Thailand’s property market is booming and so is fraud. Mainland Chinese buyers, who accounted for nearly half of the purchases by foreigners last year, are among the victims.
Zoe Yu, a 45-year-old photographer from Ningbo in southeast China, encountered trouble when investing in Thailand’s second-biggest city of Chiang Mai. Drawn by affordable international education and lower living costs in the northern tourist hotspot, she signed a contract in January 2023 to buy a 10 million baht (US$293,000) villa following an introduction by a Chinese celebrity.
However, Yu soon found out that foreigners are prohibited from owning land or individual houses in Thailand. Even though her contract lacked legal protection, she fought and won a refund in July this year, but not before losing more than a third of her investment in expenses and renovations.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
The market has unfortunately become a hotspot for fraud, as it attracts new investors with poor knowledge of the regulations, according to House Condo Lawyer, a Thai law firm specialising in property investment. Falsified title deeds and illegal land sales can lead to huge losses. One investor lost as much as 400 million baht, according to the firm.
It also highlighted the issue of illegal nominee structures, where foreign buyers are led to believe they can own land by registering it under a Thai nominee. This practice is illegal and can result in the foreign investor losing their investment if the nominee claims ownership or if authorities investigate.
Yu is not alone. In June 2023, British investor David Edward Chappelle made headlines after learning that a developer, from whom he bought a flat on Koh Samui for 15 million baht, failed to register the property in his name. He was among several foreign buyers caught in this scheme.
In September this year, two Australians filed a fraud complaint in the southern tourist town of Phuket after paying over 5 million baht for a flat that was never delivered. Although they won a civil court case, they have yet to receive compensation.
Authorities in Thailand are making an effort to prevent scams. On Monday, police in Pattaya arrested five Chinese nationals for illegally operating as property brokers.
House Condo Lawyer emphasised that many of the fraudulent schemes stem from a lack of due diligence and misplaced trust in fellow nationals. “Believe it or not, over 60 per cent of property fraud cases in Thailand involve fellow nationals,” the law firm said.
Thailand has seen a decline in the transfer of residential property rights amid a slowing economy, with the number of registrations decreasing 6.6 per cent in 2023 from a year earlier, according to data from Bank of Thailand.
However, foreign demand for properties remains robust. The number of flats transferred to foreign buyers last year jumped 25 per cent from a year earlier, according to data from the Government Housing Bank’s Real Estate Information Centre (REIC).
Chinese nationals were the largest foreign buyers of Thai property – accounting for nearly 46 per cent of all condominium units bought by foreigners in 2023 – as they sought alternative investments amid a protracted downturn in the mainland’s housing market. They snapped up 6,614 units in 2023, an increase of 16 per cent from a year earlier.
They continue to top the charts this year too, according to official data. Inquiries from mainland Chinese and Hongkongers for Thai property jumped nearly 50 per cent this year, compared with the whole of 2023, according to Daniel Ho, co-founder and group managing director of Juwai IQI, a real estate technology group.
On Chinese social media, real estate agencies and influencers have been touting higher investment returns, cheaper international education for children and lower living costs. The hashtag #LifeInThailand reached 1 billion views, while #ThaiProperty garnered 35 million views on Xiaohongshu, a platform that is like Instagram.
In response to these trends, the Thai government is considering easing restrictions on foreign ownership to attract more capital. In June, the interior ministry tabled proposals to allow foreign buyers to own up to 75 per cent of flats in a building – up from the current threshold of 49 per cent – and to extend lease periods for foreigners to 99 years from 30. However, these proposals have faced criticism and are still under review.
“If [the proposals are] implemented, they would be the biggest changes in the Thai market in at least two decades,” Ho said.
As the property investment landscape continues to evolve in Thailand, Juwai IQI said investors should conduct due diligence and work with qualified real estate lawyers to protect themselves and navigate complexities.
Meanwhile, Yu wants Chinese nationals to tread cautiously and hopes that her story serves as a cautionary tale for foreigners interested in buying property in Thailand
“My husband tried and failed to talk me out of the property purchase,” she said. “I was blinded by my vanity, as I was only thinking of living in the same community as a Chinese celebrity.”
More from South China Morning Post:
- Chinese fashion brand Urban Revivo opens in Bangkok, eyes New York, London
- Swire Properties sees robust demand for flats at first mainland China residential project
- Mainland Chinese buyers rush into Hong Kong property amid low prices and rates, high rents
For the latest news from the South China Morning Post download our mobile app. Copyright 2024.
