Sukhum VIP Real Estate: investment

Showing posts with label investment. Show all posts

Thursday, December 23, 2010

Zire Wongamat Official Launch

Tuesday, July 8, 2008

Weak demand forces a switch from Thailand

TCC Capital Land is focusing on Vietnam, which it sees as a very promising market, while scaling back launches in Thailand from four to two a year.
The joint venture between Singaporebased CapitaLand and liquor billionaire Charoen Sirivadhanabhakdi’s TCC Land might further reduce launches in Thailand next year depending on the overall situation, says CEO and managing director Chen Lian Pang.

‘‘So our emphasis is market demand. If there is a demand, we will go ahead. If there is no demand, we will pull back,’’ Mr Chen said. ‘‘We are very flexible because ours is not a listed company so there is no pressure to produce certain amount of revenue.’’

Aside from Vietnam, TCC Capital Land is also keen on India because it considers other key regional countries such as China, Australia and Singapore to have matured.

Among Vietnam’s attractions is its population of 85 million, 60% of whom are under 30 years of age.

‘‘There is a lot of potential and a big mismatch between supply and demand. For instance, over the next three years Ho Chi Minh City requires about six million square metres of housing supply but the supply is only about 1.9 million — a big gap.

‘‘Hanoi is the same. Over the next three years they need about three million square metres but the supply is only about 1.3 million. So the fundamentals there are right.’’

This clearly means that TCC Capital Land will be focusing on the local Vietnamese market, not expatriates, who might be keen on buying villas there. Foreigners are permitted 50-year leaseholds and not freehold in Vietnam.

Mr Chen drew attention to cultural differences, noting that only 15% of property buyers in Hanoi obtain mortgages. The rest pay in cash either by borrowing from relatives or pooling their resources together in order to make the purchase. The trend indicates there is a lot of hidden wealth in the country.

Both China and Vietnam appeal to foreigners. Unlike Thailand, where foreign developers cannot own more than 40% in a company in order to buy land, these two countries do not impose such a restriction. China only requires local participation but not stating the level. Even Malaysia allows foreign developers to own up to 49% in a company.

‘‘In this sense, they [Thais] are losing out to neighbouring countries.’’

Also whether Singaporean investment in Thailand increases or not depends on the return they would obtain. Mr Chen pointed out that most of them sought a yield of 8% to 10%, with 6% seen to be on the low side.

In any case, Mr Chen believes that the region is expected to continue to feel the impact of the US sub-prime crisis for some time, perhaps one to two more years. Personally, he feels the worst is not over.

The slowdown has affected demand in Thailand, as witnessed by the company over the last two years. Even so, prices are unlikely to drop.

In this environment, it is possible that financially weak or heavily leveraged companies might run into trouble and TCC Capital Land is actively looking for opportunities both within Thailand and across the region.

Mr Chen believes many people might be better off to hold cash for now, but if they do want to commit to property, they may see more clarity in the market later this year.

‘‘But of course the price of good property doesn’t go down. For instance, for TCC Capital Land I don’t think we will drop the prices even if we are not able to push sales. We will wait. Property is basically about timing. If you wait, the price will recover.’’

After perching at the high end for some time by launching a string of posh projects such as Athe´ne´e Residence and Emporio Place, TCC Capital Land dramatically moved to the middle segment recently with its new brand S&S, which stands for sufficiency and sustainability. Its first mid-range project is S&S Sukhumvit located on soi 101/1. This project covers more than six rai of land and consists of two condominium towers, 18 and 22 stories, with a total of 810 units. These range from 29.5-squaremetre studios to 68-square-metre twobedroom apartments with prices starting at 1.279 million baht.

TCC Capital has carefully planned its entry into the middle market. Aside from the eco-friendly focus, it plans to be within one to two kilometres of a BTS station, something that is very appealing to this group of buyers.

Mr Chen finds investing in Thailand to be very different from in his native Singapore. Thais are more pricesensitive than Singaporeans. Also, tastes differ with people here preferring more traditional and classical styles while Singaporeans tend to closely follow international trends.

While studios, one- and twobedroom units near the BTS stations are currently popular among Thais, the trend in Singapore before the recent slowdown kicked in was for bigger apartments.

Monday, July 7, 2008

Real-Estate market in Asia to Grow

The flow of capital into the AsiaPacific’s real-estate market from outside the region is accelerating, a report has
said.
This is the result of the credit crisis in the United States and Europe, the report by KPMG, FTSE Group and Asian
Public Real Estate Association (Aprea) said.
The acceleration is coming off the back of prolonged, steady growth, which has been powered by a combination
of opportunistic and increasingly longer- term investments, it said.
“With the credit crisis in the US and Europe, investors are ... looking to Asia for growth,” FTSE quantitative
research head (Asia-Pacific) Jamie Perrett said.
While returns on real-estate investments are expected to decline in most countries, returns in the Asia-Pacific are
expected to remain higher than the global average of slightly more than 5 per cent for the coming year, it said.
Market sentiment in Asia has been hit by the credit crunch but the regional outlook should remain positive, Aprea
chief executive Peter Mitchell said.
“ The sub-prime fallout elsewhere may well act as a catalyst for the inevitable further development of the
Asia-Pacific as a centre of and investment management,” he said.
Real-estate funds will remain the main source of capital for investments in Asia this year.

Tuesday, June 17, 2008

Condo Focus (May 08)

Click the image to download the report

Tourism Condo Thailand

The tourism industry continues as the main driver behind interest in Thailand’s resort condominiums, with holiday destinations close to Bangkok receiving the most attention, especially from international buyers lured by attractive prices.

Thailand’s seaside resorts; namely, Pattaya, Phuket, Koh Samui and Hua Hin, where more than 30% of the country’s luxury condominium inventory is now located, have experienced 9.5% annual growth in international arrivals since 2003, and these strong figures are supporting resort property expansion.

A surge in condominium launches during the second half of 2007 reversed a slowdown that began in mid-2006 and propelled the year-end tally to 2,415 new units. Of these, 67% were located in Pattaya, 26% in Hua Hin, 4% in Phuket and 3% on Koh Samui.

Pattaya’s strong performance was boosted by impressive economic expansion along the eastern seaboard and its proximity to Bangkok and the new Suvarnabhumi Airport.

Luxury condominium launches in Pattaya are trending towards both inland projects with sea views and those with beachfront locations, a reflection of buyers seeking affordable properties regardless of whether or not they have direct beachfront access.

Located three hours southwest of Bangkok, Hua Hin remains attractive due to its relaxing atmosphere, more affordable prices, appeal to Thai buyers and faster development completion schedules. Hua Hin sprang back to life in 2007, with the introduction of 640 units from prominent Bangkok developers, many of whom are launching new projects this year.

Lacklustre demand in Phuket and Koh Samui was linked to hesitant developers baulking at external factors such as currency exchange rates and possible amendments in the Foreign Business Act to make residential property rights more restrictive for non-Thais.

Should the government’s policies on foreign ownership change to allow a higher percentage of foreign ownership, developers will likely introduce more projects in Phuket and Koh Samui to satisfy international demand.

In spite of the deceleration in the rate of new resort development launches in 2007, combined sales value leaped 12% year-on-year to 17 billion baht on the take-up of 1,789 condominium units.

Pattaya’s luxury condominiums sold 544 units worth 6.6 billion baht in 2007, compared to 1,609 launched, for an average of 12.3 million baht.

Hua Hin captured 6.3 billion baht on the sales of 979 units, averaging 6.4 million baht. These projects received strong interest from local investors leading to a majority of the 640 newly launched units being sold.

Limited supply on Koh Samui led to low sales last year, with only 52 units selling for an average of 15.6 million baht. The purchase of 214 units in Phuket generated 3.2 billion baht for an average price of 14.8 million baht.

The average price per square metre (psm) in Pattaya climbed 10% over 2006 to 96,332 baht psm, the highest among all resort areas, followed closely by Phuket at 95,181 baht. Samui units averaged 87,420 baht while those in Hua Hin jumped 14.6% to 72,063 baht.

Of the total resort condo sales in 2007, 27% of the units sold were priced over 100,000 baht psm, and 21% between 80,000 and 100,000 baht psm. Units in the 60,000 to 80,000 baht psm range commanded 29% while those under 60,000 baht made up 23% of the total.

It should be noted that very few of the beachfront or seaview developments are now priced under 100,000 baht psm, and sales at the top 10 most exclusive projects averaged 123,715 baht in 2007.

Of all developments launched since 2003, 1,814 units or 23% were completed as of December last year. Of the remaining 6,177 units, 3,632 were still under construction and 2,545 units were in the planning stages.

These figures demonstrate that there is still very little supply in completed condominiums, as well as a limited number of completed projects in Thailand’s resort locations.

This situation has lifted resale prices, allowing developers to increase the prices of units in new projects while opening the door for investors seeking impressive short-term capital gains.

Foreign buyers accounted a significant portion of condominium purchases in Thailand’s resort areas in 2007, though the most active markets have changed.

Russians rose from outside the Top 10 to head Raimon Land’s 2007 buyer chart, followed by Thais, British and Australians. Germany and China also moved higher while the US and Swedish markets started to slide.

Russians, Thais and British lead Pattaya’s property market, and Phuket is commanded by Russians, British and Australians. Hua Hin remains a predominantly Thai destination, with emerging international interest now making up 20-30% of acquisitions.

In 2008, look for more players and new groups of buyers in Pattaya, with limited completed stock driving up prices. Hua Hin will continue to exhibit strong local demand, with prices increasing in both resale and off-plan projects.

Phuket and Samui will remain vulnerable to external factors. New supply in Phuket will push demand, and look for new areas on the mainland adjacent to the island, now being referred to as Greater Phuket, to open up. Koh Samui will remain a niche market leaning toward branded real estate.

Tuesday, May 27, 2008

Sixteen city-condominium projects in Victory

Offices, Sky Train boost the area’s appeal for homebuyers, investors

Sixteen city-condominium projects, valued at about Bt16 billion, are expected to be launched in the vicinity of the Victory Monument. Most of these projects have sold 30 per cent to 100 per cent within three to six months of opening for booking.

According to a survey conducted by The Nation, these projects are targeted toward the middle- to upperincome segment of the market with prices starting between Bt48,500 per square metre and Bt100,000 per square metre.

The main locations include Phahonyothin Road from Soi 2 till Soi 18, Phayathai Road, Sri Ayudhya Road, Ratchapralop Road and Petchaburi Road.

Resale prices for city condominiums in this area have risen between 10 per cent and 20 per cent this year compared to last year.

Harrison chief executive Alan Lin said that when developers raise prices 10 per cent to 15 per cent of new residential projects to adjust for higher raw- material costs, resale prices of existing residential units will also rise 10 per cent to 20 per cent, depending on the location.

City condominiums located close to the inner Central Business District, in areas such as the Victory Monument, will also witness a significant rise from an average of Bt60,000 per square metre to about Bt80,000 per square metre, Lin said.

According to research conducted by Harrison, a local property consultant, the demand for residential projects around the Victory Monument has risen because this area has many offices and is located close to the mass-transit system.

However, there is limited availability of land for residential projects for sale around the Victory Monument. This is because most land owners have used the land to develop serviced apartments.

The research said population in the Ratchathivi district stood at 97,416 while the residential register recorded 33,769 units, as of January.

Other locations close to the Ratchathivi district, such as the Phayathai district, the Pathumwan district, the Hua Kwan district and Dusit district recorded a population of 332,538 while the residential register showed 125,647 units.

After analysing these figures, Harrison believes that demand for new residential projects in this location will continue to grow, especially for residential units priced between Bt50,000 per square metre and Bt80,000 per square metre.

Last year, the number of completed condominiums in Bangkok stood at 126,071 units, a rise of 21 per cent from 2006’s figures. Of these, 17 per cent were located at Ratchadapisek while another 17 per cent were at Rama III Road. Another 15 per cent were located at Sukhumvit Road, between Soi 70 and Soi 107 and 14 per cent between Soi 1 and Soi 55. A further 9 per cent of the total condominiums were located inside the Central Business District in areas such as Silom, Sathorn, Wireless Road and Pleon Chit. The Thonburi district also had a figure of 9 per cent while Phahonyothin Road had 7 per cent of the total. Phayathai district had 4 per cent of the completed units and the rest of the 8 per cent were located in other areas on the list.

The research also shows that 67,036 city-condominium units are under construction.

It revealed that one- bedroom apartments with a utilisation space between 45 square metres and 55 square metres are the most popular type of city condominiums.

City Resort Development managing director Chaivai Poonlapmongkol said the company believes demand for residential projects in areas close to the Victory Monument and the Sky Train has seen strong growth following the rise in cost of living.

“Buying a property located close to the mass-transit system reduces the transportation costs for homebuyers. People buying properties with an investment focus can also expect good rental income because this location has a number of offices and schools,” he said.

Chaivai said investors can expect a return of 7 per cent to 10 per cent.

27 May 2008
The Nation
SOMLUCK SRIMALEE THE NATION

Tuesday, May 20, 2008

Japan invest Bt7.6 billion in Thailand.

SIAM ZOKAI GETS AGGRESSIVE ON EXPANSION PLAN

Thailand continues to be a key market as the firm designs an overseas foray

Siam Zokai, the property arm of Saha Group, has set aside an investment budget of about Bt5 billion for the development of property projects worth Bt7.6 billion in Bangkok, Phuket and Chiang Mai till 2010, the company’s Japanese president Yasuo Miyazaki said.

Siam Zokai is a joint venture between Saha Group which holds a 51- per- cent stake while Yasuo Miyazaki and his wife own the other 49 per cent. The company has a registered capital of Bt100 million.

The company is developing two property projects worth about Bt3.4 billion. Peaks Town, the first project in Chiang Mai, is worth nearly Bt1 billion. It will have six buildings including Twin Peaks, Peaks Garden, Peaks Changklan, Peaks Avenue, Peaks Mall and Peaks Market. This project is being developed under the community- living concept which integrates residential units and a shopping plaza in the same location.

Construction at Twin Peaks is complete and the building is sold out. The company expects to transfer the units to its customer this year.

The other buildings have also been sold up to 70 per cent and the rest is expected to be lapped up by customers within the year.

Grand Peaks, the company’s second project is worth Bt2.4 billion and is located in the Sriracha district, Chonburi. It is a luxury-condominium project with a 31- storey building and 570 units. Prices start at Bt65,000 per square metre – an increase from last year’s price of Bt60,000 per square metre consequent to construction costs rising. About 200 units have been sold. The project is under construction and is expected to be completed by the middle of next year.

Miyazaki said the company plans to develop three more projects with a cumulative value of Bt4.6 billion in 2010, after the existing projects are completed and sold off.

These three projects include; Peaks Andaman in Phuket worth Bt1.4 billion; North Park Office, an office building worth Bt1.2 billion located at North Park on Vibhawadee Rangsit Road; and Sathupadit Peaks Tower, another luxury-condominium project with a 31- storey building worth Bt2 billion.

The company is studying the market with a view to develop an integrated complex with luxury condominiums, a shopping centre and an office building in the same area with a combined utilisation space of up to 100,000 square metres. The project is likely to be in Bangkok’s Central Business District.

“We cannot give more information about the location of the new project but it will be developed on land already owned by Saha Group. This project may have another Japanese partner. This part is under negotiation,” he said.

The company will also start expansion in the overseas market in the next two to three years with a special focus on Malaysia and Vietnam. Malaysia is helped by a flexible law onforeign investments in the property business.

“Malaysia holds higher for us over Vietnam, where competition and land prices have surged,” he said.

Thailand remains the main market for Siam Zokai’s expansion plans. This is because it believes that demand for residential projects in the country remains strong.

Monday, May 19, 2008

Luxury condo purchases driving market forward

Thailand’s property market remains extremely buoyant despite a number of challenges it faced last year, while continuing to hold enormous potential for accelerated growth.

The resilience is encouraging with takeup rates and numbers of completed developments rising and the price per square metre (psm) of condominiums climbing, enabling investors to achieve healthy returns.

The segment that is really driving the market forward is condominiums, especially in the luxury bracket, evidence that there is high demand for quality product among both overseas and local investors.

Resort destinations have also performed well, despite quota and leasehold restrictions that have put the brakes on the high interest shown among the international investment community.

In recent research conducted by Raimon Land that covered Bangkok and key resort destinations, we can see that despite a tough political climate last year, the inner-city Bangkok condominium segment inched ahead 3% to reach 43.7 billion baht in sales.

Condominiums have clearly become the fastest growing segment in the residential market, with luxury developments emerging as an alternative for many local investors.

A second-half surge in Bangkok condominium demand in 2007 brought the year-end sales tally to 6,214 new units. Achieved prices and sales performances in high-end developments were particularly strong, with investors prepared to pay an additional 50% or more on top of the median price to secure the finest inner-city properties.

Completions of new condominiums have picked up, with 5,100 units added in 2007 compared to the 6,940 units launched. The supply/demand balance remains healthy with about 92% of the units in newly completed developments being sold. Performance in projects that have already started construction on the main structure and those that are still in earlier construction stages is similarly impressive.

Developers in Thailand’s resort areas remained hesitant in 2007 due to uncertainties in new amendments to the Foreign Business Act. However, strong absorption from foreigners, who rushed to buy condominiums with available foreign ownership titles, pushed the total market value for resort condominiums to 17 billion baht, up 12% from 2006.

Locations close to Bangkok, where there is balanced Thai-foreign demand, were the most active. Pattaya led with 6.6 billion baht sold in 2007 followed by Hua Hin with 6.3 billion.

Koh Samui and Phuket, which depend on international investors for around 90% of the demand, were greatly affected by the regulation limiting foreign allocated units to 49% of the total inventory. Although the cap is not new, there was also the fear last year that it would be further strengthened.

This prompted the postponement of new launches, especially among small under-capitalised developers who depend on early bookings. This precipitated a healthy 61% takeup rate in 2007, with buyers snapping up 96% of the units in new developments.

Resort areas are benefiting from very low availability of completed supply, driving up prices in both resale and offplan developments.

In 2007, close to a quarter of the units sold in resort areas were priced above 100,000 baht per square metre, and the number of seaview/beachfront units available for less than 100,000 baht psm is falling rapidly.

In the first quarter of 2008, the industry confirmed the recovery sparked in the last quarter of 2007 and as it approaches the middle of the year, it is demonstrating a vibrancy and dynamism that will continue to drive it forward.

This is good news for both overseas and local investors, as superb opportunities exist in the market for buyers to achieve healthy capital gains and solid rental returns.

The research that we have completed provides detailed evidence of these trends and highlights a property market that not only has a strong competitive advantage over its regional competitors but one that is maturing fast.

Our analysis draws on a wide range of factors to present a balanced, realistic survey of current market conditions. It examines new project launches in the context of annual and cumulative unit sales, price per square metre, location, takeup rates at projects under construction and completed transfers. It also employs economic indicators to provide a more precise outlook for 2008.

While providing insight for investors and buyers, what it most clearly demonstrates is that Thailand remains a growing market with huge scope for further growth. (This is the second in a series of four articles that draws on research by Raimon Land contained in ‘Condominium Focus Thailand: Update of Inner-city Bangkok and Key Resort Areas’. To reserve a copy, e-mail: research@raimonland.com or download at www.raimonland.com)

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Friday, May 16, 2008

Real Estate scores over Bank deposits

Developer’s research indicates higher returns even after factoring in inflation

At a time when fixed deposits earn interest at only 2.5 per cent, property companies and agencies suggest buying residential property located close to the masstransit system – an investment that can generate a return of 7 per cent to 100 per cent.

The returns will depend on the term of the investment.

According to research by CB Richard Ellis Thailand, resale prices for residential projects located close to the mass-transit system and the Central Business District from the Asoke intersection to Soi Thong Lor range between Bt110,000 to Bt130,000 per square metre. This shows an increase of between 37.5 per cent and 62.5 per cent from Bt80,000 to Bt90,000 per square metre last year.

The rental price for serviced apartments in Silom and Sathorn has shown a strong rise from Bt289.5 per square metre in 2004 to Bt399 per square metre this year, a jump of 33.7 per cent. The Sukhumvit area is a close second with rents rising from Bt280.5 per square metre in 2004 to Bt365 per square metre, a rise of 30.1 per cent. Central Lumpini now commands rents of Bt360.5 per square metre, a rise of 18.6 per cent from Bt304 per square metre in 2004.

The demand for residential properties in the Central Business District is coming from foreigners who work in Bangkok. The two-bedroom type unit, with covered area falling between 90 and 130 square metres, has seen the strongest demand.

Residential projects at resort destinations such as Phuket, Koh Samui and Hua Hin have also seen strong demand. Investors buying property at these locations can expect a return on investment at an average of 7 per cent a year. If they sell the property within one or two years, they can expect a significant return on investments, CB Richard Ellis Thailand managing director Aliwassa Pathnadabutr said.

Kasikornbank’s first senior vice president Chatchai Payuhanaveechai said if one has the money to buy a property at a good location close to the mass-transit system, one can expect returns of 7 per cent to 8 per cent a year. This is much better than making a long-term deposit in the bank, which earns only 2.5 per cent. When adjusted with inflation – presently at 6.2 per cent – the return is negligible.

Chatchai said if there is no ready cash to buy a property, investors can apply for a mortgage loan. This will generate higher returns if the investor selects the best location.

For example, if an investor buys a property at a price of Bt100,000 per square metre, the monthly payment on a mortgage loan comes to Bt56,000 a month. Investors can earn Bt50,000 a month by renting out the property. That will help generate money for the monthly instalment.

Chatchai said the property should be located close to the mass-transit routes or a main road which will allow for an easy commute. Such properties are easier to sell and rent out.

Harrison executive vice president Kitisak Jampathippong said residential properties on Sukhumvit Road now sell for Bt100,000 per square metre, signifying a rise of between 30 per cent and 60 per cent from last year. The frequency of resale of residential properties on Sukhumvit Road averages at two or three times a year. Resale prices are expected to rise between 10 per cent and 20 per cent each time, he said.

At a time of high inflation and low interest rates, Kitisak said buying residential properties is a good investment choice. However, investors must study the value of the property.

“An investor has to select the project that has lots of facilities and offers an easy commute. That does not mean the project has to be located close to the mass-transit system alone. If the project is located close to a main road or expressway, it is still a good location, especially if the project offers good facilities and a good environment for buyers,” Kitisak said.

SOMLUCK SRIMALEE THE NATION

Saturday, May 10, 2008

Cash-rich buyers keep luxury real estate market healthy

The luxury property market is still strong due to healthy demand and high purchasing power, reflected in the fact that fewer than 20% of purchasers seek loans, according to Chatchai Payuhanaveechai, a senior vice-president at Kasikornbank.

Most buyers of luxury units pay cash as they are seeking better returns than from bank deposits in the face of inflation that is hovering around 6%, he said.

Yields on bonds and debentures are also seen as unattractive and stocks are too volatile, while prime real estate can bring rental returns of 5-8% per year.

‘‘You need to know the real estate market and each asset’s liquidity. Choosing a good location is the key,’’ Mr Chatchai said.

Developers of luxury units are offering more than 7,000 units at 24 projects in an exhibition taking place until May 18 at Siam Paragon, while three property brokerage firms are looking for combined sales of 2.75 billion baht.

Aliwassa Pathnadabutr, managing director of the property consultancy CB Richard Ellis (Thailand), said demand in the segment remained healthy.

Unit prices have been increasing at between 7% and 15% a year depending on the project and location, while units at the very top end of the market can fetch nearly 300,000 baht per square metre, she said.

Sixty percent of luxury property buyers are Thais and 40% are foreigners, up from 15-20% in the past, according to CBRE.

‘‘Confidence is a major factor affecting decision-making and demand in this segment,’’ Ms Aliwassa said.

CBRE is selling six projects worth a combined 15 billion baht and hopes the exhibition would generate sales of two billion baht. At a similar event last year, the company generated 800 million baht from five projects.

Harrison, another participating real estate brokerage, expects sales of 600 million baht from eight projects where it has four billion baht worth of units on offer.

Phanom Kanjanathiemthao, managing director of the property agency Knight Frank Chartered (Thailand), said his company was selling three projects worth 10 billion baht and expected to sell 40 to 50 units worth 150 million baht, up from 50 million baht from a single project in the 2007 showcase.

One of the three projects is the 400-unit My Resort condominium worth two billion baht at the Phetchaburi-Asok Junction, being developed by Everland. After a month of pre-sales, 20 units worth 100 million baht have been sold.

‘‘Demand in the high-end segment is strong but prices are up 20-30% due to higher costs of construction and land. Developers needed to increase their marketing budget as sales slowed down last year,’’ Mr Phanom said.

According to the company’s research, average prices of Bangkok condominiums have risen from 65,000 baht per sq m to 82,000 baht in the past year. New condominiums in Hua Hin are fetching 120,000 baht per sq m, up from 85,000 baht, as construction costs are 10-15% higher and land prices in the resort town have risen 20-30%.

Somchao Tantaterdtham, president of the Thai Real Estate Association, said transfers of residential units during the first two months of 2008 increased from the same period last year due to higher confidence among consumers.

Significantly, transactions were up even though new tax incentives approved by the government did not take effect until late March.

Transfers of single houses and townhouses totalled 1,200 units in January and 1,167 in February, up from 903 and 1,150 units respectively in the same two months last year.

Condominium unit transfers totalled 973 units in January and 888 in February, up from 616 and 759 respectively in January and February 2007.

‘‘Risks remain. Higher oil prices affected overall construction costs while steel prices never go down. Under such circumstances, the government should support building the investment atmosphere,’’ Mr Somchao said.

KANANA KATHARANGSIPORN

Sunday, May 4, 2008

Raimon Land views about market

RAIMON RAISING BT1.3 BN TO COMPLETE PROJECTS

Obtaining loans for property projects has been near impossible since the US sub-prime meltdown shook up global banking recently, but Thailand is one of the very few exceptions, Raimon Land CEO Nigel Cornick said yesterday.

“For many foreign buyers, Thai properties are still regarded as highly undervalued,” he said.

“As banks everywhere are taking a cautious stance with the US fallout, Raimon Land has decided to raise fresh funds from the stock market,” said Cornick.

The company will hold a rights issue of two old shares for one new one to raise Bt1.3 billion to complete half a dozen projects.

The firm goes ex-rights (XR) next Tuesday, but Cornick said the stock is now trading at a discount because of poor sentiment for the real-estate sector.

“We will use the cash to complete key sites such as the 11- rai River project on the Chao Phya River, overlooking the Shangri- La and Oriental hotels,” he said.

Its other prestigious site includes 185 Rajdamri, a 6- rai estate where the Cambodian embassy was formerly located, and Northpoint, a twin-tower project in North Pattaya.

Much of the capital raised in the current exercise will actually come from existing shareholders, Cornick noted, as Kuwait’s IFA Hotels and Dubai’s Istithmar Group each hold about 25 per cent of the firm

“Only about 20 per cent of the shares are freely floated,” he said.

Cornick expects the new rights to be fully subscribed, as the two Gulf state companies and major shareholders are ready to inject cash into what is widely regarded as Thailand’s premium property developer.

He expects the new shares to be a t t r a c t i v e , based on the results of two separate surveys the company recently c o n d u c t e d through independent agencies to establish its share value.

“ The estimates range from Bt1.70 to Bt1.90, which is higher than the current market price of about Bt0.90,” he said.

On a recent visit to Singapore, Cornick said a group there with US$300 million ( Bt9.5 billion) to invest had indicated to Raimon Land that it was keen to form ventures to develop projects in Thailand.

Echoing this sentiment is Ananda Development’s CEO Chanond Ruengkritya, who said its European partner Primeamerica and other funds all indicated they were keen to invest in Thailand as it could provide solid returns with minimal risk.

“ The general view of the global financial sector is that Thailand remains one of the few markets capable of delivering a decent return,” said Cornick. “ This is different from the grimmer picture in many Asian markets that have been reeling from a post-bubble implosion.”

Observers note that Thailand is in a very special position because, as a net food exporter, it is gaining from the run in commodity prices. This gives it a solid buffer at a time when Asian food importers are facing a crisis. Its economy is therefore seen as being able to weather the financial storm much better than those of pure service economies such as Hong Kong and Singapore.

Sheltering Raimon Land’s projects is its strict adherence to build only in the city centre and other prime locations.

Raimon Land marketing chief Henri Young said: “ The River continues to book Bt150 million worth of sales a week. More than half the project, estimated to be worth Bt12 billion, has been sold.”

Real estate is not the flavour for banks these days, said Cornick. But there is also the belief lightning does not strike the same place twice.

The 1997- 1998 stock and property crash was Thailand’s worst. Property only started to recover about six years ago. It is therefore not likely to see a repeat of the kind of housing crash that is now ripping through the US and other markets where property bubbles formed over the past few years.

Wednesday, April 30, 2008

Fire Sale (Bids Open)

Developer invites bids for assets near mass-transit system

FIRE SALE

Harrison has today opened biding for its assets including undeveloped land, an office building, serviced apartments and apartments – a total of 26 items worth about Bt2.5 billion.

Most of the assets are located close to the mass-transit system in areas such as Sukhumvit, Phahonyothin, Ratchada and Petchburi.

People interested in bidding for the assets can visit the company’s website at www.harrison.co.th

The company also plans to organise the Thailand Investment Property Exhibition this year – part of an effort to promote the resale market, the company’s vice president Kittisak Jampathipphong said. – The Nation

Tuesday, April 29, 2008

Financial institutions raise cash in Asia Pacific

Buyers’ market for property
Financial institutions with sub-prime problems are looking to raise cash in Asia Pacific, reports Nina Suebsukcharoen
Financial institutions hurt by the credit squeeze in the US and are unable to get fresh funds as refinancing deadlines approach are selling assets across the region, turning it from a sellers’ to a buyers’ market in just six months, says Robert McKeller, the CEO for Asia Pacific of the property firm Savills.

Aside from Australian funds selling their real estate, those in Japan, Hong Kong and Singapore are also doing so, he said in a recent interview in Bangkok. ‘‘Savills has never had so many instructions to sell.’’

Wealthy individuals are benefiting from this trend, some re-entering the market after having obtained handsome profits from selling properties to these funds two to three years earlier.

Savills recently sold the Trade Square building in Hong Kong to a private buyer for HK$1.518 billion, or approximately US$200 million, the biggest deal in the territory this year.

‘‘They (private buyers) are making a big, fat profit and what you are seeing in Japan, Australia and other parts of Asia where some of the American funds that are highly leveraged . . . may be forced to sell and sell at a price that maybe they otherwise would not have wanted to sell at, say, six months or a year ago,’’ said Mr McKeller.

The discount in a forced sale was typically around 20%, he added.

Real estate prices in the US have also come down by more than 10%, and the country is unlikely to work its way out of its problems in six to 12 months as some optimistic commentators have said.

‘‘There was a study done saying that it may take up to 2017 before prices come back to anywhere what they were like in the last year,’’ he said.

There is also a major difference, he says, between previous recessions and the one the US is now entering. ‘‘The previous recessions . . . have been corporate-led recessions that have been quick, short and sharp. You clean out some of the defaulters, the companies that have gone bust, that haven’t performed, fine.

‘‘But this is a consumer-led recession based on the fact that the value of their homes and equity has come down and that . . . won’t won’t go away in six to 12 months.’’

The UK is also looking very difficult with real estate prices down.

Mr McKeller mentioned a recent article in The Times which said that 40,000 jobs would go in the City of London financial markets this year.

Asia cannot escape because the theory about Asia ‘‘decoupling’’ with the US is questionable when one realises that 60% of the region’s exports go to G8 countries.

‘‘Having said that, there is still so much money in Asia — the sovereign wealth funds, the Chinese, the Singaporean, the Taiwanese and Middle Eastern money coming, those who have cash and don’t rely on debt are still looking to buy real estate,’’ said Mr McKeller.

‘‘It’s a very interesting situation because you have a lot people who are being forced to sell because of financing, the cost of debt, they can’t get financing or interest is getting more expensive, and those who are waiting with cash are waiting for prices to fall even further before they buy, so this is a little bit of a stalemate. Hopefully that will soon pass and we will see more transactions in the marketplace.’’

While the outlook is for the region to turn into a buyers’ market, there are pockets that buck the trend, Taipei among them.

The Taiwanese government’s warmer stance toward China, which has led to direct flights being started, has boosted property transactions. Tokyo too is looking robust despite the fact that the Japanese economy has been stagnant for years. Savills is not seeing a major shift in prices there except for sales by heavily leveraged Americans.

‘‘Most of the Japanese real estate is held by Japanese funds and Japanese companies and they don’t trade assets, they keep them for generations.’’

Another pocket is Thailand which has not seen overall prices increase at the pace they did in Hong Kong and Singapore in the past two to three years.

Robert Collins, Savills’ chief in Thailand, said Thai banks did not have significant exposure to the sub-prime crisis and therefore local lending had not had a direct impact and this was one of the reasons prices are not softening here.

‘‘Also, on the back of tourism, the overall residential market is still holding up very well,’’ said Mr Collins. ‘‘Private investment is still very good generally speaking, there is a lack of stock and supply that is investment grade but overall the sentiment still remains quite positive.’’

While real estate developments are still taking place in China, financing is getting difficult there too with the government placing some curbs on lending to cool the market.

‘‘We have been advising some sovereign wealth funds, Middle East buyers about . . . co-investing with Chinese developers who need money, otherwise the developments they are working on will not happen,’’ says Mr McKeller.

Hong Kong residents are among those eagerly waiting for lower prices because they can borrow at 2.5% a year.

Meanwhile, Singapore, where property prices soared over the past few years, is going through very testing times.

Mr McKeller cited research showing that luxury property prices will fall by 18% this year followed by 10% and 15% respectively in the following years.

‘‘In Singapore we advise them that for those blocks with luxury residential, you’re going to have to look at 10, 15, or 20 percent reductions in the sales price if you want to get that stock away. If you want the sales, forget about last year’s prices. It’s a different market and you are going to have to drop your prices.’’

Friday, April 25, 2008

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.

Tuesday, April 22, 2008

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.

Thursday, April 17, 2008

Bt5Billioin to upgrade the Queen Convention Centre

QUEEN SIRIKIT CENTRE

BT5 BN TO BUILD A LARGER FACILITY

The Finance Ministry plans to invite bids for the private sector to invest Bt5 billion on upgrading the Queen Sirikit National Convention Centre into a world-class facility.

The ministry, which owns the property on Ratchadaphisek Road, also wants to expand its capacity, because the current space is too small.

Under the plan, the existing building will be demolished and replaced by one that can accommodate bigger events and house larger crowds, said a top ministry official who asked not to be named.

At present, the centre cannot hold large- scale exhibitions, because it is not designed to house heavy machinery or massive industrial items, he said.

In terms of capacity, the new building will have 105,502 square metres of space, nearly double the current 65,502 square metres.

It will also have 78,000 square metres of parking space, including an underground carpark beneath the main building that can hold 2,246 cars.

The ministry had dropped a previous plan to build a fivestar hotel in the compound, because the Bangkok Metropolitan Administration had banned the construction of high-rise buildings within that zone.

The location is designated as part of the city’s “green zone”.

Meanwhile, the Thailand Tobacco Monopoly (TTM) will return 300 rai of land adjacent to the convention centre to the ministry after it moves to a new site.

The TTM is looking at an industrial park within 200 kilometres of Bangkok where the ministry could also build a nearby cultural centre, art gallery and training centre, said the source.

The existing hospital and public park in the present TTM grounds will not be affected by the move.

The convention- centre upgrade and TTM relocation are pending final approval by Finance Minister Surapong Suebwonglee and the Cabinet. If approved, private investors will be invited to join the bidding.

The Treasury Department, which has revised the conventioncentre plan, hopes the new facility will draw more global trade fairs and exhibitions.

WICHIT CHAITRONG THE NATION

Old building can’t hold big shows

WICHIT CHAITRONG THE NATION