Buy, Lease, or Build? The 2025 Thailand Real Estate Playbook for Operators & Investors

Navigating the real estate landscape in Thailand can be challenging for both operators and investors, especially with the dynamic changes expected by 2025. As you contemplate your next move in the Thai market, you will inevitably find yourself facing the critical question: should you buy, lease, or build your next property? In this comprehensive guide, we'll break down the three primary routes—acquire completed assets, lease and improve, or develop from the ground up—focusing on aspects like capital, control, and time-to-market.

TL;DR: The Three Routes

There are three distinct paths to real estate investment in Thailand:

1. Acquire Completed Assets: This route allows for fast cash flow through buying finished properties such as condos and buildings, but it often limits your control due to various building regulations.

2. Lease and Improve: This method provides a capital-light entry point, allowing you to negotiate lease terms while improving the property to suit your needs.

3. Develop From the Ground Up: This offers maximum control and value creation at the cost of a longer timeline and higher execution risks.

   
   

Choosing the right path hinges on evaluating a decision matrix considering Capital, Control, Time-to-Market, Permit Complexity, and Operating Complexity.

Start with Your Operating Thesis

Before making a decision, it is crucial to clarify your operating thesis. This statement should explicitly outline what you are optimizing for, be it cash yield, long-term brand and value creation, or strategic control of specific locations or customer segments. Your thesis will not only guide your choice of the investment route but also define the level of risks you are willing to shoulder.

Aligning Your Capital Stack and Governance

Once your operating thesis is clear, align your capital stack, governance, and team according to the chosen route. Your financing options, whether through equity, bank project finance, or mezzanine structures, will significantly influence your investment capabilities and strategic choices moving forward.

Path 1: Acquire - Buy Completed Assets and Operate

Acquiring completed assets is a straightforward approach that involves purchasing already constructed properties like condos or finished commercial buildings.

Use Cases

• Turnkey Buildings: Ideal for branded operations where immediate cash flow is essential.

• Condo Aggregation: Particularly beneficial for long-stay rentals targeting expatriates or digital nomads.

  
  

Upsides and Watch-Outs

• Upside: Speed to income generation is one of the primary benefits of this route, along with generally simpler permitting and easier access to financing on completed stock.

• Watch-Outs: It’s crucial to be aware of building bylaws, foreign ownership quotas for condos, and the fit-out constraints that may affect your operations.

  
  

Keys to Win

To succeed in this approach, focus on standardized fit-outs that can be efficiently managed and deploy data-driven strategies for pricing and occupancy.

High-rise condominium representing acquired assets

Path 2: Lease and Improve - Control Without Buying Land

The lease-and-improve route provides flexibility while avoiding the high capital expenditure associated with purchasing properties.

Use Cases

• Co-Living and Co-Working Spaces: Attractive for operators seeking to capitalize on the rising trend of communal living and working.

• Adaptive Reuse Projects: Transforming underutilized spaces into profitable ventures.

  
  

Upsides and Watch-Outs

• Upside: This route involves lower upfront capital and can often gear your business toward faster scaling than ground-up development.

• Watch-Outs: Key concerns include the complexity of lease terms, renewal mechanics, and required landlord consent for significant improvements.

  
  

Keys to Win

Successful operators should negotiate long enough registered leases that allow flexibility in improvement rights and ensure that a clear improvement plan is in place.

Co-working space designed for flexibility and engagement

Path 3: Develop - Full Control and Value Creation

Choosing to develop allows you to create purpose-built properties tailored to your brand vision and intended yield.

Use Cases

• Purpose-Built Hospitality: Creating hotels or vacation rentals aligned with a specific market segment.

• Mixed-Use Projects: Combining residential, commercial, and retail spaces to maximize potential returns.

  
  

Upsides and Watch-Outs

• Upside: Full design control and value appreciation upon project completion are considerable advantages of this route.

• Watch-Outs: The challenges become significant, including land acquisition complexities, zoning issues, the lengthy permits process, and construction risks.

  
  

Keys to Win

A strong project management team is essential in navigating the intricate landscape of development. Ensure that you have a detailed procurement schedule in place to minimize risks and maximize efficiency.

Construction site for a mixed-use real estate project

Decision Matrix: Pick Your Path by Constraints

To facilitate your decision-making process, employ a decision matrix to rate each factor crucial to your investment:

Here is the visual grid

Factor	Weight	Acquire	Lease + Improve	Develop
Available Equity	x2	2	3	5
Time-to-Revenue	x2	5	4	2
Brand/Design Control	x1	2	3	5
Permit Appetite	x1	3	3	5

Evaluate each path according to your unique circumstances and score based on how well they align with your investment goals.

Cost and Risk Drivers to Consider

Before committing, model the potential costs and risks associated with each route:

• Acquisition Costs: Include due diligence, transfer fees, and any necessary fit-out expenses.

• Lease + Improve: Consider deposits, capex for compliance upgrades, and costs associated with lease indexing.

• Development Costs: Account for land acquisition, design fees, permitting expenses, and any potential contingencies during construction.

  
  

Your First 90 Days: Action Plan

Executing your chosen strategy requires a structured action plan:

• Week 1–2: Clarify your operating thesis and complete your decision matrix.

• Week 2–4: Identify potential properties, landlords, or sites; run title and planning assessments.

• Week 4–6: Finalize your strategic route, align your structure, and draft your preliminary permits map.

• Week 6–10: Prepare heads of terms for acquires or leases; begin financial modeling.

• Week 8–12: Engage lenders or investors as necessary and create a procurement plan.

  
  

How AD ASIA Can Help

Navigating the Thai real estate landscape requires a combination of expertise and strategic planning. At AD ASIA, we offer rapid feasibility studies to compare the strengths and weaknesses of your Buy, Lease, and Develop options. Following this analysis, we help you prepare a detailed structure, permits roadmap, and contract strategy that aligns with your selected route. Whether you require support in managing submissions, tendering, or project management, we provide the expertise needed to guide you every step of the way.

Choosing the right path in Thailand's real estate market doesn’t have to be overwhelming. With a clear vision of your goals and strategic guidance, you can make informed decisions that lead to success.