The ongoing land and building tax is compelling many outdated and less competitive offices, apartments, and hotels to leave the market, leading numerous owners to list their properties for sale or lease, particularly in the tourism sector.
Wutthiphon Taworntawat, managing director of commercial property developer UHG, noted that the tax significantly affects landlords’ leasing decisions, especially for older hotels and apartment buildings. “The tax is based on the assessed value of land and buildings, which has raised costs for some landlords compared to previous years,” he explained.
While some owners opt to renovate their properties to enhance income, many hesitate to invest in upgrades, particularly those managing older apartments, even if improvements could yield higher returns.
Similarly, small-scale hotel owners with one or two properties often find it more viable to exit the market due to their limited scale.
Office landlords with less competitive properties also struggle to attract tenants in an oversaturated market, as newer developments offer more appealing rates.
“We’re currently in talks with three landlords of outdated offices, apartments, and hotels in fringe city areas looking to lease their properties on 30-year terms,” Mr. Wutthiphon shared. “Our plan is to renovate these assets into hotels.”
Phattarachai Taweewong, research and communications director at Colliers Thailand, pointed out that hotel owners exiting the market recognize that a strong recovery in tourism has driven hotel prices up, making it an opportune time to sell for maximum return. “Selling now allows owners to evade renovation costs and investment risks,” he stated. “It also signifies a changing mindset, where owners now view hotels not merely as long-term income sources but as actively managed assets.”
He noted that many hotels—especially in locations like Bangkok, Pattaya, Chiang Mai, and Hua Hin—that have been in operation for years are in dire need of significant renovations, prompting sales amidst a booming tourism sector. “The land and building tax is likely to stimulate more asset transfers or repurposing this year, as it represents a fixed expense that owners must bear, regardless of the property’s income generation,” he added.
Properties in prime inner-city locations facing commercial tax rates are under increasing pressure. Without sufficient income or improvement plans, yields decrease, making long-term ownership increasingly untenable, particularly in the face of rising costs and heightened competition from newer, higher-standard developments, according to Mr. Phattarachai.
Surachet Kongcheep, head of research and consultancy at Cushman & Wakefield Thailand, observed that many hotel owners who have earlier endured multiple crises might no longer wish to continue in the business, especially if their recent earnings have met their investment objectives. In several instances, owners have opted to sell when presented with satisfactory offers, a trend that has gained momentum in recent years, particularly post-pandemic, as many faced financial struggles during the downturn.
“Thailand has weathered various crises over the last 20–30 years. Hotels are among the sectors most affected, making significant increases in room rates challenging,” Mr. Surachet commented. Just as the sector begins to rebound with rising demand, political uncertainties often disrupt tourism, leaving owners to restart repeatedly, which can diminish their long-term motivation.
