KBank finance condo on Sukhumvit

Kasikornbank has joined a Bt4.14-billion loan syndicate to finance Millennium Residence, a condominium project on Sukhumvit Road.

Also participating are Bank of Ayudhya and TMB Bank, with each of the three banks providing Bt1.38 billion.

The parties believe city condominiums will enjoy continued demand in the property market. Construction of Millennium is 20-per-cent complete. As of last December, 179 units, or 59 per cent of its 302 units in two towers, had been sold. – The Nation

Shanghai RE to slow in ’08

Investment in Shanghai´s real estate market is expected to grow less rapidly and become more vulnerable to policy uncertainties in 2008, according to several large real estate service providers.

Real estate investment saw a slowdown in the fourth quarter last year, with only one notable sales transaction completed in the city, after the government implemented the land appreciation tax and imposed additional restrictions on foreign investment in the sector, according to Jones Lang LaSalle.

"Increasing monetary control and tightening policies are bringing more uncertainties, particularly to the investment market," said Lee Hingyin, director of Research & Consultancy at Colliers International (Shanghai). "The investment market may feel the pinch, and it is likely that foreign investors will be more vulnerable to these policy changes this year," said Lee, adding that he expects more severe measures, which will significantly cool down the investment market.

James MacDonald, senior manager of Research at Savills China, however, said: "In the institutional investment market, it´s not necessary that new policies will be introduced and will affect the market in a big way. Instead, it is the more stringent implementation of previous regulations that has to be
watched."

"The government´s tighter monetary policy this year is expected to have a negative impact on the real estate investment market, which is highly dependent on bank loans," said Chen Sheng, director of the China Index Academy, which tracks property prices.

Wang Qing, an economist at Morgan Stanley Asia Ltd, said in a report that sectors with a high debt-asset ratio, such as real estate, tend to experience larger declines in fixed-asset investment growth after credit tightening. The debt-asset ratio of the real estate sector is over 70 per cent.

Liu Shiyu, deputy governor of the People´s Bank of China, the country´s central bank, said the government will strengthen commercial real estate management and adjust the real estate credit structure to prevent risk.

Cambodian goes sky-high

With apartment now going for up to $1.6 million, the post-war Phnom Penh is barely recognizable

In the market for a million-dollar penthouse suite? Thinking Kuala Lumpur, Bangkok or Singapore? Try Phnom Penh. The Cambodian capital’s rocketing real estate prices have encouraged construction to reach for the skies, according to government spokesman Khieu Kanharith.

A South Korean-funded development, Gold Tower 42, announced this month that it is offering skyscraper apartments from around US$500,000 to $1.6 million, and the development, scheduled for final completion in 2011, will become the tallest in the capital.

‘‘Five years earlier, another company began planning a 32-storey tower on the outskirts of the capital which is yet to be built, and we expect many more such projects,’’ Mr Kanharith said.

‘‘The high price of land makes it sensible to make the most of land investments, and skyscrapers are the perfect solution.’’

Some analysts estimate that real estate prices in Cambodia have increased at least tenfold in as many years as the economy continues to grow and the country enjoys post-war political stability.

For instance, real estate brokers say one square metre of land on Monivong Boulevard — one of the capital’s main thoroughfares and the location of Gold Tower — now goes for an average of $2,500 (84,000 baht). It was as low as $30 when grenade attacks and coups were still daily possibilities.

The changes have come fast — it was only in 2002 that the capital’s first shopping center opened and special instructors were employed to educate shoppers on the previously virtually unknown contraption in Cambodia, the escalator, to prevent injuries.

Cambodia is still eagerly awaiting the arrival of its first international fast-food chain this year and it’s still a race between the Malaysian distributor of Kentucky Fried Chicken and Singapore’s Asian distributors of ice cream giant Swenson’s.

But Kim Tae Gon, general manager of Yon Woo Cambodia Co Ltd, which is building Gold Tower 42, says Cambodia is a ‘‘good marriage’’ for companies such as his.

‘‘The investment climate is good. Cambodia is eager for development. We have sold 40% of our apartments in Gold Tower 42 off the plan already, and the majority of buyers are Cambodians, although Koreans, Chinese and British have also bought as well,’’ he said.

Phnom Penh, known as ‘‘The Pearl of Asia’’ in the 1920s prior to decades of civil war, covers just 375 square kilometres and boasts just over one million inhabitants, compared to the more than 10 million in Bangkok.

With its location at the confluence of the Mekong River and the Tonle Sap River, with much of the French colonial architecture intact and low pollution compared to other regional capitals, Phnom Penh is widely seen as a good investment prospect, according to Gon.

Im Chhun Lim, minister of land management, urban planning and construction, said Gold Tower’s 42-storey, $1.56-billion development was an exciting addition to the Cambodian construction scene, which is now the country’s third biggest industry behind garments and tourism.

During last week’s launch of the Gold Tower 42 showroom, Chhun Lim said the construction industry provided up to 30,000 jobs nationally and revealed that top local technicians could earn up to $1,200 a month — a small fortune in a country where the average wage is around one dollar a day.

Gold Tower 42 will not stay the tallest building for long, however. On Jan 8 the South Korean construction company GS Engineering and Construction unveiled plans to construct a 53-storey skyscraper scheduled for completion in 2012.

Ground-breaking for that new international financial building on nearly seven hectares of land in the heart of the capital is planned for mid-year.

South Koreans have launched an investment offensive in Cambodia to catch up on missed opportunities in neighbouring nations, according to analysts.

An adviser to Prime Minister Hun Sen said that the building will house supermarkets, shops, offices, schools, and accommodation for 10,000 people.

Cambodia’s building industry is booming on the back of double-digit growth and hopes that revenue, and business, will begin rolling in on the back of the expected oil and mineral revenues due to be tapped within the next two to five years. A stock market is also in the offing within a year.

BRONWYN SLOAN

Luxury condo market (Bangkok)

Major Development Plc Plc (MJD) remains confident in the growth of the luxury condominium market in next three years despite global sluggishness triggered by the declining US economy, says chief executive officer Suriyon Poolvoralaks.

A company survey showed strong demand for grade A condominiums at prices over five million baht in the central business district, higher than the demand for mid-range units, Mr Suriyon said.

The unstable global economy has created worry about diminishing demand, especially for upper-end residential units, but MJD believed conditions would not affect its business operation as the company had targeted customers with high purchasing power that buy on the spur of the moment.

‘‘The premium condo market will continue to grow for at least one to three years. If consumer demand changes, the company is flexible enough to adjust the projects to serviced apartments or hotels,’’ said Mr Suriyon.

Major Development has eight ongoing projects worth 13.8 billion baht and will continue to develop projects serving the upper segment, with foreign residents of Thailand among its target customers.

Last year, the company realised revenue from the Water Mark Tower A worth 3.9 billion baht, and the 1.25-billionbaht Manhattan Chidlom, and partly from the 1.8-billion-baht Fullerton Sukhumvit. It expects to realise revenue from all ongoing projects in this year.

MJD shares closed yesterday on the Stock Exchange of Thailand at 3.70 baht, down 10 satang, in trade worth 16.7 million baht.

Chiang Mai property boom

After slowing down for a year, the Chiang Mai property market is expected to revive this year under the new government led by the People Power Party, according to Jarin Pongyen, senior vice-president of the listed developper Quality Houses Plc (QH).

''People in Chiang Mai are very sensitive to the political situation. They spent less and saved more since the political situation was uncertain (last year) despite having high purchasing power,'' he said yesterday. ''They are ready to spend again if they are more confident in the political situation which is clearer now.''

Mr Jarin said total savings in Chiang Mai rose from 94 billion baht in 2005 to 103 billion last year but a decline in spending was reflected in lower value-added tax collections and car and motorcycle registrations.

The number of transactions registered at the Chiang Mai Land Office declined from 15,000 in 2005 to 10,000 in 2006 and 9,800 last year. Revenue generated from property transactions dropped from 1.3 billion baht in 2005 to 1.2 billion in 2006 and 900 million baht last year.

The sharpest decline was in housing units priced below two million baht, representing 80% of the total market.

''People in Chiang Mai delayed their decisions. Last year small and medium-scale developers faced lower sales below 50% [of units available] compared with the normal period when they generated sales of up to 70-80%,'' said Mr Jarin, a Chiang Mai-born executive who oversees QH's business in the North.

However, housing priced above two million baht a unit, with about 20 projects on sale, remained strong. Total sales in this segment grew from 1.8 billion baht in 2006 to 1.9 billion last year.

In Chiang Mai, he said, most residential development is in the eastern part of the province in the San Sai, San Kamphaeng and Doi Saket areas.

QH plans to develop high-priced housing units under its Laddarom brand next year on a 60-rai site on the Middle Ring Road, after its Laddarom Elegance is expected to close sales by the end of the year. It also has another two plots of land _ 80 rai on the Outer Ring Road and 90 rai on the Middle Ring Road _ for future development.

QH last year recorded sales of 600 million baht, double its 2006 total, from the existing three projects including 300 million baht from Vararom Kaewnawarat and Vararom Charoen Muang and 300 million from Laddarom Elegance.

Mr Jarin said QH expected total sales of 700 million baht from housing in Chiang Mai this year. Currently, QH and its parent, Land & Houses Plc, have a combined 60% share of Chiang Mai housing priced above two million baht.

QH shares closed yesterday on the SET at 2.34 baht, up 20 satang.

KANANA KATHARANGSIPORN