Sukhumvit 49 - 110,000 baht per sq m

KPN’s Vincente condominium in Sukhumvit 49 features 35 fully furnished units from 59 and 101 sq m and priced from 6.5 million to 11.5 million baht or 110,000 baht per sq m on average.

KPN Lifestyle back in business

After freezing activity for three years, KPN Lifestyle Co Ltd has resumed the business with a high-end condominium project on Soi Sukhumvit 49 and a plan for a luxury villa project in Krabi.

‘‘We have no pressure in launching new projects and we will develop a property project when we acquire the right plot in the right location. Timing is another factor we consider,’’ said chief executive Korn Narongdej.

The company plans to launch four villas worth around one billion baht late next year. They will be located on a 10-rai uphill site, 30 minutes from the Krabi International airport.

As the project will target foreign buyers, it plans a roadshow in Europe. Lot sizes will range from two to three rai each with prices from $5-7 million (157 million to 220 million baht).

Late last month, the company launched sales of the Vincente condominium with 35 fully furnished units worth 300 million baht. The seven-storey project, 70% financed by Siam City Bank, will be located on a 251-square-wah site in Soi Sukhumvit 49 which the company bought two years ago at 180,000 baht per square wah.

Unit sizes will range between 59 and 101 sq m with one- and two-bedroom types priced from 6.5 million to 11.5 million baht each or 110,000 baht per sq m on average. It has sold 10 units and expects to close sales by year-end when construction is completed.

‘‘We constructed major parts of the project before the launch as experience from the first project taught us to control costs,’’ said the youngest son of the Narongdej family, which owns the KPN Music Academy.

‘‘Some costly materials were unnecessary and customers didn’t see, feel or acknowledge the value of them.’’

The company learned the hard way from its first project, The Cadogan condominium, which ended up with a 20% higher cost and a drop in net profit.

Mr Korn also runs KPN Estate Co, which has 1,000 apartments for rent in the Din Daeng, Bang Na and Ramkhamhaeng areas, at 3,000 to 8,000 baht a month.

KANANA KATHARANGSIPORN

Suk31 - 3B-Bath - Royce project (Bangkok)

Major-AIG project unveiled

KANANA KATHARANGSIPORN

MJAI Development Co, a joint venture between AIG Global Real Estate Investment (Asia) and Major Development Plc, has launched its first project, the three-billion-baht Royce Private Residences on Soi Sukhumvit 31.

AIG Global Real Estate Investment (Asia), the property arm of the US insurer, chose Major because it saw the potential for condominium development in Bangkok, according to its managing director Patrick M.S. Lee.

AIG normally expects double-digit returns on real estate, he added.

The initial investment for construction would be two billion baht for the Royce Private Residence. Half of the amount would be supported by Tisco Bank, he said.

‘‘We will see the response from this project before deciding to investing more. AIG has no limitation of investments in real estate sector in Thailand. We don’t focus only on super-luxury [projects] or condominiums as the company wants to explore the opportunities in other segments.’’

AIG can contribute to MJAI by sharing its client database. The joint venture also plans roadshows in Singapore and Hong Kong to seek potential customers.

Suriyon Poolvoralaks, the president of Major Development, said demand for condominiums remained strong, especially in prime locations.

Of the total condominium projects launched last year, 35% are located in Sukhumvit Road, 18% on the riverside, 14% on Rama III Road, and 13% on Silom and Sathorn Roads. The take-up rate in central Bangkok was 73% or 15,195 units.

However, super-luxury projects lagged far behind, accounting for only 1% of total launches or only four projects including The Sukhothai Residences and St Regis Hotel & Residences on Ratchadamri Road.

He said the average unit price of super luxury condominiums rose by 23.7% year-on-year, or at 136,300 baht per square metre. ‘‘In the super-luxury segment, there are fewer players and the segment has high potential to grow. All of them are located in Silom, Sathorn and Rajdamri areas but none in Sukhumvit,’’ said Mr Suriyon.

The company launches Royce Private Residence, located on a three-rai plot on Soi Sukhumvit 31, with 165 units, sized from 111 to 462 sq m, with prices ranging between 15 million and 52 million baht or 150,000 baht per sq m.

Since a soft launch last weekend, the company has already recorded 30% of sales to its existing customers. It aims to sell at least 50% of the project by the end of the year and expects a gross profit margin at 30-35%.

The company will also launch another two projects next month worth a combined six billion baht. One is a low-rise condominium in Hua Hin on a 16-rai plot, with a unit price at 140,000 baht per sq m. The other is a high-rise condominium in Pattaya at 120,000 baht per sq m. It plans to sell a total of 400-500 units from the two projects.

MJAI Development Co, a joint venture between AIG Global Real Estate Investment (Asia) and Major Development Plc, has launched its first project, the three-billion-baht Royce Private Residences on Soi Sukhumvit 31.

AIG Global Real Estate Investment (Asia), the property arm of the US insurer, chose Major because it saw the potential for condominium development in Bangkok, according to its managing director Patrick M.S. Lee.

AIG normally expects double-digit returns on real estate, he added.

The initial investment for construction would be two billion baht for the Royce Private Residence. Half of the amount would be supported by Tisco Bank, he said.

‘‘We will see the response from this project before deciding to investing more. AIG has no limitation of investments in real estate sector in Thailand. We don’t focus only on super-luxury [projects] or condominiums as the company wants to explore the opportunities in other segments.’’

AIG can contribute to MJAI by sharing its client database. The joint venture also plans roadshows in Singapore and Hong Kong to seek potential customers.

Suriyon Poolvoralaks, the president of Major Development, said demand for condominiums remained strong, especially in prime locations.

Of the total condominium projects launched last year, 35% are located in Sukhumvit Road, 18% on the riverside, 14% on Rama III Road, and 13% on Silom and Sathorn Roads. The take-up rate in central Bangkok was 73% or 15,195 units.

However, super-luxury projects lagged far behind, accounting for only 1% of total launches or only four projects including The Sukhothai Residences and St Regis Hotel & Residences on Ratchadamri Road.

He said the average unit price of super luxury condominiums rose by 23.7% year-on-year, or at 136,300 baht per square metre. ‘‘In the super-luxury segment, there are fewer players and the segment has high potential to grow. All of them are located in Silom, Sathorn and Rajdamri areas but none in Sukhumvit,’’ said Mr Suriyon.

The company launches Royce Private Residence, located on a three-rai plot on Soi Sukhumvit 31, with 165 units, sized from 111 to 462 sq m, with prices ranging between 15 million and 52 million baht or 150,000 baht per sq m.

Since a soft launch last weekend, the company has already recorded 30% of sales to its existing customers. It aims to sell at least 50% of the project by the end of the year and expects a gross profit margin at 30-35%.

The company will also launch another two projects next month worth a combined six billion baht. One is a low-rise condominium in Hua Hin on a 16-rai plot, with a unit price at 140,000 baht per sq m. The other is a high-rise condominium in Pattaya at 120,000 baht per sq m. It plans to sell a total of 400-500 units from the two projects.

KANANA KATHARANGSIPORN

Pattaya surge by up to 100%

Market rides on strong foreign investor interest

SOMLUCK SRIMALEE THE NATION

Resale prices of luxury condominium projects in Pattaya have surged by up to 100 per cent due to strong demand from foreign investors, especially from the UK and Russia, according to a research report by property firm Raimon Land yesterday.

The Raimon Land report said that demand for luxury condominium projects located close to Jomtien Beach, Wong-Amat Beach and Pattaya Bay had risen strongly while new project launches have been limited.

As a result, the resale price of luxury condominium projects in Pattaya have increased from an average of Bt74,000 per square metre in 2005 to Bt150,000 in the first two months of this year.

Investors who are interested in snapping up properties in Pattaya are mainly from Russia, the UK, Australia, Germany, and Sweden.

Half the buyers of Pattaya properties treat it as an investment, which generates returns of between 8 to 10 per cent a year, while the other half invest in them as a second home, Simon Derville, Raimon Land vice president for research and development, said.

With strong demand in the market, a number of property firms have launched new residential projects.

According to the report, 19 new luxury condominium projects, or 5,177 units, were launched last year worth nearly Bt30 billion. Some are going through the construction phase and this year about 281 units would be completed. About 1,115 units are being constructed now and will be completed next year or over the next two years.

Some 3,781 units would be built over the next two years, to add to the booming Pattaya property market. Raimon Land is a property firm, which is planning to launch a new luxury condominium project this year called “EDGE”, with an investment of Bt3.6 billion.

Raimon Land was very successful with its Northshore project in Pattaya, worth Bt1.49 billion. Its Northpoint project has recorded presales of more than 50 per cent.

The serviced apartment market

Apartment glut possible

Colliers International Thailand anticipates tougher competition in the serviced apartment market and has urged owners and to refocus their marketing strategy, said managing director Patima Jeerapaet.

The company’s research shows that by 2011, there will be 27 billion baht worth of investments in 38 new buildings, adding 6,580 units to total supply.

Mr Patima said the lower cost of investment and operation had attracted many investors to serviced apartments, instead of building hotels.

Risinee Sarikaputra, Colliers’ research department manager, said there currently were 10,685 units in 75 serviced apartment buildings in Bangkok with an average occupancy rate of 83.33% last year.

However, the increase in demand has lagged the increase in supply. Supply on a room-night basis increased by 167% year-on-year in 2007 as against roomnight demand of only 9.3%.

The traditional main business of serviced apartments has been expatriates residing in Bangkok for a period of more than one month. However, current core demand comprises two groups — new expat arrivals in Bangkok and shortstay tourists and business travellers.

Mr Patima said competition has meant that many apartments had shifted more to the short-stay market — as many as 65% of guests in some buildings.

He said that if the hotel market was too competitive, hoteliers would cut prices and cause a knock-on effect on serviced apartments. Therefore, apartment operators need well-planned marketing strategies to achieve sales targets.

‘‘With many new hotels also opening in Bangkok over the new few years, the more successful serviced apartments are likely to be the ones focused on the core longer-stay market and offering guests staying more than one month a product that meets their requirements, rather than those engaging in a price-cutting war with hotels,’’ he added.

The breakdown of new supply shows a strong concentration in the Sukhumvit area, with 3,659 new units, or 56% of the new supply that Colliers forecasts will enter the market by 2011.

Colliers International Thailand anticipates tougher competition in the serviced apartment market and has urged owners and to refocus their marketing strategy, said managing director Patima Jeerapaet.

The company’s research shows that by 2011, there will be 27 billion baht worth of investments in 38 new buildings, adding 6,580 units to total supply.

Mr Patima said the lower cost of investment and operation had attracted many investors to serviced apartments, instead of building hotels.

Risinee Sarikaputra, Colliers’ research department manager, said there currently were 10,685 units in 75 serviced apartment buildings in Bangkok with an average occupancy rate of 83.33% last year.

However, the increase in demand has lagged the increase in supply. Supply on a room-night basis increased by 167% year-on-year in 2007 as against roomnight demand of only 9.3%.

The traditional main business of serviced apartments has been expatriates residing in Bangkok for a period of more than one month. However, current core demand comprises two groups — new expat arrivals in Bangkok and shortstay tourists and business travellers.

Mr Patima said competition has meant that many apartments had shifted more to the short-stay market — as many as 65% of guests in some buildings.

He said that if the hotel market was too competitive, hoteliers would cut prices and cause a knock-on effect on serviced apartments. Therefore, apartment operators need well-planned marketing strategies to achieve sales targets.

‘‘With many new hotels also opening in Bangkok over the new few years, the more successful serviced apartments are likely to be the ones focused on the core longer-stay market and offering guests staying more than one month a product that meets their requirements, rather than those engaging in a price-cutting war with hotels,’’ he added.

The breakdown of new supply shows a strong concentration in the Sukhumvit area, with 3,659 new units, or 56% of the new supply that Colliers forecasts will enter the market by 2011.

Investor confidence in Bangkok

Concrete expressions of confidence

NIGEL CORNICK

Investor confidence in Thailand's property market is once again on the rise as the sector is experiencing a new and invigorating start to the year.

The ushering in of an elected government in January has been the single most important factor, but the action of the administration to instil confidence among both overseas and local investors has been commendable and has immediately affected property sales.

The lifting of capital controls, for example, while not directly affecting the property market, has had the effect of creating a positive environment for investment and a perception that Thailand is once again welcoming capital inflows from international firms and institutions.

In addition, the government is about to release an economic stimulus package, which will have a clear impact on property investment and establish a framework that will inspire spending. This is good news for the industry and the country as a whole.

The stimulus package has cut the special business tax for property developers from 3.3% to 0.01% for one year and ownership transfer fees, which are split between the developer and buyer along with registration fees, have been cut from 2.0% to 0.01%.

While the initial tax reductions may seem minimal, business costs are reduced for suppliers, while affordability for investors rises due to the reduction in entry-level costs of transfer and registration.

More could still be done, such as increasing the maximum foreign ownership of condominium projects from 49% to upwards of 70% and opening up local lending to international investors.

In its Thai Property Sector report, the global wealth-management company UBS recently increased its 2008 forecast earnings for the Thai property market to 24%, as a result of theses policy initiatives.

The international business community was also recently reassured that the controversial Foreign Business Act would be next on the agenda in a process that would assess all existing concerns and re-create an environment that would welcome overseas investment.

The upbeat start to the year has been reflected clearly in strong purchasing patterns in the luxury condominium sector, where grade A units have been experiencing brisk business.

Sales at The River, an upscale condominium developed by my company, Raimon Land, surged past six billion baht in March, taking total sales volume for the project halfway to its target of 12 billion baht.

Buyer confidence is thriving throughout the Kingdom, and savvy investors would be wise to take a long hard look at what is on offer.

The Eastern Seaboard is a good example of the newfound exuberance among international buyers looking to active lifestyle destinations for properties to enjoy short-term capital gains or as solid rental return vehicles. Demand from this market has been high, driven by the development of the area into a five-star tourism location and the booming local economy.

Our Northpoint development is testament to this level of interest, with the 376-unit luxury condominium recently topping three billion baht in sales since its launch in November 2006.

Purchases have been noticeably quick since the beginning of 2008, with buyers signing up for 59 units worth almost 600 million baht at an average price of 120,592 baht per square metre. These early 2008 figures are most encouraging when you consider that we sold a total of 110 units in 2007.

This is a clear indication of investor confidence rising in Pattaya, with capital inflows coming from Thai investors as well as a wide spread of other nations, such as Russia, the UK, Australia, Sweden, Germany, Estonia and China. A more recent trend is an influx of Thai expat buyers based abroad who recognise the relative value of Bangkok compared to their current place of residence.

The lifting of capital controls and the offering of stimulus measures that directly benefits the property industry show a combination of both clear intent and positive action on behalf of the new government.

With such positive steps being made in the first quarter of 2008, local and international investors will continue to focus their attention on Thailand's property market and help the industry as a whole to grow.