THE ADDRESS Magazine Summer 2014 - Page 49

Thailand: Real Estate in the Land of Smiles By Paul Volodarsky, Limcharoen Each year, millions of tourists come to Thailand to enjoy the amazing food, sites, beaches and people. The growth and maturity of tourism has introduced a range of enticing options, from beachfront resorts to secluded mountainside villas. As with any real estate investment, choosing the right opportunity is about assessing the risks and weighing them against the potential benefits. As they make this determination, potential investors should have an understanding of Thailand, the land and its history, access rights and zoning restrictions. Understanding and mitigating the risks associated with a particular real estate investment is best achieved through detailed research and smart due diligence. In light of recent events in Thailand, potential investors should also understand how the country’s real estate market is likely to be affected. Current Events in Thailand As readers may be aware, there have been serious political disputes between the two major political parties in Thailand that recently ended with a coup d’état on 22 May 2014. These events have presented Thailand in a somewhat negative light. Therefore, it is important to consider how the political situation is likely to affect potential real estate investment. In order to better understand how the real estate market affects foreign investors, it is important to first understand how tourism responds. Official figures provided by the Bank of Thailand show that up until this year, the tourism industry has expanded rapidly, with the number of annual visitors increasing from 10 million in 2003 to 26.5 million in 2013. But it is important to note that there have been a number of significant local and global events that have affected tourism growth. In general, recent historical trends have not significantly deterred tourism. Even during times of political uncertainty in Thailand, such as the 19 September 2006 coup, the number of tourists continued to grow. Although Thailand is likely to see fewer tourists in the first half of 2014, it is likely that the tourism industry will continue to grow as the new interim government begins the process of reform and provides much-needed stability. Real Estate Many foreign visitors fall in love with Thailand and seek out ways to take advantage of all that the country has to offer on a long-term basis. This could mean purchasing a luxury villa for private use, or for investment in the growing tourism industry. As calm is restored after the coup, investors may be wondering whether it is a good idea to invest in Thailand. To better understand the real estate market, it is useful to review the connection between tourism and real estate growth. Using the quarterly reports on the value of land and building transactions and the number of tourists visiting Thailand as published by the Bank of Thailand in May, it becomes apparent that there is a connection between recent real estate growth and the 49