Thailand’s residential resort property markets, including Phuket, Koh Samui, and Pattaya, are dominated by foreign buyers, yet official real estate transaction statistics fail to reflect the true volume of sales. This is primarily due to the widespread use of corporate holding structures, which have long been the preferred method for foreigners to acquire property in Thailand.
Why Many Sales Are Not Officially Recorded
Under Thailand’s Land Code Act, foreigners cannot own land directly, meaning they are prohibited from holding a freehold land title in their personal name. As a result, for decades, foreign investors have used corporate ownership structures to circumvent this restriction, enabling them to acquire land, villas, houses, and even some apartments.
When a property is sold via company takeover, the transaction is not registered as a real estate sale at the land office. Instead, the ownership of the company that holds the property is transferred via a share transfer and a change of director. Since no land title transfer occurs, the sale does not appear in official government records for real estate transactions.
Furthermore, in the luxury sector, the company being taken over is often an offshore entity rather than a Thai-registered company. These offshore structures are typically set up for tax efficiency, with the offshore company acting as the foreign shareholder in the Thai limited company that owns the freehold. In such cases, the entire transaction takes place outside Thailand, making it completely invisible to Thai real estate statistics.
Which Property Types Does This Apply To?
This practice is most prevalent in freehold land, villas, and houses, as they involve land ownership, which is restricted by the Land Code Act. Since foreigners cannot legally own land, these types of transactions commonly involve company takeovers.
However, corporate structures are also used in the apartment market. Instead of taking a 30-year lease, sometimes ownership rights are achieved through buyers buyers being given shares in the company that owns the land that the building sets on. This means that apartment sales can also constitute company share transfers, with no official record of a real estate transaction.
Additionally, even in freehold condominium developments, where foreign buyers can own up to 49% of the total usable floors space of the project on a direct freehold basis, the remaining 51% – which falls under the Thai quota – can also be acquired through corporate holding structures, the buyers being either Thai nationals or foreign investors.
Acquisition Via Company Takeover Vs. Company Set Up
It is important to distinguish between two scenarios:
- A new company is set up to hold the property. In this case, a real estate transaction is recorded at the Land Office because the freehold of the asset must be transferred into the newly formed company.
- A company takeover is used. This is the most common method for resales of land and houses, as it avoids significant transaction costs, including: The cost of setting up a new company, government transfer fees and taxes, which can total up to 6% of the declared transaction value.
Where Do Market Sales Figures Come From?
Given that many transactions are not officially recorded, some investors may wonder where the sales and performance data quoted by major real estate firms comes from.
The key points to consider:
- Freehold condominium sales, where a foreign buyer registers the freehold in their personal name, are recorded as real estate transactions at the Land Office.
- Company takeovers do not appear in official real estate records.
As a result, when firms such as CBRE, Knight Frank, and JLL publish market data for Thailand’s resort property sector, they rely on:
- Their own internal sales figures
- Market estimates compiled from transactions handled by major agencies.
In Koh Samui, obtaining reliable real estate market data is even more difficult because the island is characterised by many smaller, local agencies. Unlike Phuket, international real estate firms such as CBRE and Knight Frank do not have a local presence on the island. Since small agencies lack the resources to compile comprehensive data, reliable real estate performance figures for Koh Samui are simply not available.
