CREATOR’S understands we all need space, for the ones doing business and living leasing a property or land in South East Asia, can give us space and offers us a canvas on which we can express our freedom in many ways. It can also somehow define our prosperity. In one’s mind, space could represent a vast area of land situated in a resort town or quiet suburbia or it may be the tiny parquet floor of a downtown condominium in a city that never sleeps. In a commercial sense, space denotes a key prerequisite for starting up a business or hotel.
HOW TO GO ABOUT THIS
To acquire space to start a business, an operator may either buy or consider leasing land or an existing property in South East Asia. Buying may sometimes be tough because the price for the land may use up most of the funds set aside to run the business. For this reason, leasing a business location speaks more to our commercial subconscious, as it requires a lower initial investment cost. However, the decision also depends on the business operator’s intended use for the land.
What is crucial for a business operator to determine is how long and secure the land lease agreement will be. The longer they can lease property, the more secure it is, the more returns the business will make. Under every civilized legal system, such as in Thailand, the Civil and Commercial Code of Thailand [CCC], offers a mechanism for alternative possession of the immovable property, such as leasing, is provided. The CCC provides that the lease term on immovable property, such as land, can be up to 30 years.
Seemingly, this permitted leasing property in Thailand term extends for quite a length of time. However, let us compare this to our regional rivals.
HOW TO LEASE IN VIETNAM
In Vietnam, the land is the property of the people and is exclusively managed by the state. Although the concept of private ownership of land is not recognized, one can lease land in Vietnam through the issuance of relevant certificates, which are valid for between 50 to 70 years, subject to certain conditions.
The rights granted over the land are dependent upon payment of a land-use fee together with an upfront payment of rental fees for the entire lease term. In return for these payments, the lessee is entitled to many privileges, e.g. the transfer of land use rights and assets attached to the land, or mortgage or guarantee land use rights and assets to credit institutions in Vietnam, during the term of the lease.
Vietnam has in recent times become more open to investment, which is essential in order to foster development and boost its economy. The country is considered a very attractive emerging market for investment in several sectors, in spite of the recent global economic crisis.
One of the most attractive sectors is real estate, illustrated by the prevalence of real estate funds, which are forecast to have huge returns in real estate businesses such as hotels and resorts. Considering the length of the lease term permitted, it is viable to state that Vietnam lives up to the accolades it receives.
HOW TO LEASE IN MALAYSIA
Malaysia allows foreigners to own land, unique in the region. A governmental program called “Malaysia – My Second Home” (MM2H), which encourages foreign consumers to own second homes in Malaysia, has had considerable success with more than 12,500 foreign applicants approved to date. Foreign nationals may acquire property that is valued at not less than 1 million ringgit [approximately US$250,000], with the government’s approval.
The applicants are of various nationalities, with the majority coming from China, Bangladesh, the UK, and Japan. MM2H has brought millions of US dollars into Malaysia, which in turn brings additional income to the country’s services sector.
To further promote investment in real estate, the Malaysian government set a maximum lease period of 99 years, although the final allotted lease period is subject to government approval.
Is Leasing Property in Thailand Trailing Its Neighbours in Real Estate Terms?
Ranked 21st in terms of ease of doing business according to the World Bank’s “Doing Business 2020“ report released in October 2019, Thailand’s warm climate, hospitality and low cost of living and labour attract both investors in the real estate business and foreigners seeking retirement homes.
However, the CCC’s 30-year leasehold limit does partially diminish some of the appeals of leasing property in Thailand, even though it does allow for renewal for another 30 years because there remains plenty of legal precedents suggesting the option is not always wise for business operators.
Many business operators have begun to think hard about whether they want to invest in the Thai real estate market given that its leasing laws have not been changed or discussed despite changing economic developments in recent years.
Some have concluded that as an investment platform for accommodating their long-term needs, the opportunity of leasing property in Thailand is sadly lacking.
While some investors choose to invest elsewhere in the region, others have attempted to circumvent the law by owning land through a Thai nominee, an issue that has recently been the subject of much public interest in the southern part of Thailand.
Space is essential to everyone, not least business operators. Perhaps it is time we redefined space to include the duration in which one can hold on to it along with width, height and depth? So for investors to consider leasing property in Thailand, the Thai government needs to consider longer lease terms to compete with its neighbours.
WHAT TO DO NEXT?
CREATOR’S as developers, contractors, designers and investors are involved in many projects that are on leased land in Indonesia, Thailand and Vietnam. Every country has its own unique challenges such as land ownership, corporate structures and risk strategies that need to be clearly understood and minimised. We have unique solutions and creative strategies that will assist in making your property more secure and profitable in the longer run.
So why not discuss your plans with our experienced and innovative CREATOR’S team and let our successful track record show you how we can help you to create a successful realisation for your property development and leasing endeavours!
To your success, Bert Bykes @Contact