A guide to buying a villa in South East Asia

A guide to buying a villa in South East Asia

524px-southeast_asia.jpgSoutheast Asia consists of two geographic regions: the Asian mainland, and island arcs and archipelagoes to the east and southeast. The mainland section consists of Cambodia, Laos, Myanmar, Thailand, and Vietnam; the population of which are primarily Tai and Austroasiatic peoples. The dominant religion is Buddhism, followed by Islam. The maritime section consists of Brunei, East Timor, Indonesia, Malaysia, the Philippines, and Singapore. The dominant religion is Islam followed by Christianity.

South East Asia is making great efforts to bring the region in line with other more well developed property markets, but there are still some anomalies to take into consideration when buying a villa in the area.

Under Indonesian law, only Indonesian private citizens, not companies, are allowed to own the freehold rights to land. Indonesian companies and foreign individuals are entitled to leaseholds, rights of use, rights of exploitation and rights to build.

What this means, in effect, is that for a foreigner to buy property in Indonesia, it is necessary to enter into a contract with an Indonesian citizen. The contract will usually give you the rights to use the property, but an Indonesian citizen will ‘own’ the freehold. We strongly recommend taking appropriate legal advice before entering into a contract of this type.

Having said that, there are alternatives, which include forming a foreign investment company, buying a ‘right of use’ title and buying the leasehold. Lease holding is common for commercial property transactions, less so for individual long term investments.

Thailand has similar restrictions, and the most common methods of securing property in Thailand are to become a majority shareholder in a domestic company and have the company purchase the property or to sign a 30-year lease with a Thai individual, with an automatic option to renew for another 30 years.

Some popular destinations in South East Asia include:

Phuket. Sometimes called the Monte Carlo of South East Asia, Phuket’s natural beauty and convenient location have created a popular destination for foreign investors.

Bali. Despite a growing tourist trade, Bali has managed to preserve it’s unique cultural heritage and the real estate market is strengthening every day. The Balinese government is also making efforts to attract foreign investors, offering longer, more attractive leases.

Some up and coming property markets include:

Krabi. Situated on Thailand’s west coast, Krabi boasts some of the best infrastructure in Thailand, with an emphasis on green development.

Koh Hang. Situated in the eastern part of the country in the Gulf of Thailand, approximately 85% of the island falls within the Mu Koh Chang National Marine Park along with some 50 other surrounding islands, effectively limiting the amount of development here.

Pattaya. With the possible exception of Bangkok, Pattaya has received more investment than any other area of Thailand over the last ten years. Many expats choose to make a permanent home there, attracted by the miles of beautiful beaches and convenient location.

Perhaps one of the most appealing aspects of South East Asia, is the fact that, unlike some Caribbean and European destinations, there is a wide range of properties available, from multi-million pound investments to far more affordable stand alone villas.

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