Do you plan to buy property in Thailand?
Click here to get in touch with an experienced agent
Thailand has a comparatively developed REIT market and introduced its first REIT in 2014. Here, you’ll not only find REITs that solely invest in domestic real estate but also REITs with properties overseas.
If you invested in property in Thailand or other Southeast Asian countries, you’re probably aware of the obstacles that foreigners come across.
Not only are there restrictions to foreign ownership, but sometimes to the value of the unit, your residential status, and the list goes on.
Even if it’s fairly straight-forward to buy condominiums and you can get hold of freehold property in Thailand, you should not overlook the benefits of investing in REITs.
Topics covered in this article:
- Can foreigners buy REITs in Thailand?
- How can I start buying REIT units in Thailand?
- Requirements to set up and run a REIT
- What are the benefits of buying REITs in Thailand?
- List of REITs in Thailand
Can foreigners buy REITs in Thailand?
Investing in REITs in Thailand is similar to other Asian countries, like Vietnam. The first thing you need is a brokerage account and it’s preferable to work with a local broker.
Buying shares through overseas brokers results in higher transaction fees that can cost around USD 50, while local Thai brokers can charge as little as USD 2. With that said, even if it’s more expensive to buy REITs via overseas brokers, this is a common option among foreign investors.
Opening a local brokerage account requires more work and you’ll have to visit Thailand. To open local trading accounts, you also need to be a permanent resident / have a long-term visa.
How can I start buying REIT units in Thailand?
As mentioned, first you have to get a brokerage account and where you have the following three channels as your options:
- Place trades directly with local SET member brokers
- Foreign trading companies and institutional investors can connect their trading applications with the help of SET member brokers’ front-send systems. This is done through Direct Market Access (DMA)
- Retail investors that trade on the SET with the help of foreign or local online brokers
The Stock Exchange of Thailand (SET) has also written a comprehensive article that explains how you can invest in REITs, which is worth checking.
Requirements to set up and manage REITs in Thailand
Some key takeaways when setting up and running a REIT are:
- The paid-up capital must be equal to or more than THB 500 million after the units offering
- 90% or more of the net profit has to be paid to the unitholders
- REIT units/shares must be listed on the Stock Exchange of Thailand (SET)
- Investments can include all kinds of real estate, including department stores, malls, office buildings, office buildings, warehouses, and similar
- Investments can include both domestic units as well as overseas
- Properties that currently generate rental incomes must be equal to or be more than 75% of the total value of units offered, in addition to loans if existing
- The REIT cannot invest more than 10% of the net asset value in so-called Greenfield projects, which are brand new properties. The REIT has to invest 90% of its net assets in Brownfield projects (established projects)
Keep in mind that these are general requirements and additional regulations apply.
What are the benefits of buying REITs in Thailand?
There are benefits of investing in REITs in practically all markets, not only developing ones. Below I have listed some of the main benefits of investing in REITs in Thailand as a foreigner.
1. Market access
Buying real estate can be a complex process and sometimes beyond the reach of foreign investors. As mentioned, foreign individuals can only acquire up to 49% of the units in strata-titled projects, which are typically condominiums.
Investing in commercial properties in Thailand is not within the reach of foreigners unless you open a local company.
By investing in REITs, on the other hand, you’ll get access to and kinds of properties, including industrial real estate, warehouses, shopping malls, and office space.
Thus, you’re not bound to invest in condominium units that oftentimes generate lower yields compared to commercial real estate.
2. Overcoming foreign ownership restrictions
This goes hand in hand with the first benefit listed. Investing in real estate in developing countries can be complex and you might come across pitfalls that result in lost time and money.
There are plenty of stories of foreigners who bought houses through nominee structures or with the help of their partners and later lost ownership of their units.
Investing in REITs generally easier and not as complicated in case you want to get access to the commercial real estate market and other assets than condominium units.
3. Substitute for owning real estate
Investing in real estate requires that you manage tenants, take care of maintenance, and pay property taxes, for example. If your unit becomes vacant, you will also suffer from reduced incomes from an unknown time.
Buying units in REITs is simple and you only have to open a brokerage account.
Selling properties is a different story for REITs as you have to find an agent that is willing to do so unless you manage to sell the unit on your own. The paperwork involved when selling real estate is also worth considering.
Selling units in REITs is easy and can be done instantly.
5. Generally offer good dividend yields
Thailand’s REIT market has been one of the best performing in Asia in the past years.
According to JLL, REITs trade at a 5.6% dividend yield, compared to 6.2% for the Property Funds for Public Offerings (PFPOs) in the USD 200 to 600 million market capitalization range.
List of REITs in Thailand
Bangkok Land introduced Thailand’s first REIT in 2014. Since then, the capitalization of the REIT market has reached THB 85 billion with two million square meters of assets.
It’s also predicted that existing trusts will move to the REIT structure in the coming years.
Impact Growth REIT
Impact Growth REIT was listed on the 1st of October in 2014 and with an investment value of THB 19,614,500,000. The REIT currently holds the following units on a freehold basis:
- IMPACT Arena
- IMPACT Challenger
- IMPACT Forum
- IMPACT Exhibition Center
These are all IMPACT Muang Thong Thani projects. It’s the biggest exhibition and convention center in South East Asia with a total exhibition area of more than 122,165 square meters.
The REIT lost around -53% of its value from September 2019 to March 2020 but has gained around 40% since.
The REIT distributed the following dividend yields in the past years:
- Dec 2018: 3.83%
- Dec 2019: 3.53%
- Dec 2020: 4.11%
Strategic Hospitality Extendable Freehold and Leasehold Real Estate Investment Trust
SHREIT is managed by Strategic Property Investors Company Limited and invests in hospitality assets in the Mekong region, including Jakarta and Ho Chi Minh City. The REIT has both luxury and more low-priced units with 632 rooms.
The 3 properties owned by SHREIT include:
- Pullman Jakarta Central Park (Jakarta)
- IBIS Saigon South (Ho Chi Minh City)
- Capri by Fraser (Ho Chi Minh City)
Not surprisingly, the REIT lost around -46% in value in 2020, due to the ongoing COVID-19 pandemic which severely impacted the hospitality industry.
The dividend yields have been as follows according to the SET:
- Dec 2019: 6.28%
- Dec 2020: 6.14%
Frasers Property Thailand Industrial Freehold & Leasehold REIT
FTREIT was launched in 2014, as you can hear by its name, the REIT is managed by Frasers Property Industrial REIT Management (Thailand) Co., Ltd.
The REIT has around THB 41.14 billion worth of property under its portfolio, including 614 warehouses and factories that covers 1.87 million square meters.
The properties are located in strategic areas, including Ayutthaya, Pathum Thani, Samut Prakan, and the Eastern Economic Corridor (EEC).
The units had tenancies at the time of the purchases, including multinationals that work in the automotive, electronics, and logistics industries.
Worth mentioning is also that FTREIT was assigned with an ‘A/Stable’ rating, the highest credit rating among all REITs in Thailand.
The REIT offered the following dividend yields in the previous years:
- Dec 2016: 2.95%
- Dec 2017: 1.40%
- Dec 2018: 4.68%
- Dec 2019: 4.25%
- Dec 2020: 5.72%
Amata Summit Growth Freehold and Leasehold REIT
AMATAR was incorporated in 2015 with a registered capital of around THB 3,57 billion. The REIT has both leasehold and freehold factory buildings under its portfolio, distributed as follows:
Amata City Chonburi Industrial real estate
- 48,408 sq.m. of freehold property, 25 buildings
- 105,516 of leasehold property, 60 buildings
Amata City Rayong Industrial real estate
- 46,662 sq.m. of leasehold property, 3 buildings
In the past years, the REIT has generated the following dividend yields:
- Dec 2016: 3.68%
- Dec 2017: 6.21%
- Dec 2018: 6.90%
- Dec 2019: 5.66%
- Dec 2020: 7.30%
Other REITs available in Thailand
Other REITs available in Thailand include the following:
- CPN Retail Growth Leasehold REIT
- Thailand Prime Property Freehold and Leasehold REIT
- Dusit Thani Freehold and Leasehold REIT
- LH Hotel Leasehold REIT
- WHA Premium Growth Freehold And Leasehold REIT
Property Funds for Public Offering (PFPOs):
You can also invest in the following Property Funds for Public Offering (PFPOs):
- Land and Houses Freehold and Leasehold Property Fund
- Samui Airport Property Fund
- CPN Commercial Growth Leasehold Property Fund
- Tesco Lotus Retail Growth Freehold and Leasehold Property Fund
- LH Shopping Centers Leasehold Real Estate Investment Fund
- Quality Houses Leasehold Property Fund
- Quality Houses Hotel and Residence Freehold and Leasehold Prop. Fund
- Jasmine Broadband Internet Infrastructure Fund
If you’re interested in Singapore real estate, I also recommend you to read my separate article that explains how you can invest in Singapore REITs as a foreigner.
Disclosure: This information is intended for educational purposes. It does not constitute investment advice and should not be considered as a recommendation for investment. The writer of the article and the owners of the website don’t own any of the securities/REITs mentioned in the article. Note that the value and income of investments can go up, as well as down (resulting in a loss).