Real estate is land plus any permanent structures and natural resources attached to it, and in Thailand it spans condominiums, apartments, detached houses, villas, townhouses and office units. You invest in it for rental income, capital appreciation or development. Foreigners most often buy freehold condominiums, since land must be held through a Thai company or a leasehold rather than owned outright.
The History of Real Estate
The history of real estate began with hunter-gatherers who often traveled with the seasons and the food sources that they relied on for survival. At this time, there was little concept of land ownership. Ideas of property possession came with the agricultural revolution which hit different parts of the world at different times, though generally from around 10,000 BC.
Because of the creation of farming systems, settlements became necessary. With these settlements came struggles and conflicts over land rights, and soon aristocratic classes emerged, with property owners given the title “Landlord.”
Over time, more people came to own land as property ownership gained an economic dimension, with people being able to purchase, sell and even lease their own real estate while collecting passive income. Free market economics added to this, increasing the value of desirable properties. Now, these markets are regulated to different degrees depending on the country.
Thailand saw a similar pattern of real estate evolution, with the Chao Phraya River Delta in modern-day Bangkok as one of the early desirable locations due to its agriculture potential. Over time, aristocratic land ownership patterns emerged, followed by free market real estate trends. Finally, the Land Department was established in 1901, in part to regulate Thai title deeds in the free market.
Another major step was taken with the Condominium Act of 1979, which introduced the ability for foreign nationals to invest in the Land of Smiles’ real estate sector. Since then, Thai markets have grown steadily in spite of difficult events like the 1997 Asian Financial Crisis and the 2008 Global Financial Crisis.
What Is the Definition of Real Estate?
The definition of real estate is land, and any property built on this land, that is owned by an individual or legal entity. Real estate’s origins come from the Latin word “real” which means existing or genuine, and the French word “estat” which means status.
The phrase ‘real estate’ became popularized after the Great Fire of 1666 in London when much of the city’s property was burnt down and needed rebuilding.
What Is the Difference Between Real Estate and Moveable Property?
The difference between real estate and moveable property is that moveable property can be removed from the land it’s on. When talking about moveable property, only the actual structure is valid unless the land is also owned. If the structure is built into the land, it’s considered part of immovable real estate.
How Does Real Estate Work?
Real estate works by attaching economic value to a piece of land based on the surrounding environment and financial activity in the area and, in many cases, structures fixed to that land. The value is usually decided by supply and demand, with property often increasing in value over time and people transferring it for capital gains or leasing as a way of collecting royalties (passive income), a summative profit, or a loss.
There are three main processes involved in real estate activities:
- Building plan and construction. In many cases, real estate is exchanged with structures already built on the land, but some property entrepreneurs will prefer to start from scratch. The building plan and construction phase allows you to build the property the way you want and involves detailed architectural planning and construction development.
- Real estate agents and intermediary institution dealings. Most sellers, buyers, lessors, and lessees of property will organize transactions with the help of a licensed real estate agent. These agents market and drive interest in the property for potential buyers and sellers using their extensive local networks and client databases. They can also sort out contract details between parties and help buyers and sellers find the right piece of real estate for their needs.
- Property management. For those who own property that’s being rented, leased, or simply held as an investment vehicle, property managers can save you time and effort. They will arrange tenants, lease agreements, sort out problems with the property, and take care of its general appearance and maintenance.
What Is Real Estate Development?
Real estate development is the process of buying a piece of land and developing structures on it or improving existing ones with the aim of profiting after a sale. Developer businesses typically go through 6 main steps that include:
- Conducting market research that includes evaluating economic interests and any potential zoning issues
- Financing a budget with commercial banks
- Architecturally designing a project
- Submitting detailed architectural plans to authorities
- Receiving licenses and permits from the local municipal authority
- Completing construction.
There are many Thai real estate developers to choose from, many with niches like townhouse, houses, villas, and luxury condominiums.
What Is Real Estate Sales and Marketing?
Real estate sales and marketing is a crucial part of the financial success of any real estate process, and involves attracting buyers, building relationships with them, showing property, and guiding buyers through the transfer.
Modern marketing techniques are common among real estate agencies now, such as innovative technologies like 3D tours, animated renderings of the property, and digital marketing via websites and social media. All of this goes alongside more traditional forms of advertising like commercials and ads. Once the marketing team has attracted potential buyers, the sales team then works to secure sales agreements.
What Is Property Management?
Property management is the act of overseeing the operations of a piece of real estate owned by a client. This may involve selecting tenants, arranging improvements and maintenance on the property, and sorting out any issues that may arise.
Foreign real estate owners, or any owner who wants to save time, can benefit from property management in services as it allows them to create an investment vehicle without physically needing to be nearby.
Types of Real Estate in Thailand
There are 6 main types of real estate in Thailand:
- Residential. This refers to any property whose sole purpose is to act as a home or residence and includes structures like condominiums, apartments, townhouses, villas, and detached houses.
- Commercial. Refers to any property that was created and is used for the purposes of earning profit from some business within. Examples include office buildings, shopping malls, restaurants, and drugstores.
- Leisure. This refers to properties that may or may not be for-profit, but whose primary purpose is to serve as a fun spot open to visitors. Examples include theme parks, shopping malls, and sports facilities.
- Industrial. Refers to property such as factories and processing facilities that process raw materials or create finished goods for sale.
- Institutional. This refers to real estate set aside for the public good and might include parks, libraries, schools, universities, sports facilities, government buildings, and public research centers.
- Agricultural. Refers to land set aside for farming practices and includes rice paddies, grazing fields for animals, and plantations.
What Is a Condominium?
See our FAQ on property ownership in Thailand for the foreign-ownership rules.
A condominium is a piece of residential property that’s part of a larger group of residences with a shared common space. Condos can be leased or sold and, in the case of a purchase, only the physical rooms and not the shared space are owned.
What Are apartments?
An apartment is a residential rental property not registered under the Condominium Act of 2008. These units come as part of a larger set of units within a single building and are often larger than condominiums.
Apartment units don’t come with ownership rights as they are owned by a local company and are built to rent as a real estate service. Instead, they are rented on a short (month-to-month) or longer term basis, the fees for which cover all building maintenance for the residents.
What Is a Detached House?
A detached house is a form of residential real estate structure that is not connected to anything other than the land. These typically have a higher average cost compared to condominiums as they require more private land and are usually a maximum of 3 floors. They’re also normally removed from city centers for the same reason of land scarcity.
What Is a Villa?
A villa is a type of property that’s often single-storied and is usually in a desirable location with many amenities that a typical house may not have such as a swimming pool and a wide lawn for sports. Villas historically refer to vacation homes and the same idea applies today.
What Is a Townhouse?
A townhouse is usually a multi-story property that shares walls with other similar properties. Townhouses are typically built in a large group by the same developer, with individual units sold or leased.
What Are Office Units?
Office units are a type of commercial real estate that company employees occupy for various business ventures. Office units can be broken into 3 grades:
- Grade A office space refers to the highest quality, and generally most expensive, structures. The location is typically ideal and other factors like architecture and technology built into the buildings are of the highest standard.
- Grade B office space is a tier below grade A. These are still quality buildings, but they may not have the same perks and the building materials are often less expensive.
- Grade C office space is the lowest rank. It serves as more of a budget-friendly option for companies looking to save money.
