Thailand property market shaken by nominee crackdown on luxury homes

Thailand’s crackdown on nominee structures used to hold property on behalf of foreign interests is creating new pressure on the luxury housing and condominium markets, as authorities intensify checks on ownership arrangements in the real estate sector.

The issue gained attention after officials investigated the purchase of 33 luxury houses worth more than 1.27 billion baht in the Pattanakarn and Krungthep Kreetha areas of Bangkok.

The purchases were linked to a network allegedly using more than 33 companies as fronts, with Thai nationals acting as nominee shareholders to hold ownership of luxury homes across several projects.

Real estate sources said the practice is not a new development, but enforcement has become more active as authorities increase scrutiny of ownership structures and financial transactions.

The 49:51 structure under scrutiny

Sources in the property sector said one commonly used method involves establishing Thai companies with 51% Thai ownership and 49% foreign ownership under the framework of the Foreign Business Act B.E. 2542 and relevant civil and commercial laws.

The structure was originally intended to support foreign investment, particularly in industrial businesses after the 1997 economic crisis. However, sources said it has also been used in some cases as a channel for foreign nationals to acquire houses, land and other property through companies where Thai shareholders may hold shares only nominally.

“Laws were intended to promote investment in manufacturing, but they are now being used to buy houses, land and hold property instead,” a source said.

Sources said methods identified in the market include setting up companies specifically to purchase property, using accounting firms or legal offices to manage arrangements, and spreading ownership across multiple companies.

They added that company registration documents can reveal shareholder and director structures, allowing unusual arrangements to be identified.

Luxury housing areas under watch

The Krungthep Kreetha area, where luxury homes priced between 200 million and 400 million baht have been launched, is among the locations attracting attention.

Sources said some projects have a significant number of foreign buyers using companies to purchase property, while some developers or project owners also have foreign links.

Other areas being monitored include Krungthep Kreetha, Ratchaphruek, Pattanakarn, Pattaya, Phuket and Chiang Mai.

However, sources stressed that using a company to hold property is not automatically illegal if the business operates genuinely and complies with the law. The issue arises when a company is used only to conceal ownership on behalf of a foreign individual, which may constitute nominee activity.

Wider property market faces scrutiny

Although luxury homes have received the most attention, government inspections also cover condominiums and residential properties across different price segments.

Sources said agencies including the Revenue Department, Department of Business Development and anti-money laundering authorities should examine financial flows alongside ownership structures, particularly where multiple property purchases are made through connected companies.

The increased scrutiny has also affected some genuine buyers with links to foreign nationals.

One example cited by sources involved a foreign husband and Thai wife who used the husband’s funds to purchase a 5-million-baht house but had not completed the transfer due to concerns over ownership and financial checks.

As authorities strengthen reviews of funding sources and ownership status, transfers of both houses and condominiums are facing more detailed examination, particularly properties priced from 3 million to 5 million baht and above.

Foreign demand faces uncertainty

Property developers acknowledge that Thailand’s real estate market has relied heavily on foreign buyers over the past two to three years as domestic purchasing power weakened.

Foreign property purchases are estimated at about 30 billion baht annually, with buyers from China, Myanmar, Taiwan, Russia and other countries contributing to demand.

However, stricter nominee investigations and financial checks could slow some foreign purchases, affecting developers that depend heavily on overseas buyers, particularly in the high-end segment.

Developers watch transfers and liquidity

Sources expect the property market to face greater pressure towards the end of the year due to weak domestic demand, tighter bank lending conditions and increased scrutiny of nominee arrangements.

Many developers are focusing on generating sales and completing property transfers to maintain liquidity, while some companies have delayed new project launches. Smaller developers are also reducing their market activity as access to funding becomes more difficult.

Sources said cracking down on nominee structures is necessary to enforce the law and prevent money laundering, but authorities should balance enforcement against maintaining confidence among legitimate foreign investors.

The challenge for the property sector is ensuring illegal ownership arrangements are addressed without undermining investment confidence and the broader real estate market.

Source: Thansettakij