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Optimum Regulation on Real Estate--Article for "The Nation"

Optimum and Clear Regulation for Real Estate Development

May 5th, 2008

Real Estate is one of the most regulated industries in Thailand. Although strict regulation makes a lot of sense for the industry that has the direct impact on people life, excessively strict regulations can hurt the growth and prosperity of the industry.


The real estate law and regulations are very important to develop the real estate projects. There are 8 groups of real estate law & regulations with the totally of the existing 46 issues below:

1. 4-issue of the Law of Agreement
2. 5-issue of the Law of Housing Development
3. 3-issue of the Law of Town & Country Planning
4. 1-issue of the Law of Environmental Development
5. 7-issue of the Law of Building Restriction
6. 4-issue of the Law of Building
7. 16-issue of the Law of Property Fee & Tax
8. 6-issue of the Law of Foreign Purchasing Property in Thailand

The land valuation on each plot will be different as per any difference of the law & regulations on land.

Based on the strictly zoning regulations, which was issued on 2006, it has made more costs and time to property developers for developing on new projects. The majority of the regulations were: FAR (Floor Area Ratio): Gross Building Area per Land Ratio; OSR (Open Space Ratio): Open Space per Gross Building Area Ratio. This also makes the difference of the valuation of land plots

Meanwhile, the Law of Environmental Investigation Agency (EIA) trend to be stricter; the changes will impact many residential development projects, as EIA approval processes are time-consuming. This could cause a delay for some real estate development projects, reducing the IRR of the project significantly. If the developers are to retain the required return, eventually the increasing cost will be transferred to the end customers. Moreover, the latest of a draft announcement of the Natural Resources and Environment Committee (NEC) recently launched a revised regulation on the Environmental Investigation Agency (EIA). A comparison between the original criteria and the new criteria is outlined below:

Original EIA Regulation Criteria
1) Any buildings that have 79 units up
2) Any Individual Buildings that are over 23 meter high or have an area of 10,000 sqm and up
3) All area, land development projects with 500 sub-plots and more, or total project area over 100 rai.



New EIA Draft Announcement Criteria
1) Any building that have an area of 2,000 sqm. up
2) Any individual building that has an area of 10,000 sqm and up, including those projects with more than 1 building which have a total project building area of 10,000 sqm and up
3) Any land development projects with 250 sub-plots and more, or total project area over 100 rai will be required to prepare EIA report

We recommend to setting of a One Stop Service to facilitate for property developments i.e. reducing the process of the permit-issue period and including the EIA submission process within one agency. These will make more convenience and reduce the costs of construction. Such improvement is possible since there was already a successful example of One Stop Service in Thailand, which is Industrial Estate Authority of Thailand (IEAT).

After all, strict regulation is fine and fully supported by the developers. The better living means better value to the customers as well as to the whole economy, since it enhance the economy along with the quality of life. However, the regulation should be at optimum and so clear that it does not impair the growth and prosperity of the industry.



Create Date : 23 มิถุนายน 2551
Last Update : 26 มิถุนายน 2551 23:16:09 น. 0 comments
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