Thailand has long remained one of the most attractive destinations for international businesses, investors, and entrepreneurs looking to establish an office, hotel, restaurant, coworking space, or other commercial property in Southeast Asia. However, foreigners entering the Thai real estate market for the first time often discover that local legislation imposes significant restrictions on direct land ownership.

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For this reason, one of the most widely used mechanisms for obtaining control over commercial real estate in Thailand is the Leasehold structure — a long-term lease arrangement that allows foreign investors to legally use land and property for business purposes without the need to own the land outright.

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At the same time, there are many misconceptions and misunderstandings surrounding Leasehold structures. Many investors mistakenly believe they are obtaining guaranteed rights to a property for 90 years, fail to properly assess renewal provisions, or overlook important legal aspects of the transaction structure. As a result, even a promising investment project may be exposed to significant legal risks.

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Legal framework and key features of the Thai land market

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Before considering the available mechanisms for acquiring commercial real estate in Thailand, it is important to understand the fundamental principles of the local land market and the legal restrictions applicable to foreign investors.

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Unlike many European jurisdictions, Thailand's land legislation is built around the principle of protecting national land resources. As a result, foreign individuals and legal entities are generally prohibited from directly acquiring land ownership.

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The primary legal act governing land ownership is the Land Code B.E. 2497 (1954). Under its provisions, ownership of land is generally reserved for Thai nationals and Thai legal entities that meet the applicable ownership and control requirements.

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At the same time, foreign investors may legally obtain rights to use land and real estate through specific legal mechanisms provided under Thai law.

Can foreigners own land in Thailand?

As a general rule, the answer is no. A foreign individual cannot acquire freehold ownership of land on the same basis as a Thai citizen. There are certain exceptions; however, they apply only in limited circumstances and are subject to substantial investment requirements. For example, Thai legislation provides a possibility for a foreign individual to acquire a limited area of land if significant investments are made into the Thai economy and the relevant approvals are obtained from competent authorities. In practice, such mechanisms are rarely used.

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As a result, the vast majority of foreign investors rely on alternative legal structures, including:

• Leasehold (long-term lease rights);
• Superficies (ownership rights over a building situated on another person's land);
• Usufruct (rights to use and benefit from property);
• acquisition of eligible condominium units;
• structures involving Thai companies, subject to compliance with applicable legal requirements.

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Despite the restrictions on direct land ownership, foreign investors may obtain a substantial degree of control over commercial real estate for business purposes.

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Depending on the transaction structure, a foreign investor may be entitled to:

• use land for commercial activities;
• own buildings constructed on leased land;
• renovate, improve, and redevelop the property;
• transfer certain rights to third parties;
• use the property as an office, hotel, restaurant, warehouse, or other commercial facility;
• generate income from the operation of the property.

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Therefore, when assessing real estate investment opportunities in Thailand, it is important to focus not only on land ownership itself, but also on the scope of rights that the investor effectively obtains under the chosen legal structure.

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Leasehold in Thailand: Legal Regulation, Requirements, and Limitations

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As already mentioned, due to legislative restrictions on direct land ownership by foreigners, Leasehold has become the primary mechanism for the use of commercial real estate in Thailand for offices, hotels, restaurants, resorts, and other business projects.

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Despite the widespread use of this structure, investors often mistakenly perceive Leasehold as equivalent to ownership rights. In reality, Leasehold is a separate property right that grants the lessee the right to possess and use real estate for a legally defined period.

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The primary source of legal regulation for Leasehold is the Civil and Commercial Code of Thailand, particularly the provisions governing the lease of immovable property (Sections 537–571). These provisions establish the rules for the execution, registration, duration, and termination of real estate lease agreements.

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In addition, the following are of practical importance:

• Land Code B.E. 2497 (1954);
• regulations of the Thailand Land Department;
• Supreme Court of Thailand case law concerning long-term leases and lease renewals.

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What is the maximum Leasehold term?

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This is one of the most important features of Thai law.

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According to Section 540 of the Civil and Commercial Code, the lease term for immovable property may not exceed 30 years. If the parties agree on a longer term, it is automatically reduced to 30 years regardless of the contract’s wording.

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This is why common marketing structures such as:

• a 50-year Leasehold;
• a 90-year Leasehold;
• 30+30+30 years;

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do not create a guaranteed right to use the property for such a period. From a legal perspective, only the first registered lease term of up to 30 years is guaranteed.

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Can a Leasehold be renewed after 30 years?

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Yes, the law allows lease renewal. However, it is important to understand that renewal is not automatic. After the expiration of the initial term, the parties must enter into a new agreement and register it again with the Land Department. Even if the original agreement contains a renewal clause, such a provision alone does not guarantee the creation of a new 30-year term. This is one of the main legal risks for foreign investors.

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Is Leasehold registration required?

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Yes. If the lease term exceeds three years, the agreement must:

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1. be made in writing;
2. be registered with an authorized official of the Thailand Land Department.

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Without registration, a long-term lease agreement will effectively be legally enforceable for only three years. In addition, an unregistered Leasehold provides significantly weaker protection for the lessee if the property is sold to a new owner.

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What rights does a lessee obtain under a Leasehold agreement?

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Depending on the terms of the specific agreement, the lessee may obtain the right to:

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• use the land plot or building for business purposes;
• operate a hotel, office, or commercial property;
• carry out repairs, reconstruction, and modernization of the property;
• grant certain rights through subleasing arrangements;
• generate profit from the use of the property;
• register additional real rights where permitted by the transaction structure.

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The scope of these rights is determined not only by law but also by the terms of the Leasehold agreement itself.

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However, despite its popularity, Leasehold is not a complete substitute for ownership rights.

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A foreign investor should take into account the following risks:

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• lack of ownership rights to the land plot;
• dependence on the landowner for lease renewal;
• risks associated with a change of land ownership;
• insufficient protection in the case of a poorly structured agreement;
• misleading promises regarding guaranteed “30+30+30” schemes.

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For this reason, when acquiring commercial real estate through a Leasehold structure, it is advisable to conduct comprehensive legal due diligence of the land plot, ownership title, and draft lease agreement before signing the transaction.

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In the next section, we will examine which additional legal mechanisms — Superficies, Usufruct, and corporate structures — may be used together with Leasehold to strengthen the protection of a foreign investor’s interests.

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Additional structures: superficies, usufruct and condominium ownership

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In addition to Leasehold, foreign investors in Thailand may utilize several other legal mechanisms that can provide a greater degree of control over real estate assets or enhance the protection of their investments. The most commonly used structures include Superficies, Usufruct, and the acquisition of eligible condominium units.

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Superficies: ownership of a building located on another person’s land

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Superficies allows the ownership of land to be separated from the ownership of a building, structure, or other improvements located on that land. In practice, this means that a foreign investor may not own the land itself but can legally own an office building, villa, hotel, or other structure situated on that land.

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This mechanism is governed by Sections 1410–1416 of the Civil and Commercial Code of Thailand. The law expressly allows a landowner to grant another person the right to own buildings, structures, or plantations situated on, above, or below the land.

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In practice, Superficies is often used in combination with a Leasehold structure. While Leasehold grants the investor the right to use the land, Superficies provides a separate legal title to the building itself. This is particularly important for commercial projects where the investor intends to construct, renovate, or make substantial capital investments into the property.

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The main limitation is that Superficies does not provide ownership of the underlying land. Furthermore, the right must be properly structured and registered. A poorly drafted arrangement may create the appearance of protection while failing to provide meaningful security for the investor's asset.

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Usufruct: the right to use and benefit from property

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Usufruct is a real property right that allows a person to possess, use, and derive economic benefit from another person's property without becoming its owner.

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Under a Usufruct arrangement, a foreign investor may be entitled to occupy a property, use it for certain activities, lease it to third parties, or generate income from its operation, while legal ownership remains with another party.

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Usufruct is governed by Sections 1417–1428 of the Civil and Commercial Code of Thailand. Section 1417 provides that immovable property may be subject to a usufruct, granting the beneficiary the right to possess, use, and enjoy the benefits derived from such property.

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For individuals, a Usufruct may be granted for a fixed term or for the lifetime of the beneficiary. For legal entities, the term is generally limited to 30 years. While this structure may be suitable for private investments or smaller projects, it is not always the preferred solution for large-scale hotel, office, or commercial developments.

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The primary advantage of Usufruct is the ability to legally use and generate income from property without owning it. The main disadvantage is its limited flexibility in transferring rights and the importance of proper registration. For commercial projects, Usufruct is often better viewed as a supplementary protection mechanism rather than the primary investment structure.

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Condominium ownership: when foreigners can obtain direct ownership

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Unlike land, certain condominium units may be acquired directly by foreigners on a freehold basis. This represents one of the few situations in which a foreign investor can obtain direct ownership of real estate in Thailand in their own name.

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This mechanism is regulated by the Condominium Act B.E. 2522 (1979). The key rule is that foreign ownership within a condominium project may not exceed 49% of the total floor area of all units in the building. Once the foreign ownership quota has been fully utilized, additional foreign purchasers cannot acquire units on a freehold basis within that project.

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In addition, the purchase funds must generally be transferred into Thailand from abroad in foreign currency. In practice, buyers are required to demonstrate the source of funds and the international transfer of those funds through supporting banking documentation, including, where applicable, a Foreign Exchange Transaction Form.

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From an ownership perspective, this is the most straightforward option available to foreign investors. However, it is not suitable for every business model. A condominium unit may work well for office space, serviced apartments, or investment purposes, but it is often insufficient for hotel projects, resorts, or standalone commercial properties situated on their own land plots.

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Conclusion

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For foreign investors, acquiring commercial real estate in Thailand involves much more than simply purchasing a building or securing access to a land plot. At its core, the process is about selecting the appropriate legal structure capable of balancing compliance with Thai law, operational control over the asset, and long-term investment security.

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Thai legislation does not prevent foreign participation in the real estate sector, but it does require investors to understand the local legal framework and make use of specific legal mechanisms designed for non-Thai ownership and control. As a result, the success of a project often depends less on the property's value or location and more on how effectively the ownership and operational structure has been designed.

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When properly structured, a commercial real estate investment in Thailand can provide foreign investors with a stable level of control over the asset, a predictable legal framework, and an effective platform for business expansion in one of Southeast Asia’s most dynamic and rapidly developing markets.

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