Policymakers looked at the experience of Hong Kong and a few other areas when debating the foreign land ownership bill.
Jeremy O'Sullivan, head of research and consultancy at property firm JLL Thailand, said the new bill will not lead Thailand down a similar path as Hong Kong, where residential price growth is driven by foreign buyers, making property there unaffordable for locals.
"A major difference between Hong Kong and Thailand is the Thai proposal requires a large investment to be maintained before being able to purchase property," he said.
"Hong Kong's market did see a lot of speculation, partially driven by foreign investor and expatriate demand, so they introduced measures to cool the market, including special stamp duties on foreign sales and tough loan-to-value mortgage requirements. Thailand could introduce similar measures if price speculation goes too high."
Mr O'Sullivan said foreigners have been able to purchase Thai condo units for a long time and still comprise a small share of the overall market, though their buying activities did lead to some price inflation in specific buildings and areas.
"The proposal could lead to residential price growth in certain locations within Thailand that are attractive to foreign investors. But the impact overall will be less severe than with Hong Kong because investment requirements will greatly limit the number of buyers," he said.
Mr O'Sullivan said many countries have allowed foreign land ownership for several years and now aim to attract foreign investors and buyers to revive the post-pandemic economy.
The closest competitor is Malaysia, which has much more liberal policies for foreign buyers, including a 10-year visa and a minimum property purchase price of RM1 million. Foreigners account for roughly 10% of residential sales in Malaysia.
There was some price inflation when foreign buyer demand soared, but the overall market is still dominated by local demand, he said.
The United Arab Emirates is a popular destination for international buyers because of the low tax rates and large expat communities in cities like Dubai. Foreigners can only purchase property within designated areas, as outlined by the government.
A large number of European countries permit foreigners to buy property, which helps buyers secure permanent residency. The minimum property investment starts from €250,000 in Greece, which is the lowest minimum on the continent.
While such policies help stimulate these property markets, local residents often suffer from soaring prices driven by foreign buyers, said Mr O'Sullivan. Thailand's much higher minimum level of investment will result in a far smaller number of buyers entering the market, he said.
"To attract more foreign property investors in the future, the government will have to reduce the eligibility criteria to make it more attractive to investors and more competitive with other countries," Mr O'Sullivan said.
Thailand faces a lot of competition from other countries, most of which have lower barriers for purchases by foreigners and have already developed trust and popularity among the target market, he said.
The new proposal should have a minor impact on Thailand's real estate industry, though areas that are popular with foreign buyers may see a slight uptick in sales and property value, said Mr O'Sullivan.