Investment breaks record

Bangkok - Investment applications in Thailand hit a record 644.8 billion baht (19.5 billion dollars) in 2007, up 32 per cent on the previous year, even in the face of great political uncertainty, the Bangkok Post reported Friday.

The Board of Investment also approved - gave tax breaks - to a 744.5 billion baht in investments, almost double the year previously.

The board's secretary-general, Satit Chanjavanakul, said that investors clearly feel comfortable with the forward momentum of the Thai economy even as politics goes through a period of turmoil unusual even by Thai standards, according to the report.

Foreign investors' applications climbed 63 per cent to 502.73 billion baht. The outgoing caretaker administration and its military sponsors have ruffled foreign investors by flirting with tougher anti-foreigner regulations, as well as being widely perceived as being generally poor at boosting the economy. The political future remains uncertain even though the military claims it will respect the outcome of a December 23 election that will likely produce a coalition government dominated by a proxy party for the controversial former prime minister Thaksin Shinawatra, who was ousted by a coup in September 2006.

Thaksin's People Power Party has accused the Election Commission of bowing to military pressure by ejecting some of its winning candidates for electoral fraud so as to weaken its ability to put together a coalition with minor parties. The top foreign investors in Thailand were Japanese with applications totalling 149.07 billion baht, up from 110.47 billion baht in 2006. US and European investors were second and third, at 85.75 billion baht and 75.93 billion baht respectively. German investors showed the highest growth, from 1.28 billion baht in 2006 to 37.08 billion baht last year. Korean and Chinese investments also jumped 121 per cent and 38 per cent to 11.56 billion baht and 17.17 billion baht respectively.

Favourite investment projects were in the service sector, followed by automobile, parts manufacturing, chemicals and plastic operations. Satit said that a further positive sign was the interest of developers in creating new industrial estates. No new industrial estates have been built in Thailand since the 1997 financial crisis.

© 2008 dpa - Deutsche Presse-Agentur

Thailand drawing investors

Investment is continuing to pour into Thailand from overseas developers and property-fund managers with the hospitality industry in traditional holiday locations attracting the lion´s share of foreign projects, according to a recent study carried out by The Nation.

The study also found that foreign companies, both on their own and via joint venture with domestic construction firms, have shrugged off the political and economic uncertainty of recent years and earmarked some Bt20 billion for further investment this year.

Among the biggest players to commit to Thailand´s property industry is Singapore-based Pacific Star International, who has formed two joint-venture firms with Asian Property Development to build two Bangkok condominium developments, one on Sathorn Soi 12 and the other on Ratchadaphisek Road, at a cost of Bt6 billion. The Nation also revealed that Hong Kong´s Concord Property Group has plans for an integrated property development worth up to Bt40 billion in the Pinklao area.

Singapore´s Banyan Tree Group has also ploughed massive sums into Thailand´s burgeoning property industry. In a further demonstration of faith the Kingdom the group set up a centre in Phuket where it trains service staff for use in it´s resorts and hotels elsewhere in the world. Another big investor is Hong Kong Real Estate International, which has invested some Bt18 billion in residential developments with various partners to date.

It is not just developers from other Asian countries investing in Thailand – a number of firms from the US and Europe are lining up to invest, predominantly, in the Thai hospitality business in tourist destinations such as Phuket, Koh Samui, Pattaya and Chiang Mai.

by Robert Carry / Property Report

Office Space (Bangkok)

Bangkok has the fifth cheapest office cost per workstation in the world based on a survey by the Singapore-based international property adviser DTZ Debenham Tie Leung.

Thailand sits with other cities in Asia Pacific at the bottom of the rankings. Indonesia's Surabaya was the least expensive at $1,550, followed by Manila (Ortigas) at $1,670, Jakarta at $2,170 and Tianjin at $2,830.

London (West End) continued to top the rankings as the most expensive location globally at $31,160 per workstation per year, followed by Hong Kong at $27,540, London (City) at $20,690, Paris at $20,430 and Tokyo (Central 5 Wards) at $18,430.

The top five locations with the highest annual growth in occupancy costs per workstation (quoted locally) were Moscow (95%), Singapore (93%), Dubai (74%), Manila (Makati) (73%) and Silicon Valley (San Jose, CA) (53%). On the other hand, Lisbon (-24%), Tallahassee (-22%), Atlanta (-20%), Los Angeles (-19%) and Las Vegas (-8%) experienced the largest decline in occupancy costs.

(Read More... BangkokPost)

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Rental Yields (Bangkok)

Rental yields for luxurious condominiums in Bangkok range from 7.2% to 8.9%. The exception is 300-square metre (sq. m) units yielding only around 6.84%.

In Hua Hin, mountain-side villas are cheapest with prices only reaching up to around US$649 per sq. m. While top luxurious properties can cost almost twice that, 150-sq. m beachfront villas are most expensive at US$4,333 per sq. m.

The River (Bangkok)

Magnificent vistas from The River

With the opening of The River’s Bt100 – million sales office and three floors of show rooms at its 13-rai Chao Phraya riverfront site, developer Raimon Land is now witnessing a big surge in bookings.

Raimon’s chief executive officer Nigel Cornick says the landmark development is setting a new benchmark for prime riverfront properties in design and pricing. “Buyers who had put off their purchase, signed up once they saw the units,” said a sales executive.

“We knew it would be best to show what buyers are getting,” said Cornick. “The views and show apartments speak for themselves.”

Visitors came away with awe once they visited the show homes, realizing The River’s units offer some of the very best residences in town.

The starting price of Bt 95,000 a square metre becomes secondary to the fact that the location commands unparalleled views.

Cornick says the project has received accolades from professional builders, designers as well as global investors, many of whom are keen to acquire the freehold apartment as part of their portfolio in the Kingdom.

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$5bn venture (Cambodia)

SET-listed Italian-Thai Development Plc (ITD), Thailand's biggest construction company, is joining with five investment partners to develop a $5-billion coal-fired power plant in Cambodia. BangkokPost - Read More...

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Surging Demand (Vietnam)

Vietnam faces surging demand for property but also legal shortcomings

The fast-growing economy of Vietnam has opened tremendous opportunities for real estate investment but there are some challenging factors that overseas investors need to consider before jumping on the bandwagon.


Vietnam's high gross domestic product (GDP) growth rate has been fuelled mainly by its two largest cities -- Ho Chi Minh City and Hanoi -- where GDP growth rates last year were 12.2 percent and 11.5 percent respectively, according to Nguyen Quang, habitat programme manager for the UN-Habitat office in Vietnam.

He said opportunities had arisen due to Vietnam's membership in the Asia Pacific Economic Co-operation (Apec) group, the booming stock market and the entry into the World Trade Organisation. More retailers, distributors and investors have entered the market while more local and foreign companies have set up businesses. As a result, demand for office space has surged.

At the same time, housing demand has risen in line with increased job opportunities, higher incomes and consumer-oriented demand from young workers who make up 60 percent of Vietnam's population.

Mr Quang also pointed to the phenomenon of "repatriates" -- workers who have discovered that they no longer need to be in the big cities to make a good living.

"More repatriates have come back to live in their hometowns as the government has opened more opportunities for them to come back, do business and own a residential unit," he said during a seminar entitled "Asia's Real Estate Cycles: the Vietnam Situation".

As a result, demand is growing while supply in all sectors is very limited. Office and retail vacancies are was low and the upward trend will continue due to growing demand and delays in new supply. Demand for good-quality residential projects is also growing.

Sopon Pornchokchai, president of the Thai Appraisal Foundation, told seminar participants that the Ho Chi Minh City real estate market had a lot of potential to grow as the country's GDP was still relatively low -- about half Thailand's figure -- despite a population of 85 million.

"In Vietnam, the land area is about two-thirds of Thailand's. Land prices in Ho Chi Minh City are very high. Of a unit price in Ho Chi Minh City, the land price is four times the housing price while in Bangkok, the land price is only two times the housing price," said Mr Sopon.

Mr Quang said that amid the property boom, some challenges awaited including legal matters, land title problems, speculation, planning and investment procedures.

He said the legal framework had some limitations such as the legacy of the Communist central-planning system, spontaneous and ad-hoc state intervention, dual ownership of land and housing units, and overlapping responsibilities for land use title supervision and planning.

"Access to land-use rights is complicated, such as long-term use and leases on land," he said.

In Vietnam, people cannot own a land plot but the government can grant them land-use rights. Five types of rights are available: right to transfer, mortgage, inherit, rent and transform land.

Mr Quang said the land-title situation was especially chaotic in urban areas because of unclear administrative responsibilities. People also had limitations in terms of access to formal land and housing.

As well, land information and records are not adequate while land registration and formalisation procedures are complicated. The government's planning system is also rigid and the cost of land transfers is quite high.

Another challenge involves differences in pricing that distort the property market. Land value is determined by administrative measures rather than based on the market while land allocation through bidding is limited.

"We lack a market-based and independent valuation organisation," he said. "The booming real estate market has built a lot of real estate brokers but few of them are professional."

Mr Quang said the planning system was inefficient and ineffective as there was a lack of priority-setting. Little co-ordination exists among mechanisms related to socioeconomic planning, spatial planning, land use and sector planning.

"The government should allow public consultation and participation in plan preparation and implementation," he said.

Constraints exist as well on investment procedures and land allocation. They are unclear and complicated while some regulations overlap.

Project and programme assessment and monitoring also need more appropriate mechanisms.

Other challenges include weakness of business capacity and professionalism, limited capital investment, a lack of market research and strategies, constraints on mortgages and access to financial markets, limited savings mobilisation for the formal real estate market, widespread speculation, inefficient land use and corruption and mismanagement.

Copyright (c) 2007, Bangkok Post, Thailand
To see more of the Bangkok Post, or to subscribe to the newspaper, go to http://www.bangkokpost.com.

Land prices surge (Bangkok)

Silom remains the priciest at B650,000

Bang Kho Laem, Sathon and Yannawa districts in Bangkok posted the highest increases in the Treasury Department's new land valuations effective from January until 2011.

Property values in Bangkok rose 5.76% overall under the new assessment from the last survey. Silom Road, in the heart of the Bangkok business district, maintains its position as the most expensive property in the country at up to 650,000 baht per square wah.

The least expensive property in Bangkok was in Nong Chok district, at 260 baht per square wah.

Besides Silom Road, the next most expensive properties were located on Yaowarat Road in Chinatown, at 550,000 baht per square wah, followed by Sampheng at 500,000 baht, Siam Square at 350,000 baht, Asok at 260,000 baht, and Ekamai at 170,000 baht.

Klaew Tongsom, the director of the department's Property Valuation Bureau, said the higher valuations for Bang Kho Laem, Sathon and Yannawa reflected municipal plans to position the three districts as the financial centre for Bangkok.

Land values in Bang Kho Laem under the new 2008-11 framework rose 56.86% from the last valuation, while Sathon values increased 52.38% and Yannawa 50.94%.

The official valuations are used to assess property taxes and also serve as a benchmark for property transactions by the private sector.

Mr Klaew said that valuations for another five Bangkok districts - Don Mueang, Bung Kum, Bang Kapi, Huai Khwang and Lat Phrao - would be adjusted further in 2008 for use in 2009 to reflect changes of more than 20% in prices.

Bang Sue district also recorded a 33% increase in land values, mostly due to speculation of the area's increasing importance as a transport hub for the new Red and Purple mass-transit lines.

Puntip Surathin, the director-general of the Treasury Department, said the new valuations included assessments for more than 30 million plots nationwide.

Of the total, 5.12 million plots were assessed on an individual basis, including 1.8 million in Bangkok and the rest in 23 provinces. The other 24.9 million plots were assessed on a block basis.

Upcountry land values rose on average by 26.97% in the new assessment.

The most expensive property values were recorded in Hat Yai in Songkhla province, at 400,000 baht per square wah. Southern property values increased by 85.79% on average from the last assessment, the highest increase of all regions.

The cheapest property values were recorded for Ban Rai, Uthai Thani and Doi Lo in Chiang Mai.

In the eastern and central provinces, prices rose by an average of 11.71%, with Muang district in Samut Prakan the highest at 140,000 baht per square wah. Values in the North rose 15.43% overall, with Muang district in Chiang Mai quoted at 250,000 baht per square wah.

For northeastern provinces, values rose by an average of 22.97%, with Muang district in Khon Kaen quoted at an average of 200,000 baht per square wah.

Surat Thani in the South had property values adjusted to 11,000 baht per square wah from 1,500 baht earlier. Officials said the sharp increase reflected higher land demand for agriculture.

Udon Thani also recorded a sharp increase of 55% in the new valuation, reflecting the province's strategic location along the North-South Corridor running from southern China to the Laem Chabang Port as well as the East-West Corridor ending in Danang, Vietnam.

WICHIT CHANTANUSORNSIRI
Copyright (c) 2007, Bangkok Post, Thailand
To see more of the Bangkok Post, or to subscribe to the newspaper,
go to http://www.bangkokpost.com.