Superficies in Thailand is an attractive property right for foreigners interested in using Thai real property. Since foreigners cannot own land outright, investors must look for alternatives to absolute ownership. The Superficies option is a strong property right that offers long-term protection to potential investors. A superficies is a property right whereby a landowner will grant the use of their land for a specified period to the superficiary. Unlike a lease, a superficies agreement is an actual property right. While the lease focuses on the people who sign the contract, the superficies focuses on the land stipulated in the contract. Since it is a property right, the superficies must be registered with the Land Office.

The superficies in Thailand grants the superficiary the right to build or plant on a piece of land. The term of the superficies can be defined in two ways. First, the landowner may grant a superficies for 30 years. Once the 30-year period has expired, the parties may extend the agreement for another 30 years. The second option involves structuring the agreement like a life estate. The parties may agree that the superficies will last for the life-term of one of the parties involved, either the landowner or superficiary.

Another beneficial aspect of the superficies is that it is transferable. This is because it is a true property right. The superficiary may sell or transfer his interest at any time. Additionally, the superficiary may devise the interest via a will. The transferability of superficies makes it a unique property right for foreigners in Thailand. Superficies in Thailand is commonly employed among married couples where one spouse is Thai and the other is a foreigner. Since the foreign spouse cannot own land, the Thai spouse may purchase property and grant a superficies to the foreign spouse. This requires somewhat complex contractual maneuvering so a couple should consult an attorney before choosing to avail of this option.

While a foreign spouse, in the case of a divorce, may retain the rights associated with superficies, this does not always work out as a practical matter. This is particularly true in the more rural regions of Thailand. While a foreigner may actually retain the legal right to use their spouse’s property, local family and friends may disregard this right and just refuse to cooperate. In order for the foreign party to protect this right, he may consider entering into a prenuptial agreement with his Thai fiancé where this right is provided for in definite terms.

Thailand going back to democracy after a 15 month military rule has already had a positive impact on the property market. There have been a notable number of deals completing during the high season in Phuket as well as more visitors to the sole agency projects. The newly elected government has begun to take initiatives toward a more open and favorable policy for foreign property investors. The new government has already taken away the 30% capital control which is thought to support bringing back foreign investments.

Property financing for foreigners in Thailand is available. When we buy a property back home, one of the first things that come to our mind is financing. Even for those who have enough funding and liquidity for owning a property, financing is often perceived as a way of leveraging our investments. For buyers with less access to funding, financing is an unavoidable vehicle they utilize to own that dream home. Considering this, Thailand is the same as any other country. Most of the financial institutions in Thailand offer loans for real estate purchases to local Thais and Thai companies centered on similar criteria we are familiar with in our home country. However, the similarities do not extend from there for most foreigners buying property in Thailand.

The issuing of the new tax incentive package is also an attractive move for the property market. This is anticipated to fuel market sentiments on both the demand and supply side. Property Transfer fee will be decreased from 2% to 0.01% and Specific Business Tax for property transactions will be decreased from 3% to 0.1%. Reliability in the market could be improved further by longer lease terms, stretching from the current 30 years to 90 years. The beginning of business lending to foreign property investors should also be considered by the government. Policies like these would enable Thailand to keep pace with its emerging neighbors, Vietnam and Malaysia, relating to property purchase terms. It is expected that there will a more encouraging outlook for the Thai property market in 2008 than in 2007.

Since the December election, foreign investors have shown increased interest. Established developments have witnessed a particularly alive high season. Newly awarded projects have also met with a positive response. A similar trend is witnessed in Samui with a clear rise in visiting and purchases of resort properties. It is anticipated that there will be further demand in Samui with surge in flight schedules. The Samui market for luxury villas is closing on Phuket, with the establishment of international hotel brands wooing quality tourism. Samui has traditionally been a less favored beach destination, but this not at all the case now as it is emerging rapidly as a beach destination. Lot of high net worth investors is now increasingly keen.