Customers this year mainly smaller firms
Hemaraj Land and Development Plc (HEMRAJ), Thailand's largest private industrial land developer, expects its 2009 land sales to slump by two-thirds of last year's figure, says president and CEO David Nardone.
Hemaraj sold 1,621 rai of industrial land in 2008, but this year the company is targeting only 500 rai, because of the global downturn's impact on investment and industrial land demand.
Last year's land sales figure was a record for Hemaraj, as large companies in several industries sought to expand capacity to sustain their growth.
Big buyers among its 60 land sales in 2008 included Suzuki Motor Corp, Bitumen, Thai Rayon and Nippon Steel.
So far this year, though, most clients have been small-scale businesses.
''This is due mainly to large corporations preferring to move cautiously on investments due to concern about the impact of uncertainty in the global economic and local political situations,'' Mr Nardone told the company's annual shareholders' meeting yesterday.
Despite record land sales, Hemaraj's total revenue last year dropped 4% to 4.98 billion baht, down from 5.24 billion in 2007. But its net profit rose 15% to 1.34 billion baht, up from 1.16 billion.
To balance its revenue portfolio that is still largely focused on land sales, Hemaraj has invested in utility services, such as steam and power supply, as well as construction design and management at its six industrial estates.
Hemaraj entered the water supply business last year through its wholly-owned subsidiaries Hemaraj Water and Hemaraj Clean Water.
Utility revenues rose to contribute 20%, or 924 million baht, of the company's total revenue last year. An increase from 13%, or 721 million, in 2007.
Hemaraj expects to further raise its services revenue to more than 2.5 billion baht in 2011.
Its utility earnings are set to triple in 2012 after the start of operations at the 660-megawatt Gheco-One coal-fired power plant. Utility income from the plant in which Hemaraj holds 35% is expected to provide one-third of the company's revenue from then on.
Hemaraj is freezing residential project developments planned for 2009 because of a market glut and the unsettled political situation. Residential property's contribution to company revenues has slipped from 50% in 2006 to 40% in 2007, and to less than 10% last year, in line with the number of available units.
Source: Bangkok Post 30 April 2009
Thursday, April 30, 2009
Problems, and Deals, in Thailand
JUST how many hits can the tourism industry of Thailand take? Will the anti-government protests in Bangkok in mid-April — which escalated into two days of rioting during the traditional Thai New Year and caused the cancellation of a summit meeting of Asian nations in Pattaya — keep away the visitors who have been gradually returning since the devastating tsunami of 2004?
Readers' Comments
How have global incidents, including the spread of the swine flu, affected your travel plans?
The clashes, in which two people were killed and more than 100 injured, were quelled after government troops stepped in. But images of burning buses and armed soldiers in the streets of Bangkok came just four months after another group of demonstrators blockaded airports, stranding passengers for about a week. And the prospect of continued turmoil has already prompted some travelers to rethink their travel plans.
For a three-week vacation abroad, John D. Long, of Washington, had been trying to decide between a trip to Europe or a tour of Southeast Asia, using Bangkok as a hub to reach Cambodia, Vietnam and Myanmar.
“I was ready to make a reservation for either place but as I began to read about the unrest in Thailand and remembering what happened the last time the political party currently in power was in the opposition,” he said referring to the airport shutdowns, “I began to think it was more prudent for me to opt for the European trip.”
It wasn’t so much the nature of the recent strife that worried Mr. Long, but how his trip might be affected if the demonstrations were to have an impact on his travel plans. “If I get to Bangkok and can’t get out,” he said, he would never make it to places like Yangon, the former Rangoon, in Myanmar, “a major draw for that trip.”
Thailand tourism had already taken a hit from the global economic crisis. The Tourism Authority of Thailand was anticipating about 14 million international visitors this year, down from about 14.6 million in 2008. But the Bangkok riots are expected to direct an additional blow at the travel market — an estimated drop in international visitors of 20 to 30 percent for the first half this year, according to the tourism authority.
The Thai government has tried to tamp down tourist jitters. On April 21, Kasit Piromya, the foreign minister, said, “The protests in Thailand were confined to only a few, one or two spots of Bangkok,” and in the rest of the city, “99 percent was life goes on as usual.”
While the United States Embassy advised citizens to avoid areas of demonstration and “exercise caution anywhere in Bangkok” during the protests, the State Department did not issue a separate warning or travel alert for the region. It does, however, advise American citizens visiting Bangkok “to monitor events closely, to avoid any large public gatherings, and to exercise discretion when moving about” the city.
As a result, some travel companies expect visits to drop.
“There is always a short-term effect when things like this occur,” said Rod Cuthbert, founder of Viator.com, which links travelers with local tour operators for sightseeing, including 94 activities in Thailand. Though traffic to the site’s Thailand pages remained strong throughout the period of upheaval, he said, “we expect April and May bookings will be well down.”
The uncertainty about the situation in Thailand may well damage the country’s increasing reputation as a place where travelers can find affordable luxury — five-star treatment at three-star prices.
Certainly, some recent deals make Thailand seem like the place to go. Through April, the Metropolitan Bangkok, part of the high-end COMO Hotels and Resorts, offered rooms that are normally $260 a night for $99.
The Anantara Golden Triangle Resort and Spa in Northern Thailand, which has an on-site Elephant Camp, is offering three nights for the price of two, with rates from 9,200 baht a night, about $255 at 36 baht to the dollar. Travelers can get an even lower rate (7,600 baht) by booking 50 days in advance.
Its sister property Si Kao Resort and Spa, on a southern beach an hour from Krabi’s airport, is offering discounts of up to 40 percent off the usual rates of 6,000 baht and up a night, based on how far ahead travelers make their reservations (see www.anantara.com for both resorts).
On top of such deals, American travelers have about 11 percent more buying power in Thailand compared with a year ago because the baht has dropped against the dollar.
DESPITE televised images of burning buses and armed soldiers squaring off with angry protesters in the streets of Bangkok, some visitors to the city were oblivious to the state of emergency. Agneta Mallenberg, 38, an interior architect, and her friend, Agnieszka Mrugala, 37, a computer programmer, both from Warsaw, were there when the riots started.
“I didn’t know what happened in Bangkok while we were there,” said Ms. Mallenberg, while taking a break from shopping in the Jungceylon mall in Phuket. “My mum wrote me on Facebook that I’m supposed to avoid big crowds. That was the first I heard about it.”
Other vacationers in Thailand also appeared unfazed. Just days after the riots, the boisterous night-life scene in Patong, on Phuket, was still raging, its bars and street stalls thronged with people.
Friendly Planet Travel, based in Jenkintown, Pa., sent a group of 26 tourists to Thailand on April 16 for a 12-day tour from Chiang Mai to Bangkok. No one canceled.
“September 11 changed forever our way of viewing the world,” said Peggy Goldman, Friendly Planet’s president. “We have found that our travelers are much more sanguine about facing the world, even during times of instability and unrest.”
Ms. Goldman is planning to go to Bangkok herself this month.
“Quite honestly, we don’t have any concerns at this moment,” she said. “While there is political instability at this moment, these are generally peaceful, welcoming people who love visitors and treat them with a great deal of respect.”
Sibel Mulard, 39, an insurance account manager from France who was vacationing in Thailand with her husband, Lionel, and their two young boys, had just arrived on Phuket when the Bangkok riots started and received many calls from concerned family members in France urging her to come back right away.
But Ms. Mulard, who said she was more concerned about a tsunami than getting caught up in any violence, was determined to see out her vacation. She pointed out to her family that Phuket is a long way from Bangkok, adding: “I said, ‘I am going to stay. I am not coming back.’ ”
The Mulards did alter their plans so they would avoid the capital, however, due to the protests. Instead of sightseeing in Bangkok, Ms. Mulard said, “We will go to the islands.”
Source: NY Times 29 April 2009
Readers' Comments
How have global incidents, including the spread of the swine flu, affected your travel plans?
The clashes, in which two people were killed and more than 100 injured, were quelled after government troops stepped in. But images of burning buses and armed soldiers in the streets of Bangkok came just four months after another group of demonstrators blockaded airports, stranding passengers for about a week. And the prospect of continued turmoil has already prompted some travelers to rethink their travel plans.
For a three-week vacation abroad, John D. Long, of Washington, had been trying to decide between a trip to Europe or a tour of Southeast Asia, using Bangkok as a hub to reach Cambodia, Vietnam and Myanmar.
“I was ready to make a reservation for either place but as I began to read about the unrest in Thailand and remembering what happened the last time the political party currently in power was in the opposition,” he said referring to the airport shutdowns, “I began to think it was more prudent for me to opt for the European trip.”
It wasn’t so much the nature of the recent strife that worried Mr. Long, but how his trip might be affected if the demonstrations were to have an impact on his travel plans. “If I get to Bangkok and can’t get out,” he said, he would never make it to places like Yangon, the former Rangoon, in Myanmar, “a major draw for that trip.”
Thailand tourism had already taken a hit from the global economic crisis. The Tourism Authority of Thailand was anticipating about 14 million international visitors this year, down from about 14.6 million in 2008. But the Bangkok riots are expected to direct an additional blow at the travel market — an estimated drop in international visitors of 20 to 30 percent for the first half this year, according to the tourism authority.
The Thai government has tried to tamp down tourist jitters. On April 21, Kasit Piromya, the foreign minister, said, “The protests in Thailand were confined to only a few, one or two spots of Bangkok,” and in the rest of the city, “99 percent was life goes on as usual.”
While the United States Embassy advised citizens to avoid areas of demonstration and “exercise caution anywhere in Bangkok” during the protests, the State Department did not issue a separate warning or travel alert for the region. It does, however, advise American citizens visiting Bangkok “to monitor events closely, to avoid any large public gatherings, and to exercise discretion when moving about” the city.
As a result, some travel companies expect visits to drop.
“There is always a short-term effect when things like this occur,” said Rod Cuthbert, founder of Viator.com, which links travelers with local tour operators for sightseeing, including 94 activities in Thailand. Though traffic to the site’s Thailand pages remained strong throughout the period of upheaval, he said, “we expect April and May bookings will be well down.”
The uncertainty about the situation in Thailand may well damage the country’s increasing reputation as a place where travelers can find affordable luxury — five-star treatment at three-star prices.
Certainly, some recent deals make Thailand seem like the place to go. Through April, the Metropolitan Bangkok, part of the high-end COMO Hotels and Resorts, offered rooms that are normally $260 a night for $99.
The Anantara Golden Triangle Resort and Spa in Northern Thailand, which has an on-site Elephant Camp, is offering three nights for the price of two, with rates from 9,200 baht a night, about $255 at 36 baht to the dollar. Travelers can get an even lower rate (7,600 baht) by booking 50 days in advance.
Its sister property Si Kao Resort and Spa, on a southern beach an hour from Krabi’s airport, is offering discounts of up to 40 percent off the usual rates of 6,000 baht and up a night, based on how far ahead travelers make their reservations (see www.anantara.com for both resorts).
On top of such deals, American travelers have about 11 percent more buying power in Thailand compared with a year ago because the baht has dropped against the dollar.
DESPITE televised images of burning buses and armed soldiers squaring off with angry protesters in the streets of Bangkok, some visitors to the city were oblivious to the state of emergency. Agneta Mallenberg, 38, an interior architect, and her friend, Agnieszka Mrugala, 37, a computer programmer, both from Warsaw, were there when the riots started.
“I didn’t know what happened in Bangkok while we were there,” said Ms. Mallenberg, while taking a break from shopping in the Jungceylon mall in Phuket. “My mum wrote me on Facebook that I’m supposed to avoid big crowds. That was the first I heard about it.”
Other vacationers in Thailand also appeared unfazed. Just days after the riots, the boisterous night-life scene in Patong, on Phuket, was still raging, its bars and street stalls thronged with people.
Friendly Planet Travel, based in Jenkintown, Pa., sent a group of 26 tourists to Thailand on April 16 for a 12-day tour from Chiang Mai to Bangkok. No one canceled.
“September 11 changed forever our way of viewing the world,” said Peggy Goldman, Friendly Planet’s president. “We have found that our travelers are much more sanguine about facing the world, even during times of instability and unrest.”
Ms. Goldman is planning to go to Bangkok herself this month.
“Quite honestly, we don’t have any concerns at this moment,” she said. “While there is political instability at this moment, these are generally peaceful, welcoming people who love visitors and treat them with a great deal of respect.”
Sibel Mulard, 39, an insurance account manager from France who was vacationing in Thailand with her husband, Lionel, and their two young boys, had just arrived on Phuket when the Bangkok riots started and received many calls from concerned family members in France urging her to come back right away.
But Ms. Mulard, who said she was more concerned about a tsunami than getting caught up in any violence, was determined to see out her vacation. She pointed out to her family that Phuket is a long way from Bangkok, adding: “I said, ‘I am going to stay. I am not coming back.’ ”
The Mulards did alter their plans so they would avoid the capital, however, due to the protests. Instead of sightseeing in Bangkok, Ms. Mulard said, “We will go to the islands.”
Source: NY Times 29 April 2009
Phuket market resists slowdown
Seems to contradict CBRE's views recently...
Political instability in Thailand and a global economic slow-down have failed to curb Phuket’s booming property industry, according to a report in The Nation newspaper.
Quoting sources from several top real estate agencies, the report claims that Phuket’s strong tourism market is providing the boost needed to counter a slowing national economy.
Phuket remains an attractive retirement destination and every year more and more retirees are looking to Phuket. The growing number of tourists that choose to make Phuket their second or third home has also spurred the exponential growth of the property industry on the island.
According to a report from Colliers International Thailand, based on the company’s market research the number of residential units for sale in Phuket, which recorded a peak in 2006 with 1,473 units for sale, dipped last year, showing a 44 percent decrease. This year, however, the figures have rebounded and show a healthy growth.
The majority of property investors in Phuket are said to be expatriates based in Asia, particularly Hong Kong and Singapore. With real estate in these cities being highly priced, more attractive prices and environment are big draws for investors from these business hubs, either looking for holiday homes, investments with a rental return or looking longer-term to a future retirement home.
Phuket is also becoming popular with property purchasers from many new markets, such as Russia, South Korea, the Middle East and India. These buyers tend to be more investment-orientated, says the Colliers report, and are looking for potential capital appreciation and possibly rental income.
High quality construction and reputable hotel brands branching into time-share units have also raised the profile of the island and are becoming central to the high prices now being commanded.
The Colliers International Thailand study further claims that the eastern coast of Phuket is emerging as the future destination for high-end developments in Phuket, with the three marinas (and one more close to operational), traditional magnets for residential projects, all located along this coastline. The selling price per square metre in some projects on the eastern coast is higher than that on the western coast, although the land price per rai in the western areas is higher on average.
CB Richard Ellis Thailand also predicts a strong growth for the high-end market, particularly after the imminent upgrade of the Phuket International Airport, which aims at almost doubling the facility’s capacity by 2010.
Source: Asia Property Report
Political instability in Thailand and a global economic slow-down have failed to curb Phuket’s booming property industry, according to a report in The Nation newspaper.
Quoting sources from several top real estate agencies, the report claims that Phuket’s strong tourism market is providing the boost needed to counter a slowing national economy.
Phuket remains an attractive retirement destination and every year more and more retirees are looking to Phuket. The growing number of tourists that choose to make Phuket their second or third home has also spurred the exponential growth of the property industry on the island.
According to a report from Colliers International Thailand, based on the company’s market research the number of residential units for sale in Phuket, which recorded a peak in 2006 with 1,473 units for sale, dipped last year, showing a 44 percent decrease. This year, however, the figures have rebounded and show a healthy growth.
The majority of property investors in Phuket are said to be expatriates based in Asia, particularly Hong Kong and Singapore. With real estate in these cities being highly priced, more attractive prices and environment are big draws for investors from these business hubs, either looking for holiday homes, investments with a rental return or looking longer-term to a future retirement home.
Phuket is also becoming popular with property purchasers from many new markets, such as Russia, South Korea, the Middle East and India. These buyers tend to be more investment-orientated, says the Colliers report, and are looking for potential capital appreciation and possibly rental income.
High quality construction and reputable hotel brands branching into time-share units have also raised the profile of the island and are becoming central to the high prices now being commanded.
The Colliers International Thailand study further claims that the eastern coast of Phuket is emerging as the future destination for high-end developments in Phuket, with the three marinas (and one more close to operational), traditional magnets for residential projects, all located along this coastline. The selling price per square metre in some projects on the eastern coast is higher than that on the western coast, although the land price per rai in the western areas is higher on average.
CB Richard Ellis Thailand also predicts a strong growth for the high-end market, particularly after the imminent upgrade of the Phuket International Airport, which aims at almost doubling the facility’s capacity by 2010.
Source: Asia Property Report
Wednesday, April 29, 2009
Thai tourism to lose $2.9 bln from riots: PM
BANGKOK — Thai Prime Minister Abhisit Vejjajiva on Wednesday said tourism income was likely to fall by more than 102 billion baht (2.91 billion dollars) after deadly anti-government protests in April.
The same riots sparked losses of 220 million baht in damage to public property and loss of state income, according to the National Economic and Social Development Board (NESDB), the cabinet said in a statement.
Supporters of fugitive former premier Thaksin Shinawatra forced the closure of an Asian summit in Thailand on April 11, before taking to the streets of Bangkok where a state of emergency was declared for almost two weeks.
Street battles between protesters and soldiers left two dead and 123 people injured.
"Income from tourism this year is expected to fall by around 102.39 billion baht compared to 2008 due to the incidents in April, according to the NSDB," said Abhisit following the cabinet meeting.
"The number of foreign tourists in 2009 is also expected to drop by 877,474 people compared to last year," he added.
State services including public transport and road tolls received less revenue while electricity and telecommunications pylons were also damaged by the protests, the cabinet revealed in a statement.
Last week the government forecast 3.2 million fewer visitors to Thailand as a result of the unrest. Thailand last year recorded 14.1 million foreign visitors into the kingdom.
Rival protest campaigns have wracked Thailand for months, with opponents of Thaksin protesting late last year before a court toppled his allies from government, paving the way for Abhisit's Democrats to take power.
Source: AFP 29 April 2009
The same riots sparked losses of 220 million baht in damage to public property and loss of state income, according to the National Economic and Social Development Board (NESDB), the cabinet said in a statement.
Supporters of fugitive former premier Thaksin Shinawatra forced the closure of an Asian summit in Thailand on April 11, before taking to the streets of Bangkok where a state of emergency was declared for almost two weeks.
Street battles between protesters and soldiers left two dead and 123 people injured.
"Income from tourism this year is expected to fall by around 102.39 billion baht compared to 2008 due to the incidents in April, according to the NSDB," said Abhisit following the cabinet meeting.
"The number of foreign tourists in 2009 is also expected to drop by 877,474 people compared to last year," he added.
State services including public transport and road tolls received less revenue while electricity and telecommunications pylons were also damaged by the protests, the cabinet revealed in a statement.
Last week the government forecast 3.2 million fewer visitors to Thailand as a result of the unrest. Thailand last year recorded 14.1 million foreign visitors into the kingdom.
Rival protest campaigns have wracked Thailand for months, with opponents of Thaksin protesting late last year before a court toppled his allies from government, paving the way for Abhisit's Democrats to take power.
Source: AFP 29 April 2009
Thai tourism to lose $2.9 bln from riots: PM
BANGKOK (AFP) — Thai Prime Minister Abhisit Vejjajiva on Wednesday said tourism income was likely to fall by more than 102 billion baht (2.91 billion dollars) after deadly anti-government protests in April.
The same riots sparked losses of 220 million baht in damage to public property and loss of state income, according to the National Economic and Social Development Board (NSDB), the cabinet said in a statement.
Supporters of fugitive former premier Thaksin Shinawatra forced the closure of an Asian summit in Thailand on April 11, before taking to the streets of Bangkok where a state of emergency was declared for almost two weeks.
Street battles between protesters and soldiers left two dead and 123 people injured.
"Income from tourism this year is expected to fall by around 102.39 billion baht compared to 2008 due to the incidents in April, according to the NSDB," said Abhisit following the cabinet meeting.
"The number of foreign tourists in 2009 is also expected to drop by 877,474 people compared to last year," he added.
State services including public transport and road tolls received less revenue while electricity and telecommunications pylons were also damaged by the protests, the cabinet revealed in a statement.
Last week the government forecast 3.2 million fewer visitors to Thailand as a result of the unrest. Thailand last year recorded 14.1 million foreign visitors into the kingdom.
Rival protest campaigns have wracked Thailand for months, with opponents of Thaksin protesting late last year before a court toppled his allies from government, paving the way for Abhisit's Democrats to take power.
Source: AFP 29 April 2009
The same riots sparked losses of 220 million baht in damage to public property and loss of state income, according to the National Economic and Social Development Board (NSDB), the cabinet said in a statement.
Supporters of fugitive former premier Thaksin Shinawatra forced the closure of an Asian summit in Thailand on April 11, before taking to the streets of Bangkok where a state of emergency was declared for almost two weeks.
Street battles between protesters and soldiers left two dead and 123 people injured.
"Income from tourism this year is expected to fall by around 102.39 billion baht compared to 2008 due to the incidents in April, according to the NSDB," said Abhisit following the cabinet meeting.
"The number of foreign tourists in 2009 is also expected to drop by 877,474 people compared to last year," he added.
State services including public transport and road tolls received less revenue while electricity and telecommunications pylons were also damaged by the protests, the cabinet revealed in a statement.
Last week the government forecast 3.2 million fewer visitors to Thailand as a result of the unrest. Thailand last year recorded 14.1 million foreign visitors into the kingdom.
Rival protest campaigns have wracked Thailand for months, with opponents of Thaksin protesting late last year before a court toppled his allies from government, paving the way for Abhisit's Democrats to take power.
Source: AFP 29 April 2009
Developers put luxury projects on hold in Thailand
Buyer waiting to see if political situation gets any better
Residential projects that are worth more than Bt10 billion in resort destinations like Phuket, Krabi, Hua Hin, Pattaya and Koh Samui have been put on hold now that demand from foreign investors is showing a significant drop since last year.
According to a survey by The Nation last week, a number of property developers in tourist destinations have postponed the completion of the construction as they wait for an economic recovery.
International property agent CB Richard Ellis (CBRE) reported that the forward momentum in Phuket property in terms of price and take up over the last five years came to a halt in the fourth quarter of last year due to global recession.
This has resulted in a significant drop in transactions and project launches, while cancellations have increased considerably, the agent said.
"In many ways, the property market in Phuket is a foreign-driven market located on a Thai island," said David Simister, chairman of CB Richard Ellis Thailand. "The bulk of visitors, hotels guests and property buyers are all foreigners."
Nabeel Hussain, manager of CBRE Research, added: "Our earlier estimates called for as many as 1,700 condominium units to be completed in 2009, but we believe a number of projects will be delayed due to slower take-up rates. Similarly, in the villa market, we have identified over ten projects with more than 450 units that went on hold or were delayed during last year's fourth quarter alone. It also appears that around a quarter of all upscale hotel rooms under development are now on hold as well."
However, since the start of 2009, CBRE did note some positive elements. These include the fact that tourist numbers in Phuket remain among the highest compared to any other Asian resort and there is a lack of bank-financed mortgages that have played a significant role in the demise of other markets. As evidenced by the island's popularity, they point to the fact that the Ibis Patong Hotel recorded 100 per cent occupancy during the first weekend in March, which is after the end of the high season.
"In the long-term, we remain bullish on this market, since we believe that buyers of luxury and high-end properties tend to make choices based on lifestyle and not primarily pricing. That said, it is unlikely that demand for these high-end properties will recover before the global economy improves. Our view is that potential buyers who are able to view investment with discretion and who have suffered little from the global downturn still be interested in the near-term," Simister added.
Colliers International Thailand's head of research Risinee Sarikaputra also said that purchasing power of foreign investors, especially those from the United States, Europe, Hong Kong, and Singapore, have dropped significantly to between 20 per cent and 50 per cent depending on the location.
"After the sub-prime crisis hit the US and turned into a global crisis now, demand for luxury residential projects at prices between Bt25 million and Bt50 million have significantly dropped in both residential projects in inner-Bangkok and resort destinations," she said.
With the market trend, a number of property developers planning to launch new projects, especially those worth more than Bt10 billion, have decided to postpone things.
"Only customers who plan to launch new projects this year have decided to wait until next year," Risinee said.
Managing director of Knight Frank Charter (Thailand), Phanom Kanjanathiemthao, admitted that demand from foreign investors had halved last month compared to the same period last year.
The global economic crisis has badly affected the Thailand property market now that buyers from the US, Europe, Hong Kong and Singapore have suspended their overseas investments. As a result residential sales in Thailand, especially in terms of luxury condominiums that are focused on foreign buyers, has suffered significant losses since the last quarter of 2008 until now, he said.
"In terms of market trends, we advise property developers to put off the launch of their new residential projects until the second half of next year," he said.
Nexus Property Consultants' managing director Apisit Limlomwongse admitted that his company's sales had dropped in the first quarter of this year to between 5 and 10 per cent, and as a result the firm has had to organise road shows to boost its sales.
"The US financial crisis has not had a direct impact on the Thai property market as much as the current political uncertainty, which is scaring away local and foreign buyers planning to purchase property in the Kingdom," he explained. "Most of our potential buyers have suspended their decision to purchase and are waiting to see when the unrest will end."
Apisit added that the drop in the Bangkok property market might also have something to do with the location of some residential projects, especially those that are a fair way away from the Skytrain or the underground train system.
However, he said, prices for projects located close to transit systems will remain stable.
Source: The Nation Published on April 9, 2009
Residential projects that are worth more than Bt10 billion in resort destinations like Phuket, Krabi, Hua Hin, Pattaya and Koh Samui have been put on hold now that demand from foreign investors is showing a significant drop since last year.
According to a survey by The Nation last week, a number of property developers in tourist destinations have postponed the completion of the construction as they wait for an economic recovery.
International property agent CB Richard Ellis (CBRE) reported that the forward momentum in Phuket property in terms of price and take up over the last five years came to a halt in the fourth quarter of last year due to global recession.
This has resulted in a significant drop in transactions and project launches, while cancellations have increased considerably, the agent said.
"In many ways, the property market in Phuket is a foreign-driven market located on a Thai island," said David Simister, chairman of CB Richard Ellis Thailand. "The bulk of visitors, hotels guests and property buyers are all foreigners."
Nabeel Hussain, manager of CBRE Research, added: "Our earlier estimates called for as many as 1,700 condominium units to be completed in 2009, but we believe a number of projects will be delayed due to slower take-up rates. Similarly, in the villa market, we have identified over ten projects with more than 450 units that went on hold or were delayed during last year's fourth quarter alone. It also appears that around a quarter of all upscale hotel rooms under development are now on hold as well."
However, since the start of 2009, CBRE did note some positive elements. These include the fact that tourist numbers in Phuket remain among the highest compared to any other Asian resort and there is a lack of bank-financed mortgages that have played a significant role in the demise of other markets. As evidenced by the island's popularity, they point to the fact that the Ibis Patong Hotel recorded 100 per cent occupancy during the first weekend in March, which is after the end of the high season.
"In the long-term, we remain bullish on this market, since we believe that buyers of luxury and high-end properties tend to make choices based on lifestyle and not primarily pricing. That said, it is unlikely that demand for these high-end properties will recover before the global economy improves. Our view is that potential buyers who are able to view investment with discretion and who have suffered little from the global downturn still be interested in the near-term," Simister added.
Colliers International Thailand's head of research Risinee Sarikaputra also said that purchasing power of foreign investors, especially those from the United States, Europe, Hong Kong, and Singapore, have dropped significantly to between 20 per cent and 50 per cent depending on the location.
"After the sub-prime crisis hit the US and turned into a global crisis now, demand for luxury residential projects at prices between Bt25 million and Bt50 million have significantly dropped in both residential projects in inner-Bangkok and resort destinations," she said.
With the market trend, a number of property developers planning to launch new projects, especially those worth more than Bt10 billion, have decided to postpone things.
"Only customers who plan to launch new projects this year have decided to wait until next year," Risinee said.
Managing director of Knight Frank Charter (Thailand), Phanom Kanjanathiemthao, admitted that demand from foreign investors had halved last month compared to the same period last year.
The global economic crisis has badly affected the Thailand property market now that buyers from the US, Europe, Hong Kong and Singapore have suspended their overseas investments. As a result residential sales in Thailand, especially in terms of luxury condominiums that are focused on foreign buyers, has suffered significant losses since the last quarter of 2008 until now, he said.
"In terms of market trends, we advise property developers to put off the launch of their new residential projects until the second half of next year," he said.
Nexus Property Consultants' managing director Apisit Limlomwongse admitted that his company's sales had dropped in the first quarter of this year to between 5 and 10 per cent, and as a result the firm has had to organise road shows to boost its sales.
"The US financial crisis has not had a direct impact on the Thai property market as much as the current political uncertainty, which is scaring away local and foreign buyers planning to purchase property in the Kingdom," he explained. "Most of our potential buyers have suspended their decision to purchase and are waiting to see when the unrest will end."
Apisit added that the drop in the Bangkok property market might also have something to do with the location of some residential projects, especially those that are a fair way away from the Skytrain or the underground train system.
However, he said, prices for projects located close to transit systems will remain stable.
Source: The Nation Published on April 9, 2009
Chong Nonsi Lures Developers: Three Projects Worth B30bn Planned in Area
Apr. 28--Locations on Narathiwat Ratchanakharin Road and Silom Road near the Chong Nonsi BTS station are becoming hot with three new property projects scheduled for future development with a total value of at least 30 billion baht.
According to property brokers and consultants, the biggest project with the highest value will be a luxury development called Bangkok Mixed-Use.
It will be a joint venture between the Thai property firm Pace Development, the developer of the luxury Saladaeng Residences, and the Israeli investor Industrial Buildings Corporation (IBC), a large real estate developer traded on the Tel Aviv Stock Exchange.
Both planned an official announcement last Wednesday but postponed it due to unfavourable sentiment, though the investment and development plan continues to move forward.
An industry source said the plot was a seven-rai site on Narathiwat Ratchanakharin Road close to the Chong Nonsi BTS station, next door to Golden Land's The Infinity, a nearly completed luxury residential project.
He said that Sorapoj Techakraisri, Pace Development's CEO, had dealt with the plot's landlords for five years. Of the seven rai, the front three rai were owned by Prasong Panichpakdee of property firm Somprasong Group and the four rai at the back belonged to the Catholic Missions.
The land price was not disclosed. But market prices rose to 800,000 baht a square wah after the giant insurer AIA completed a deal with Metrostar Property for a plot on South Sathon Road last year, the source added.
In August last year, IBC reported that the company, controlled by Israeli investor Eliezer Fishman, would invest 71.1 million shekels (595 million baht) to develop a luxury property project in Bangkok.
It signed an agreement with three Thai companies that held the rights to the land plot. IBC would have 50 percent voting shares and the right to profits in the companies initiating the project.
The project would include two buildings with total built space of 123,000 square metres, one of which would be a 70-storey skyscraper comprising luxury apartments, a Ritz Carlton hotel and commercial space, scheduled to be completed by 2012.
"If the project is completed, it would be the second highest building in Thailand, following Baiyoke Tower," the source said. "And this location will shine as two luxury hotels are located there -- W Hotel on the same plot of The Infinity and Ritz Carlton."
According to the Department of Business Development, IBC and Pace Development have set up three joint-venture companies. They are Pace Project One with registered capital of 200 million baht in 2007, Pace Project Two and Pace Project Three in 2008 with capital of 200 million and 100 million baht respectively.
The source said IBC and Pace had now revised the plan and had additional options. The project investment is estimated at around 40 billion baht while the value should exceed 50 billion.
Before teaming with Pace Development, IBC had been interested in a project by renowned architect Rangsan Torsuwan, the Sathorn Unique Tower condominium, a suspended 49-storey building on Charoen Krung Road.
It also spent 40-50 million baht as a deposit but the deal could not be completed due to unresolved problems with the building's creditors, the source added.
The listed developer Major Development Plc (MJD), meanwhile, acquired a 500-square-wah site on Anuman Ratchathon Road, which links Silom and Surawong roads, in the third quarter last year for 361 million baht.
MJD managing director Suriya Poolvoralaks said the company planned to launch a condominium project with 100 to 200 units in the first quarter of this year but needed to postpone it to the second half of the year as the timing was poor.
"The Silom and Surawong area has potential as the location and property prices are good," he said.
In the second half, MJD also plans to launch a new condominium in the Phaya Thai area but it is postponing the launch of another condominium in Thong Lo to next year.
On Pramuan Road, linking Silom and North Sathon roads near the Hindu Temple, the Phornprapha family is interested in a three-rai plot where an SMC Motors Volvo showroom was once situated.
"This leasehold plot has a two-year contract remaining but the showroom is now empty and removed," said the source.
The family plans to develop the hip-style Siam@Silom Hotel, following up on the success of its Siam@Siam Hotel near the National Stadium BTS station.
Along Sathon Road, it is very rare to find large plots for new development. Currently, there is only one plot of 10 rai on the corner of South Sathon Road near the Surasak Intersection and Taksin Bridge, on the offer for around 650,000 baht a square wah, said a property broker.
The plot has attracted a lot of interest from investors and developers but most of the deals have failed due to problems with some landlords and concerns about evictions, said the source.
Source: Bangkok Post, Thailand
According to property brokers and consultants, the biggest project with the highest value will be a luxury development called Bangkok Mixed-Use.
It will be a joint venture between the Thai property firm Pace Development, the developer of the luxury Saladaeng Residences, and the Israeli investor Industrial Buildings Corporation (IBC), a large real estate developer traded on the Tel Aviv Stock Exchange.
Both planned an official announcement last Wednesday but postponed it due to unfavourable sentiment, though the investment and development plan continues to move forward.
An industry source said the plot was a seven-rai site on Narathiwat Ratchanakharin Road close to the Chong Nonsi BTS station, next door to Golden Land's The Infinity, a nearly completed luxury residential project.
He said that Sorapoj Techakraisri, Pace Development's CEO, had dealt with the plot's landlords for five years. Of the seven rai, the front three rai were owned by Prasong Panichpakdee of property firm Somprasong Group and the four rai at the back belonged to the Catholic Missions.
The land price was not disclosed. But market prices rose to 800,000 baht a square wah after the giant insurer AIA completed a deal with Metrostar Property for a plot on South Sathon Road last year, the source added.
In August last year, IBC reported that the company, controlled by Israeli investor Eliezer Fishman, would invest 71.1 million shekels (595 million baht) to develop a luxury property project in Bangkok.
It signed an agreement with three Thai companies that held the rights to the land plot. IBC would have 50 percent voting shares and the right to profits in the companies initiating the project.
The project would include two buildings with total built space of 123,000 square metres, one of which would be a 70-storey skyscraper comprising luxury apartments, a Ritz Carlton hotel and commercial space, scheduled to be completed by 2012.
"If the project is completed, it would be the second highest building in Thailand, following Baiyoke Tower," the source said. "And this location will shine as two luxury hotels are located there -- W Hotel on the same plot of The Infinity and Ritz Carlton."
According to the Department of Business Development, IBC and Pace Development have set up three joint-venture companies. They are Pace Project One with registered capital of 200 million baht in 2007, Pace Project Two and Pace Project Three in 2008 with capital of 200 million and 100 million baht respectively.
The source said IBC and Pace had now revised the plan and had additional options. The project investment is estimated at around 40 billion baht while the value should exceed 50 billion.
Before teaming with Pace Development, IBC had been interested in a project by renowned architect Rangsan Torsuwan, the Sathorn Unique Tower condominium, a suspended 49-storey building on Charoen Krung Road.
It also spent 40-50 million baht as a deposit but the deal could not be completed due to unresolved problems with the building's creditors, the source added.
The listed developer Major Development Plc (MJD), meanwhile, acquired a 500-square-wah site on Anuman Ratchathon Road, which links Silom and Surawong roads, in the third quarter last year for 361 million baht.
MJD managing director Suriya Poolvoralaks said the company planned to launch a condominium project with 100 to 200 units in the first quarter of this year but needed to postpone it to the second half of the year as the timing was poor.
"The Silom and Surawong area has potential as the location and property prices are good," he said.
In the second half, MJD also plans to launch a new condominium in the Phaya Thai area but it is postponing the launch of another condominium in Thong Lo to next year.
On Pramuan Road, linking Silom and North Sathon roads near the Hindu Temple, the Phornprapha family is interested in a three-rai plot where an SMC Motors Volvo showroom was once situated.
"This leasehold plot has a two-year contract remaining but the showroom is now empty and removed," said the source.
The family plans to develop the hip-style Siam@Silom Hotel, following up on the success of its Siam@Siam Hotel near the National Stadium BTS station.
Along Sathon Road, it is very rare to find large plots for new development. Currently, there is only one plot of 10 rai on the corner of South Sathon Road near the Surasak Intersection and Taksin Bridge, on the offer for around 650,000 baht a square wah, said a property broker.
The plot has attracted a lot of interest from investors and developers but most of the deals have failed due to problems with some landlords and concerns about evictions, said the source.
Source: Bangkok Post, Thailand
Thailand property sector sluggish
Bangkok - Thailand's property sector, hard-hit by the global recession and political instability since the last quarter of 2008, has yet to witness the kind of fire sales seen in the Asian crisis of 1997, Jones Lang LaSalle (Thailand) said Wednesday. While the economic slowdown has led to falling office rents in Bangkok, to date there have been few investments in distressed assets largely because owners are not distressed, the international property consultant said in their latest property review.
"The gap between buyers and sellers' prices expectations has continued to be a factor in curtailing property investment transactions," Jones Lang LaSalle noted.
"With the economy and the real estate market in a downturn, buyers expect to buy quality property assets at the deeply discounted prices seen during the tom yum koong crisis, an expectation which just isn't being met by owners who are currently liquid and not overly leveraged," it added in the company's most recent sector review.
"Tom yam koong," the name of Thailand's famous spicy shrimp soup, was used to describe the financial crisis of 1997 that started in Bangkok and was blamed largely on over-investment in property and excessive bank lending to what turned into a property bubble.
"Many of the distressed sales following the 1997 financial crisis were the result of banks needing to restructure an abundance of non-performing loans, a condition which does not exist today," Jones Lang LaSalle said.
The company, however, noted that while there had been few property investments in recent months, office rents were on the decline.
The average Grade A office rentals in central Bangkok had fallen from 671 baht (19.95 dollars) per square metre per month at year-end 2008 to 662 baht (18.70) at the end of first-quarter 2009.
"Real estate in Thailand has increasingly become a buyer/tenant market," Suphin Mechuchep, Managing Director of Jones Lang LaSalle, said. "Softening demand has resulted in stronger competition in both the residential and office markets, with more incentives being offered to buyers and tenants."
"The gap between buyers and sellers' prices expectations has continued to be a factor in curtailing property investment transactions," Jones Lang LaSalle noted.
"With the economy and the real estate market in a downturn, buyers expect to buy quality property assets at the deeply discounted prices seen during the tom yum koong crisis, an expectation which just isn't being met by owners who are currently liquid and not overly leveraged," it added in the company's most recent sector review.
"Tom yam koong," the name of Thailand's famous spicy shrimp soup, was used to describe the financial crisis of 1997 that started in Bangkok and was blamed largely on over-investment in property and excessive bank lending to what turned into a property bubble.
"Many of the distressed sales following the 1997 financial crisis were the result of banks needing to restructure an abundance of non-performing loans, a condition which does not exist today," Jones Lang LaSalle said.
The company, however, noted that while there had been few property investments in recent months, office rents were on the decline.
The average Grade A office rentals in central Bangkok had fallen from 671 baht (19.95 dollars) per square metre per month at year-end 2008 to 662 baht (18.70) at the end of first-quarter 2009.
"Real estate in Thailand has increasingly become a buyer/tenant market," Suphin Mechuchep, Managing Director of Jones Lang LaSalle, said. "Softening demand has resulted in stronger competition in both the residential and office markets, with more incentives being offered to buyers and tenants."
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