The Sea (Koh Samui)

The Sea Samui, worth Bt550 million. ( Sinthoranee Property)

Wuttichai said the company was also studying a possible residential project in Hua Hin, in order to support strong demand in that market.

“We believe in the next two years, we’ll launch new property projects – residential, retail, hotels and resorts – that will generate more income for our property business,” he said.

The Sea Samui is part of its business expansion this year and has sold 40 per cent of its Bt550-million value. The Sea Samui will have six villas and 15 units of low-rise condominiums starting at Bt7.6 million per unit and covering 66 square meters.

Wuttichai said that up to 70 per cent of its customer target for The Sea Samui was foreign investors wanting a vacation home or a second home on Koh Samui, with the rest coming from the domestic market.

The company expects Bt200 million worth of sales from The Sea Samui this year. Total revenue is expected to be Bt310 million, with Bt50 million of that coming from rental fees for Pavilion Place and Bt60 million from the two villas of La Bay Buri de Pran. Sinthoranee’s total revenue target for this year is double last year’s Bt100 million.

Chanond has sold more than 3,500 units

With Bt5 billion in fresh funds coming from its European partner Primeamerica, a subsidiary of financial giant Prudential, Ananda Development’s CEO Chanond Ruengkritya is in a fix.

He is under pressure to build even more condominiums than the roughly 4,000 units he is now putting on the market.

“We now have seven sites and we plan to buy land to build seven more by year-end,” he said yesterday.

Already the first Bt8 billion injected into Ananda last year has reaped big returns with his Ideo brand projects, which are built close to subway and Skyrain stations in Bangkok.

Chanond has sold more than 3,500 units and already closed sales at three sites: in Lat Phrao Soi 17 and Phaholyothin and Phya Thai roads.

His newest site in Sukhumvit Soi 103 is already 25-per-cent booked. The two-tower project with 1,200 units on a 7- rai plot is expected to be worth Bt2.6 billion when sales close, he said.

“ There is no guarantee building next to a Skytrain station on Sukhumvit Road will draw buyers,” said Aquarius CEO Yongyuth Chaipromprasert, who is behind the design of the Ideo units and a key consultant to Chanond.

“Close to our Sukhumvit site are many other condominium projects, some selling cheaper, but many are just not attracting buyers,” said Yongyuth, who formerly headed Sansiri subsidiary Plus Property.

Chanond said the secret to Ideo’s success was the firm’s ability to produce fully fitted units that start from Bt62,000 a square metre.

“A 24-square-metre studio sells for Bt1.5 million, which is affordable to urban workers,” he said.

Moreover, changing trends among young Thai adults are boosting Ideo’s sales figures.

“Graduates are now telling parents not to buy them a car but an Ideo condominium instead,” said the CEO.

“ We have a resounding appeal with youths, because we are fully supporting the move to fight climate change,” said Chanond.

The developer dislikes car ownership, as it is expensive and robs Thai workers of a large chunk of their savings.

“It is far better for them to buy property, which over time increases in value,” he said.

But the speed at which his projects are selling is stunning even the builder himself.

“I did not expect the 470 units at Ideo Q on Phya Thai to sell out so quickly, being launched just last quarter, “ he said. “Its average floor price was Bt100,000 a square metre.”

The first 300 units in Sukhumvit Soi 103, which offers only studios and one-bedrooms, are also booked.

If buyers own cars, however, the Ideo estates do have ample parking facilities. The company has already obtained approval for five of its projects from the environmental impact assessment ( EIA) board, said Chanond.

“We try to be the most environmentally responsible and energysaving developer in Thailand to comply with all the regulations under the new city administrators,” he added.

Lately, the rules have been strictly enforced, and developers failing to measure up have been forced to chop off high floors that exceeded EIA rules. A number of developers denied EIA approval were also recently forced to return cash deposits to buyers.
ITTHI C TAN THE NATION

Slow down the real-estate sector

INFLATION DRAGS DOWN ASIAN MARKETS

Asian property markets, though still relatively unaffected by the credit crunch, will soon be affected by inflation and higher interest rates, because of rising food, fuel and other commodity prices, warns the Global Property Guide.

The Global Property Guide is an online property research house.

Many Asian economies have recently experienced residential realestate price surges such as China (Shanghai) where the housing price increased 35.43 per cent, Singapore by 31.18 per cent, Hong Kong by 24.95 per cent, the Philippines by 15.15 per cent, Japan by 8.40 per cent and South Korea by 3.08 per cent.

Meanwhile, most analysts said the key rates might be raised next month if inflation continues to be above the official targets.

Fears of interest- rate hikes rose in several Asian countries, particularly in Indonesia and China.

High interest rates affect housing markets in two ways, namely, discouraging investment and consumption, causing the economy to slow down, thus reducing people’s willingness to spend on housing.

They also discourage borrowing for housing loans.

“ The situation is unfortunate because most Asian housing markets have not yet fully recovered from the effects of the 1997 Asian financial crisis,” Cruz said.

“Even with strong house price gains last year, property prices in Asia are still below their pre-Asian crisis peak levels.

Despite the 31-per-cent nominal rise in the overall residential property price index, Singapore’s prices are still about 10 per cent to 20 per cent below their pre-Asian crisis peak level in real terms,” he said.

“In the Philippines, even with the 15-per-cent increase in condominium prices in 2007, it is still about 47 per cent below its peak level in real terms,” Cruz said.

The housing markets most likely to be affected by monetary tightening seem to be China, India, Singapore, the Philippines and Thailand, which have experienced the largest increases in inflation.

“ With global financial markets interconnected, the world’s economies tend to move together. The synchronicity was observed with the global housing boom – never before in recorded history did so many countries experience such house price growth at the same time,” he said.

“ The housing market slowdown may also be synchronised,” he said. “Inflationary pressures are likely to cause Asia’s central banks to raise interest rates and slow down their housing markets,” Cruz said.

Location remains priority

Location remains priority for non-residential investment

Location remains the first priority that investors should consider before investing in non-residential property projects, suggested executives in the real-estate industry.

Vivat Sricharoenwong, vice-president of the Thailand Asset Management Association, said property investors should consider location first, followed by financial and management risks, as a better location would bring a higher yield.

For example, an office building in Soi Lung Suan in downtown Bangkok can command a monthly rent of 650-700 baht per square metre while a similar building outside the central business district (CBD) would charge less.

In yield terms, office buildings in the CBD would generate 8% per year while non-CBD ones earn 5-6%.

Wongphumi Vanasin, president and managing director of Pinnacle Hotel Group, said location was also a factor for hotel investment.

The second concern was building structure and hotel management team.

The tourism business has not been affected by the economic slowdown because people stressed out from work or business usually take leisure trips for relaxation, he noted.

However, risks in hotel investment include interest rates, supply and the political situation.

Charoen Nadpobsuk, general manager of SC Park Hotel, said currently there is an oversupply in the hotel business due to a rising number of serviced apartments competing for market share.

As a result, hotel agents are bargaining down the price with hotel operators.

Over the past 10 years, hotel room rates rose by less than 10% on average.

Currently, there are 500,000 hotel rooms in Thailand, excluding apartments, serviced apartments and condo-turnedhotel rooms. The average occupancy rate was 70%.

Thanin Nonnathee, president of the Bangkok Serviced Apartment Club, said that as of early 2008, there were a total of 10,685 serviced apartment rooms in Bangkok, with 1,500 added in 2007. About 65% of them are located along the BTS and Sukhumvit Road.

He suggested that investors study location, project feasibility and demand before investing in serviced apartments.

Compared to hotel investment, serviced apartments generated higher gross operating profits as hotels would need two staff members for a room but serviced apartments need up to one.

Ornranee Ratanakongsawat, a consultant with Panthip Court Serviced Residence, said the initial return rate of grade A serviced apartments in Phloen Chit, Silom and Sukhumvit Road was 12-15% and 10-13% for grade B.

On Phahon Yothin Road, the return on investment was 11-14% for grade A and 9% for grade B while on Ratchadaphisek Road it was 10% for grade A and 8-9% for grade B.

At the same time, the break-even period should not be longer than seven years for serviced-apartment investments, excluding land price, and 10-12 years including land price.

KANANA KATHARANGSIPORN

Dusit International to expand

All together, a total of 13 new properties in Thailand and abroad will come under the management of Dusit in the next three years.

They include two in Bali and another two in Cairo, with some opening this year.

The chain will manage its first Bali hotel called Dusit Princess Bali this December.

Its second site called Dusit Devarana Bali, that has 144 rooms, should open in late 2009.

Bali’s tourism has fully recovered, the hotel said. Last year, the island drew 1.6 million foreign arrivals, up 32 per cent from 2006.

Octavio Gamarra, senior vice president, said tourists from Russia, South Korea, and China as well and Japan are coming to Bali as they feel confident about their safety there.

The group will also run the Dusit Thani Cairo in June.

Its second Egypt hotel called Dusit Residence Lake View opens next year.

Its boutique brand called Dusit D2, will open in Pattaya midyear.

Dusit D2 Samui is scheduled to open next year.

Seven Dusit hotels are set to open in 2010. These include properties in Dubai and Abu Dhabi in the United Arab Emirates. The group is currently running 18 properties, including hotels in the Philippines and Dubai.

Gamarra said its new developments are on track, even though the global economy has slowed with oil prices skyrocketing and air tickets becoming more expensive. The group is also negotiating with investors to manage hotels in Hong Kong, Singapore, Japan, the Maldives, Australia and Bhutan.

“We are a Thai operator with an aim to be a global chain,” said Gamarra.

Its Bangkok flagship is close to 100 per cent occupancy in the first quarter, he said.

SUCHAT SRITAMA THE NATION

Four hotels are planned for Bali and Egypt

SUCHAT SRITAMA THE NATION

Dusit International will open four new hotels in Bali and Cairo over the next 18 months as part of its overseas expansion.

Altogether, a total of 13 new properties in Thailand and abroad will come under the management of Dusit in the next three years.

They include two in Bali and another two in Cairo, with some opening this year.

The chain will manage its first Bali hotel called Dusit Princess Bali this December.

Its second site called Dusit Devarana Bali, that has 144 rooms, should open in late 2009.

Bali’s tourism has fully recovered, the hotel said. Last year, the island drew 1.6 million foreign arrivals, up 32 per cent from 2006.

Octavio Gamarra, senior vice president, said tourists from Russia, South Korea, and China as well and Japan are coming to Bali as they feel confident about their safety there.

The group will also run the Dusit Thani Cairo in June.

Its second Egypt hotel called Dusit Residence Lake View opens next year.

Its boutique brand called Dusit D2, will open in Pattaya midyear.

Dusit D2 Samui is scheduled to open next year.

Seven Dusit hotels are set to open in 2010. These include properties in Dubai and Abu Dhabi in the United Arab Emirates. The group is currently running 18 properties, including hotels in the Philippines and Dubai.

Gamarra said its new developments are on track, even though the global economy has slowed with oil prices skyrocketing and air tickets becoming more expensive. The group is also negotiating with investors to manage hotels in Hong Kong, Singapore, Japan, the Maldives, Australia and Bhutan.

“We are a Thai operator with an aim to be a global chain,” said Gamarra.

Its Bangkok flagship is close to 100 per cent occupancy in the first quarter, he said.

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Golden era kicks off in Thonglor (BKK)

GOLDEN ERA KICKS OFF IN THONGLOR

Luxury rental segment shows healthy growth with demand from foreigners

PROPERTY REPORTERS THE NATION

Several property developers are spending almost Bt10 billion to develop luxury serviced apartments in Sukhumvit Soi 55 (Soi Thonglor), marking a golden era for Sukhumvit Road’s high-end market.

Research conducted by Colliers International Thailand shows that three new serviced-apartment projects worth almost Bt3 billion will be launched next year in Soi Thonglor. They include 148 units at Eight Thonglor by Pacific Star, 268 units at Somerset Sukhumvit Thonglor and Oakwood Residence Thonglor.

Meanwhile, a Nation survey showed more serviced apartments were under construction and scheduled for completion this year and next.

These include The Alcove Thonglor 5 worth Bt350 million, developed by the Alcove Group and a new building worth up to Bt1 billion developed by Tan Passakornatee, founder of the Oishi Group, owner of the country’s leading brand of greentea beverages.

Alcove Group director Anand Singjirakul said serviced apartments on Sukhumvit Road, especially in the Thonglor area, had great potential for appreciation, due to high demand from foreigners.

The group has already been very successful with its first project, The Alcove Residence Thonglor 23, he said. Driven by this success, the group has kick-started a new Bt350-million serviced- apartment project called The Alcove Thonglor 5, with 46 units.

The project will be completed this year and target foreign nationals, especially Japanese businessmen.

The Alcove Thonglor 5 has 36 units covering 51-67 square metres for rental fees of Bt65,000 to Bt75,000 a month. Ten units covering 80 square metres each have a rental fee of Bt90,000 a month.

Singaporean-based Pacific Star International (Thailand) has introduced its second residential project in Soi Thonglor Soi 8, called Eight Thonglor Residences, a mixed-use building worth Bt4 billion. Condominiums start at Bt100,000 per square metre. Rents for a serviced apartment range from Bt1.5 million to Bt3.5 million a month. The project is under development and will be completed by mid-year.

Apart from serviced-apartment projects that are still under construction, the Nation survey found many condominium and serviced-apartment projects available for rent.

Centre Point Thonglor, a servicedapartment project with 156 units on 12 floors, has been available since 2005 on an annual, monthly or daily rental basis.

A studio apartment covering 38 square metres is available for Bt51,000 a month; a one-bedroom apartment covering 68 square metres costs Bt74,000 a month; a one-bedroom apartment covering 80 square metres goes for Bt82,000 a month; a one-bedroom apartment covering 87 square metres is Bt85,000 a month; a two-bedroom apartment covering 131 square metres is available for Bt115,000 a month; and a two-bedroom executive suite covering 142 square metres costs Bt120,000 a month.

Most condominiums and serviced apartments in Soi Thonglor are available for more than Bt10,000 a month, with only a few available for less.