Hotel operators are expressing concerns regarding proposed changes to foreign ownership regulations for real estate, fearing that these alterations could lead to a resurgence of illegal hotels in Thailand.
The government’s real estate stimulus plan aims to extend the leasehold period for foreigners to 99 years and raise the foreign ownership limit for condominiums from 49% to 75% of usable space within a building.
According to Udom Srimahachota, vice-president of the western chapter of the Thai Hotels Association (THA), these proposals could undermine the competitiveness of Thai hotels by encouraging foreign homebuyers to take advantage of Thai tourism.
Mr. Udom warned that with increased ownership opportunities, there is a heightened risk of buyers converting condominium units into rentals for foreign tourists. For example, past instances showed Chinese nominee agents purchasing an entire floor in a condominium to rent exclusively to Chinese visitors in popular tourist areas.
He also noted that Thai hotels generally incur higher costs, including land and building taxes as well as corporate taxes, compared to non-licensed accommodations. Currently, Thailand boasts approximately 16,000 registered hotels alongside about 15,000 unlicensed establishments.
In Hua Hin, a condo project was notably purchased in bulk by Russian agents, who then rented the units only to Russian tourists, directly competing with local licensed hotels. Mr. Udom pointed out that if cities like Bangkok or Chiang Mai, which enjoy direct flights to Hua Hin, were to increase their flights from China, it could attract more Chinese buyers interested in illicitly using their investments for accommodation purposes.
He expressed skepticism regarding the extension of leasehold periods for foreign land purchases in Thailand. The country has seen an uptick in Chinese nominees developing residential and condominium projects, as well as hotels, leading to the importation of workers and materials directly from China. This situation implies that the local economy does not fully capitalize on the tourism sector’s benefits.
Mr. Udom emphasized that the THA has already raised these concerns with the Interior Ministry, urging the government to prioritize enhancing the competitiveness of Thai hotels. He advocated for the removal of financial barriers to enable small and medium-sized operators to secure loans, as independent hoteliers continue to face challenges in obtaining funding for property refurbishment.
Furthermore, he recommended that the government expedite regulations for small properties rented out to tourists, which were previously categorized as non-hotels, ensuring they are properly registered in the system.
