, the only applicable treaty is the Treaty of Amity and Economic Relations between the Kingdom of Thailand and the United States of America. In the same manner, land ownership by foreigners is not permitted as a general rule under the Land Code. A company in which foreigners hold more than 49 per cent of the shares, or where more than half of the shareholders are foreigners, is also not permitted to own land in Thailand.

Nevertheless, some special laws and regulations allow foreigners to hold more than 49 per cent of the shares in a company or own land for specific promoted businesses or in specific areas – for example, investment promotion laws and those related to industrial estates and the eastern special development zone. In exchange for such privileges, the foreign investors must complete certain requisitions and comply with the post-acquisition requirements, for instance, minimum capital requirements, technology transfer programmes and reporting requirements.

While there is a restriction on foreigners owning land, there is no such restriction on buildings, and accordingly foreigners can acquire and hold ownership rights in respect to buildings located on land under leasehold or other rights (though such foreigners owning the building must hold for their own use and must not offer the building for lease). However, in respect to condominiums, under the Condominium Act, ownership by foreigners is permitted provided it does not exceed 49 per cent of the total saleable area of a particular condominium.

Structuring the investment

There are several choices of investment structures for investing in real estate projects in Thailand. Foreign investors may choose to have a local partner or invest independently in the real estate project, depending on several factors. The main investment options for real estate investment in Thailand are as follows.

i Joint ventures

As stated in Section III above, a foreign entity is restricted from owning land in Thailand unless it qualifies for certain exemptions. In addition, a foreigner engaging in immovable property businesses would normally be required to obtain a foreign business licence under the FBOA. However, it is rare for a foreign business licence to be issued for foreigners wishing to engage in an immovable property business in Thailand.

An investor who does not qualify for an exemption and seeks an approach to overcome such a restriction can make an investment by setting up a joint venture company with a local developer. This traditional investment structure is one of the most popular structures for real estate projects in Thailand for foreigners. The investment portion of the Thai local partner must not be less than 51 per cent of the total shares in the company for the company not to be subject to the foreign ownership limitation. Local developers have expertise and knowledge in the Thai real estate market, which could also support a foreign investor who has no experience in this type of investment in Thailand. Nevertheless, an investor should bear in mind that there is a limitation under this scheme in terms of decision making as this would normally be mutually agreed by both parties.

ii Board of Investment of Thailand, Industrial Estate Authority of Thailand and Eastern European Corridor

Alternative investment structures that are widely used for investment in Thailand include an investment promotion scheme from the Board of Investment of Thailand (BOI) and the Industrial Estate Authority of Thailand (IEAT). Incentives offered to promoted entities from both the BOI and IEAT can be categorised into tax incentives and non-tax incentives that include authorisation to own land required for business operations regardless of any other contrary laws. To obtain such investment promotions, the investor must meet certain criteria – for example, have invested in a type of business included in the BOI promoted business list or have invested in an IEAT industrial estate.

A specific condition of the BOI provides that, within one year after the promoted business is terminated or ends (for any reason), the business must dispose of the land otherwise the Director-General of the Land Department shall be empowered to dispose of it. However, if a non-Thai national business operator who is granted authorisation to own land under IEAT scheme dissolves its business or its business is transferred, the land must be disposed of to IEAT or the transferee within three years of the date of dissolution or transfer, as the case may be.

In addition to the above scheme, investment promotions are also granted under the Eastern Special Development Zone Act (the EEC Act).10 The EEC Act also offers incentives to foreign investors to own land in the promoted zones in Chachoen Sao, Rayong and Chonburi provinces (and in other areas, as prescribed by Royal Decree as special development zones, in the eastern part of Thailand), as under the BOI such land must be disposed of within one year after the promoted business is terminated or ends for any other reason.

iii Leasing land and owning buildings

If an investor does not qualify for obtaining an investment promotion to own land under the BOI, IEAT or EEC schemes, they may consider an alternative investment option. An alternative option would be to lease the land and own the building, as there are no specific restrictions on the lease of land and ownership of buildings by foreign entities. The maximum lease term must not exceed 30 years as prescribed under the CCC. It is important to be aware that although this scheme can avoid the restrictions under the Land Code, operation of certain businesses may subject to limitations under the FBOA.

iv REITs

After the collapse of the Thai property sector in 1996, a contributing factor to the Tom Yum Kung Crisis in 1997, Thailand's government attempted to stimulate the Thai economy through implementation of various strategies. In relation to the real estate sector, the Securities and Exchange Commission of Thailand (SEC) supported the sector by adapting existing mutual fund regulations to establish a vehicle for PFPOs. PFPOs attracted investors by enabling them to partially own large real estate projects through the issuance and offer of investment units. Funds raised from investors were used to refinance the existing project and enable the development of new projects, enhancing growth in a shorter time than through traditional property project development.

Nevertheless, PFPOs have some disadvantages. The laws and regulations that were applicable when PFPOs were established focused heavily on investor protection, such as limiting the types of assets in which a PFPO could invest and restricting the debt ratio. This made PFPOs a strictly regulated vehicle for real estate investment. Subsequently, under an SEC Notification in 2012, the REIT was established. REITs are a more commonly and widely used vehicle at an international level involving an immovable property investment system that is easier to use and more transparent. REIT regulations also provide more operational and investment flexibility and opportunity.

The main characteristics of the REIT scheme in Thailand are as follows:

  1. REITs in Thailand are trust-type schemes based on the Trust of Transactions in Capital Market Act.11 A REIT in Thailand is not a corporation. Accordingly, the trustee of a REIT is formally the asset holder;
  2. the assets invested in consist of:
    • immovable property (freehold rights, leasehold rights or possession rights over the land and the ownership or leasehold rights over the building); or
    • the shares of companies that hold immovable property;
  3. the total value of the immovable property invested in must be at least 500 million baht;
  4. the trust beneficiary rights units issued for REITs in Thailand must be listed on the Stock Exchange of Thailand. Currently, private placements of REIT units for REIT establishment are not permitted. There are several ongoing discussions on an amendment to current regulations or an issuance of new regulations to support the establishment of private REITs; and
  5. there is also a minimum offering amount of at least 500 million baht for trust beneficiary rights certificates.

Another advantage of a REIT is the ability to borrow money and use its assets as collateral. REITs can borrow up to 35 per cent of their total asset value from financial institutions, or 60 per cent if the REIT itself is investment grade. This makes REITs attractive from an investment perspective. REITs can also raise funds by issuing bonds, which are becoming more common in today's market.

Real estate ownership

i Planning

Town planning

One of the primary laws governing real estate development is the Town Planning Act,12 which provides regulations in relation to the town planning process. A specific town plan for each province or area is issued separately to govern the area and is updated every five years. The specific town plans provide zoning, floor area ratios (FAR), open space ratios and other relevant requirements for each zone. To motivate developers to develop projects for the public benefit, a special privilege, the FAR Bonus System was recently introduced. This allows the developer to gain additional FAR ratio if the development falls under the relevant conditions, for example, providing an area for public utilisation or a public park in the project or developing the project following the green building construction concept.

Building construction control

Under Thai law, construction activities are governed by the Building Control Act13 as a general law. In addition, regulations issued by each municipality also cover construction in each area. Prior to the construction of a building in a location where the Building Control Act is enforced or where there is a town plan, the developer must obtain a construction licence from the local administrative office. In addition, certain types of building require a completion inspection by the relevant local administrative office for issuing building certificates. This is required prior to the commencement of the operation of the building.

ii Environment

In response to the increase in concern about the environment, an environmental impact assessment (EIA) has been introduced as one of the key prerequisites of real estate development projects in Thailand. A real estate development project may be subject to an EIA, depending upon the nature and size of such real estate development project. The criteria are contained in the Enhancement and Conservation of National Environment Quality Act.14 The project developer could be subject to civil and criminal liabilities if they fail to comply with such requirements.

Developers of small real estate development projects in certain areas of Thailand are not required to prepare the EIA report; however, they may be required to prepare an initial environmental examination (IEE), which is the initial stage in the environmental assessment of a project at the pre-feasibility level, for identifying and evaluating possible environmental impacts. The conduct of the IEE is less complicated in practice compared to the preparation of the EIA report or the environmental health impact assessment report (the EHIA report), which is further discussed below.

If the real estate project is required to prepare and submit the EIA report to the Office of Natural Resources and Environmental Policy and Planning (ONEP), the competent authority for approval, the EIA report must be prepared by an EIA consultant authorised by the ONEP and in accordance with the guidelines published by the ONEP. To assess the impact on the environment from the real estate development project, the EIA report typically covers the forecasts of possible impacts that may occur during the course of the real estate development project. This is regardless of whether the impact on the environment is negative or positive. The report also covers mitigating measures as well as monitoring requirements to prevent an undesirable impact from the real estate development project. In addition, there are particular types of real estate development projects (e.g., large-scale biomass power plant projects) that may be required to prepare an EHIA report instead of preparing the EIA report. This is because those types of real estate development projects are deemed to potentially have a more severe impact on environmental quality as well on the health of the affected community. Therefore, the EHIA report, for which the process is more complicated compared to the EIA report, is required to cover a health impact assessment as part of the EIA process.

iii Tax

Land and building tax

In 2019, Thailand launched a new land and building tax law to repeal and replace the previous taxes. The aim of the new tax is to systemise the tax system and penalise the owners of unutilised land. This new tax system changes the tax base and who the taxpayers are. For some, it significantly reduces the tax rate. It imposes different tax rate ceilings depending on the purpose for which the property is used. The purposes include agricultural purposes, residential purposes, and purposes other than the previous two. Unutilised land is also subject to land and building tax.

Taxable properties under the new land and building tax law are land, buildings and condominium units. Several tax exemptions are granted for specific land and buildings that comply with certain conditions. The specific land and buildings include the following land or buildings that would impact on real estate developers in Thailand:

  1. land and buildings under development as a housing or industrial project under the land allocation law;
  2. land or buildings under development as a condominium under the condominium law; and
  3. land or buildings under development as an industrial estate under the law governing industrial estates.

The new tax collection was implemented in 2020. However, owing to the covid-19 pandemic, a significant tax reduction was granted to all taxpayers. For the 2020 and 2021 tax years, taxpayers were only required to pay 10 per cent of the assessed tax for which they were liable.

Applicable tax for real estate transactions

The relevant parties to transactions relating to land and buildings would usually pay income tax. In addition, they would also pay stamp duty. Stamp duty rates vary depending on the type of transaction. For example, the rate for the lease of land or buildings is 0.1 per cent of the rental fees throughout the term of the lease and the rate for the transfer of land or buildings is 0.5 per cent of the assessed price or selling price, whichever is higher. However, in a case where such transfer is subject to a special business tax, the stamp duty shall be waived. The special business tax is a fixed rate of 3.3 per cent of the assessed price or selling price, whichever is higher and shall be imposed on commercial transfers. Certain exemptions shall be granted if the conditions are met.

iv Finance and security

When banks act as lenders for financing real estate projects, it is general practice to request security over the assets as well as any sponsorship undertakings or guarantees from a parent company.

A form of security interest in real estate is frequently a mortgage that is governed by the CCC. The mortgage agreement must be made in writing in Thai language, clearly indicating the mortgaged amount in baht and registered with a competent official.

Prior to 2016, there was no specific law governing the granting of leasehold rights over real property as security. Parties usually created security in the form of a conditional assignment. Against this backdrop, the Business Security Act15 was enacted on 2 July 2016. The security receiver under this act must either be a financial institution or other persons as prescribed in the ministerial regulations. A business security agreement must be registered via an online system with the Secured Transactions Registry Division, Ministry of Commerce.

Since the enactment of the Business Security Act, rights and claims under the lease agreement can be placed as security in the business security agreement. Although it is not required by law, the Bank of Thailand requested that financial institutions opt for entering into conditional assignment of lease agreements and use registered business security agreements.

Leases of business premises

As with leases for other kinds of premises, the leases for business premises are governed by the CCC. There are no specific restrictions on leases entered into by foreigners. The key provisions related to the lease of business premises are as follows.

i Term and renewal of rent terms

The duration of a lease for land or a building cannot exceed 30 years as a general rule. Given this limitation, the contracting parties may have an agreement in some cases that the lessor grants an option to the tenant to renew the contract after completion of the 30-year period. A lease under some special acts (i.e., the EEC Act and the Lease of Immovable Property for Commercial and Industrial Purposes Act16) can have a longer period of up to 50 years.

If a lease period for immovable property is over three years, the lease must be registered with the competent land office. A lease will only be enforceable for three years without registration. A typical term for a lease for commercial space such as retail space, office space or industrial space is usually three years. The agreement may include a renewal option for another three years. If a lease period is three years or less, a tenant can assert its rights under the lease agreement against third parties even without the registration. Prior to the commencement of the lease term, the tenant may request a rent-free fit-out period for one to three months for carrying out fit-out activities in the leased premises.

ii Rental, security deposits and fees

Payment of rent is an important element of a lease agreement under the CCC. A lease without a rental fee would not be considered as imposing a lease but other types of real rights may exist, for example, a right of habitation or usufruct – in these cases a different set of rules would apply. The rent can either be a fixed rent or a variable rent based on the turnover achieved by the tenant within the leased premises. Office and industrial rents tend to be fixed rent and retail rents tend to be variable rent.

Lease agreements almost always require the tenant to place a security deposit of one to three months of rent in the form of a cash or bank guarantee. In addition, it is usually agreed in the lease agreement that the tenant must be responsible for the other ancillary costs as well as taxes and other duties. For a lease agreement with a term of more than three years, which is required to be registered at the land office, the costs for the registration include a registration fee at the rate of 1 per cent of the total rental throughout the lease term and stamp duty at the rate of 0.1 per cent, also of the total rental throughout the lease term.

iii Maintenance and repair

Unless the lease agreement specifies otherwise, the tenant is obligated to conduct minor repairs and maintenance and the lessor is obligated to conduct major maintenance. In general, in the case of a long-term lease where the tenant occupies all or a major part of the leased premises, the obligation of the tenant will include major maintenance.

iv Transfer and sublease

Transfer of a lease by the tenant requires consent from the landlord, but generally the parties may agree in advance to allow the transfer of a lease within group companies. The right of a tenant to sublease is also prohibited unless consent from the landlord is obtained.

If the lessor sells or transfers the ownership of the leased property to a third party, the lease is binding on the transferee of the leased premises. The transferee is required to assume all rights and obligations of the lessor and effectively becomes a new lessor in place of the original lessor.

v Termination

If the tenant is in breach of its obligation including failing to pay the rent, the lessor is entitled to terminate the lease and forfeit the security deposit. However, in practice, the lease agreement normally provides a remedy period of from 30 up to 90 days depending on the negotiation. Typically, a lease agreement does not allow the tenant to terminate the lease early prior to the expiration of the lease term. This is unless the lessor is in breach of its obligation, or the lease agreement specifies otherwise.

Developments in practice

i Changes and uncertainty under the law

Apart from the impact from the covid-19 outbreak in 2020, which continued in 2021, real estate developers are facing a series of changes and uncertainties, including a new land and building tax system and the pending Bangkok town plan. The latest tax collection system differs materially from the previous one in several aspects. In addition, since the new tax collection system has just been implemented, it has not run smoothly for all taxpayers. There have been administrative difficulties that have resulted in the tax filing letters not being sent to each land and building owner in a timely manner. These difficulties have also caused delays in the tax payment by the taxpayers or caused confusion. Furthermore, the interpretation of the land utilisation under this new tax system still needs more precedents to become consistent.

Another significant change in the law, which remains uncertain, is the Bangkok town plan. The anticipated new Bangkok town plan has not been launched. Real estate project developers continue monitoring the upcoming changes. The new Bangkok town plan is still being considered by the competent authority and the final plan may be different from previously disclosed details (e.g., increasing the ratio of a building's total floor area to the land size in the some areas, changes to zoning control and new measures for development projects surrounding mass transit stations).

Furthermore, in 2021, the Central Administrative Court rendered a judgment to revoke the construction licences for a condominium development project in central Bangkok, which had already been completed and more than 80 per cent of the condominium units had already been transferred to buyers. The reasoning of the judgment was based on the minimum requirement of the public road access to the project. The decision of the Central Administrative Court is subject to an appeal. Real estate developers and the public are taking a keen interest in this case.

ii Real estate-backed initial coin offerings

Over the past few years there has been significant growth in fintech, and with that an increase in risk involved in this non-traditional form of fund raising. As a result, in May 2018, a legal framework for digital tokens, cryptocurrencies and initial coin offerings (ICOs) was implemented in Thailand by the Royal Decree on Digital Assets Business.17 This framework is expected to provide more flexibility to the issuer and investors in prescribing unorthodox rights between parties (i.e., any rights as agreed between the issuer and the investors such as profit distribution from the project or rights to receive products or services as agreed) by using smart contracts. With regard to the decentralised feature of blockchain of not having to have intermediaries, it is also expected to save costs in relation to the offering process. In October 2021, Thailand's first ICO of real estate-backed tokens, namely Siri Hub Investment Digital Tokens (SIRIHUB), was introduced to the market. XSpring Digital Company Limited, an ICO portal approved by the SEC, has raised 2.4 billion baht from selling a total of 240 million SIRIHUB. The underlying asset is Siri Campus, which has steady cash flow generated from a long-term lease agreement with Sansiri Public Company Limited. Further to SIRIHUB, it is understood that several real estate developers in Thailand are now preparing registration documents to be filed with the SEC. ICOs could soon become an attractive option for fundraising and will transform the Thai investment market.

iii Private real estate investment trusts

The Thai capital market's regulatory systems are designed to be merit-based. In this regard, the Thai SEC, as a securities' regulator, tends to control all matters related to the Thai capital markets as well as REITS (or Public REITs). The SEC attempts to take necessary measures to preserve the confidence of investors and to ensure appropriate security for non-sophisticated investors in Thai capital markets. As a result, unfortunately, the process involved for the establishment of a new Public REIT, a capital increase of an existing Public REIT as well as ongoing operation compliance, can be relatively time consuming and complicated.

In June 2021, the SEC introduced an alternative REIT investment choice, a Private REIT, to reduce such a time-consuming process and complexity. Private REITs are subject to less filing and regulatory requirements as they are limited to sophisticated investors (i.e., institutional investors and REIT managers and their associated persons) who are classified to have sufficient experience in capital markets. Private REITs are also not traded on a stock exchange. As a result, Private REITs can be attractive for a group of sophisticated investors as they tend to offer superior dividend yields to their publicly traded counterparts and their lower compliance costs have the potential to result in superior returns. Recently, several real estate developers in Thailand have been investigating and discussing with their potential investors for the establishment of Private REITs.

iv Sap-Ing-Sith

As mentioned above, foreigners are not permitted to own land in Thailand although there are certain exemptions under the Land Code. To enable foreigners to undertake a real estate development project in Thailand, a leasehold structure is commonly implemented to overcome the foreign restriction on land ownership. However, an ordinary leasehold structure under the CCC still has certain drawbacks; for example, it is a non-transferrable right unless prior consent from the lessor is granted. Sap-Ing-Sith, a new type of right to utilise real estate, has been adopted in recent years. The Sap-Ing-Sith Act18 was implemented to provide more flexibility and certainty for foreigners investing in real estate development projects in Thailand.

Sap-Ing-Sith is arguably similar to leasehold rights to some extent, but there are several key differences as the purpose of Sap-Ing-Sith is to overcome certain limitations associated with the leasehold structure.

In accordance with the Sap-Ing-Sith Act, Sap-Ing-Sith permits a maximum term of 30 years, which is renewable at the end of the term. The agreement must be made in writing and registered with the competent authority for it to be enforceable. Sap-Ing-Sith rights may be granted to certain permissible types of real estate:

  1. land, represented by a title deed;
  2. land, represented by a title deed, together with buildings constructed thereon; and
  3. condominium units under the Condominium Act.

Only the owner of those types of real estate may grant Sap-Ing-Sith rights to another person (the Sap-Ing-Sith holder). In general, Sap-Ing-Sith rights are transferrable, inheritable and may be mortgaged. A Sap-Ing-Sith holder also has the right to alter the underlying asset under Sap-Ing-Sith without prior consent of the owner, and the ownership of the buildings constructed on the underlying asset under Sap-Ing-Sith belong to the Sap-Ing-Sith holder for the term of Sap-Ing-Sith.

In 2021, the development of Sap-Ing-Sith has been slow. Although Sap-Ing-Sith is one of the alternatives to real estate investment structures for foreigners and it is hoped that it will become a new productive mechanism, there are yet to be notable precedent Sap-Ing-Sith's cases. A leasehold structure is still commonly implemented to overcome the foreign restriction on land ownership due to its simplicity and straightforward structure to undertake real estate development projects in Thailand.

Outlook and conclusions

From November 2021, Thailand reopened its borders to foreign travellers subject to certain conditions. Some hope that the real estate market in Thailand is resilient enough and should be able to bounce back from the covid-19 pandemic as early as the beginning of 2022 or, more conservatively, by late 2022. In response to that, the Thai government is also seeking to welcome more foreign investment in Thailand. One of the most recent proposed initiatives of the Thai government is to reduce foreign ownership restrictions in condominium units. Currently, foreigners are able to hold up to 49 per cent of the total space of all units in a condominium. This quota is expected to be modified upwards to between 70 per cent and 80 per cent of the total space of all units in a condominium. However, foreign co-owners' voting rights at an annual general meeting would still be maintained at 49 per cent to ensure that the Thai co-owners' rights and interests are still reserved.

Furthermore, foreign restrictions on owning land for residential purposes could potentially be reduced. Currently, a foreigner may be able to own land for residential purposes if the investment value of such land is not less than 40 million baht. In this case a foreigner can hold up to a maximum of 1 rai of land, provided that prior approval is obtained from the Ministry of Interior. This is not a popular choice for foreigners due to the substantial investment amount required and complexity in obtaining the approval. The proposed relaxation will reduce the investment amount downwards to 10–15 million baht. The land must be located in a housing estate area and the foreign ownership ratio would still be restricted to a maximum of 49 per cent of the total housing estate area. Even though this relaxation is only expected to be effective for a short period (three to five years), it could potentially support housing development projects in Thailand after the covid-19 pandemic.

In addition to the proposed relaxation of foreign ownership in condominium and housing projects, there is a proposal to increase the lease period under the CCC from 30 to 50 years with a renewable right of 40 years. These proposals are under the consideration of the Thai government and therefore it is unclear when they will take effect.


1 Tananan Thammakiat and Susumu Hanawa are partners, and Namita Tangpitukpaibul, Piyawannee Watanasakolpunt and Tanyamai Thanissranont are senior associates at Chandler MHM Limited.

2 The Condominium Act, BE 2522 (1979).

3 The Conflict of Laws Act, BE 2481 (1938).

4 Marcus Sohlberg, 'Thailand Property Market Outlook 2021: A Complete Overview', 10 November 2020,

5 CBRE, CBRE Research, Real Estate Market Outlook 2019 Thailand.

6 See footnote 4.

7 id.

8 See footnote 5.

9 The Foreign Business Operations Act, BE 2542 (1999).

10 The Eastern Special Development Zone Act, BE 2561 (2018).

11 The Trust of Transactions in Capital Market Act, BE 2550 (2007).

12 The Town Planning Act, BE 2562 (2019).

13 The Building Control Act, BE 2522 (1979).

14 The Enhancement and Conservation of National Environment Quality Act, BE 2535 (1992).

15 The Business Security Act, BE 2558 (2015).

16 The Lease of Immovable Property for Commercial and Industrial Purposes Act, BE 2542 (1999).

17 The Royal Decree on Digital Assets Business, BE 2561 (2018).

18 The Sap-Ing-Sith Act, BE 2562 (2019).

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