Golden Land taps CBD potential

From today's Bangkok Post

Flush with the success of its new property fund, Golden Land Plc is now working on two major central business district projects, one of them a nine-rai plot opposite the Queen Sirikit National Convention Center, according to CEO William Wilfong.

Gold Property Fund, which owns the posh Mayfair Marriott serviced apartment in Soi Lang Suan, was oversubscribed by almost 50% even while the fund manager, Kasikorn Asset Management, only targeted Thai investors. The units began trading on the Stock Exchange of Thailand on May 22 under the symbol GOLDPF. They closed unchanged on Friday at 10 baht, their IPO price.

As property funds are best suited to buildings that are already built, Golden Land is now working on building new ones that might be good investment candidates. Under the regulations such buildings have to be 80% complete before a company can offer them to a fund.

Coming to Thailand a year ago from Singapore, Mr Wilfong observed that the Thai property fund market, aside from being much smaller than in the island republic, is also hampered by severe limits on gearing, making it hard to develop an active market.

Golden Land acquired its prime nine-rai site opposite the QSNCC, which is currently used as a car park, by exchanging a coveted site in Soi Polo, where it was deemed difficult to build, with the Crown Property Bureau.

While the company is still considering what it plans to develop on this site, there is no hotel near the convention centre right now. However, Golden Land is first going ahead with construction at its Sathorn Square project located near the old Russian embassy.

Equally well known as a developer of single detached houses, Golden Land is getting ready to launch a new phase of Golden Nakara estate where a tunnel connecting it to Rama IX Road has been built, and also Golden Heritage in the Pin Klao area.

Also in the pipeline is Grand Monaco, off the Ring Road in Bang Na, and Golden Legend on the extension of Sathorn across the river in Thon Buri.

Mr Wilfong observed that while the housing market did not have a good year last year and may not have a great 2007, Golden Land was very lucky because it had a balance of projects including serviced apartments. Also helping the company was the topping off of its Infinity condominium, which is completely sold out.

"So last year, even though housing was pretty disappointing, we still had a huge increase in profits."

He hopes that things look up later this year noting that lower interest rates do make it easier for everybody whether they are homebuyers or developers.

Regarding which type of property appreciates in value the fastest, he observed that it depends on the point of the cycle for each kind and many other factors.

"Demand is half of it but you also have to look at supply, so if you have a market where it's very difficult for any new supply to come in and there is a big increase in demand, I don't know if it's true in Bangkok, but in other markets such as Hong Kong and Singapore, things can really turn around very quickly.

"Housing prices have probably doubled in Singapore in the last 18 months and office rentals in Hong Kong have probably tripled in a relatively short time."

As Mr Wilfong sees it, the Thai condominium market is not completely moving in the same direction and looking ahead he is concerned about the amount of supply coming up at the lower end.

"There is an awful lot of low-end condos coming up, an awful lot, and Bangkok is a huge city and there is a big demand, but is it going to keep up with level of supply coming in?"

While Golden Land itself is doing well, Mr Wilfong is concerned about the very top end of the condo market where prices are above 100,000 baht a square metre because these developments count on a big foreign component and he's uncertain how well that is doing.

"And then even if the foreign quota gets sold out, I don't know how many local Thai buyers really want to spend 120,000 baht a square metre to live in a condo. ... If you're talking about 25 to 30 million baht, my sense is people would really like to have a big house rather than a flat."

His advice, based on his personal home-buying experience, is to buy the best project in the best neighbourhood that one can reasonably afford, because quality doesn't go out of style.

"Regardless of how the market is, if the market is tough it will probably hold its value better, and if the market is good it has better chance to appreciate."

Also while there is a lot of talk about property as an investment, Mr Wilfong's viewpoint is that at the end of the day, it's a place where you live.

"So it's a bit like a piece of art, you shouldn't buy something you don't like just because you think it's going to go up."