Israel's Fishman Group invests in Thai property project

Bangkok - Shrugging off political instability and recession, Israel's Fishman Group has chosen Thailand for its first major property investment in Asia, a 18-billion-baht (500-million-dollar) luxury property development in Bangkok, media reports said Thursday.

'We want to enter Asia and chose to do so in Thailand because we believe the country has good potential for long-term investment despite its politcal problems,' Anat Menipaz-Fishman, managing director of the Fishman Group, said.

'And it is cheaper than other Asian countries,' she added, in an interview with The Nation newspaper.

Fishman, through its publicly listed Industrial Building Corp, on Wednesday announced a joint venture with Thailand's Pace Development group to invest 18 billion baht in a luxury 'mixed-use' property project in Bangkok.

The project, on which construction is scheduled to begin in the third quarter 2009 and is expected to be completed in 2013, will include 200 Ritz-Carlton Residences, The Edition Bangkok boutique hotel and a 'luxury lifestyle' retail centre.

The investment comes at a time when the Thai economy has been suffering from more than a year of unprecedented political instability, caused by anti-government street protests, and has entered recession.

Thailand's gross domestic product (GDP) declined 7.1 per cent in the first quarter of 2009, after dipping 4.2 per cent in the last quarter of 2008.

Source: Business news 28 May 2009

Land purchase through Thai spouse forbidden: Land Dept

PHUKET CITY: The director general of the Land Department has reiterated that foreigners using Thai nominees to buy land anywhere in the country will have their land title deeds revoked if caught – even if the nominee in question is a lawfully wedded spouse.

Land Department Director Anuwat Meteewiboonwut made the comments during a recent stop in Phuket as part of a nationwide inspection tour of 30 provinces.

The tour is aimed at improving public services by land officials in three areas: dress, conduct when dealing with the public and working harder to eliminate a backlog of work.

Many members of the public have complained that it takes up to a year to complete a transaction that should only take one day, he said.

Mr Anuwat, a former governor of both Phang Nga and Samut Prakan provinces, said he was satisfied on the first two points, but rated the general level of success among land officials nationwide at speeding up their work rate at “only 30%”.

The next round of inspection tours will come in July, after which time personnel changes will be considered if service does not improve, he said.

“We have to keep pressure on them, otherwise the work will not get done,” he said.

As for foreigners seeking to buy homes in Phuket, they can do so through the Condominium Act, which allows foreign ownership of up to 49% of any project, he said.

Foreigners cannot use a Thai spouse as a nominee to buy property in Thailand, however.

“If the Thai spouse has enough money to buy the house that is fine, but if the Thai has no money and uses money given to him or her by a foreigner to acquire property, that is against the law. If we check and find out later that a Thai person has been using money from a foreigner to buy land anywhere in Thailand, we will revoke title deeds,” he said.

Mr Anuwat said the provisions of [Ministry of Interior] ministerial order 43 makes it difficult to issue land documents quickly, as it requires action from a number of different agencies. Desire for land on the island has also led to encroachment problems here, he said.

As a key market for property companies, Phuket is a constant source of problems and complaints to the director general’s office, he admitted.

“We will try to resolve these problems and develop our personnel continuously in order to provide high quality services. Fortunately the governor of Phuket used to work in the Land Department, so he understands the procedures and can help co-ordinate all the agencies involved,” he said.

Mr Anuwat was speaking of Phuket Governor Wichai Phraisa-ngop, who served as Land Office director in Nakhon Pathom in 1997 and as deputy director of the Land Department nationwide in 2003.

Source: Phuket Gazette 27 May 2009

Revenue from Phuket real estate deals plummets

PHUKET CITY: In an indication that the Phuket real estate market is not quite as robust as some like to suggest, statistics released by the Phuket Provincial Land Office reveal that income on land and property sales transactions was down over 70% year-on-year over the first four months of 2009.

There were a total of 1,945 transactions involving land title deeds for the period from January to April.

The total value of land transactions for the period was Bt883.24 billion baht, with the vast majority (Bt881.52bn) for land with pre-existing structures.

Income from transactions from January to April 2008 totaled Bt333.5 million baht.

Income for the same period this year was just Bt97.8m, down almost 71%.

Source: Phuket Gazzette 26 May 2009

The largest reduction was in business tax collection, which is normally paid for by the seller at a cost of 3.3% of appraised value. This figure fell from Bt132.0m to Bt18.2m year-on-year.

There was a similar downward trend in income from transfer fees, normally paid for by the buyer at 2% of registered value. These plummeted from Bt104.3m to Bt13.6m year-on-year.

Withholding tax, paid for by the seller at 1% of appraised value, fell from Bt85.7m to Bt58.6m year-on-year.

Stamp duty, paid for by the seller at 0.5% of registered value, fell from Bt11.6m to Bt7.5m.

Property analyst Bill Barnett of thephuketinsider.com told the Gazette that the figures reflect a "wait and see" attitude on the part of Thai investors, many of whom speculate by buying several units at a time without the intention of living in them.

Describing the figures as somewhat volatile, he cautioned that they are not a reliable yardstick for trends in the upscale villa market, where many sales are to foreigners on a leasehold basis or though offshore accounts, and thus not included in the Land Department figures.

Gloomy outlook for Phuket tourism industry

The Phuket Tourism Association has forecast that hotels in the province would see occupancy rates as low as 25-30 per cent, compared to 60 per cent in the low season last year, citing a number of negative factors.

Phurit Maswongsa, the association's vice president for marketing, said the spread of the type-A(H1N1)flu virus was one of the main problems hitting the industry.

"Phuket is already in the low [holiday] season, but occupancy rates will fall by about 30 per cent to remain at between 30-35 per cent," Phurit said.

He added revenues for operators in Phuket would be down 50 per cent compared to last year.

Only tourists from Australia, the Middle East and India are likely to be visiting the island.

He said promotional offers were not enough to tempt tourists back to Thailand as they were trying to avoid the possibility of catching the flu and were also concerned about political instability.

Moreover, occupancy rates in the high season are expected to be down 20 per cent, to between 50-60 per cent.

Laguna Resorts and Hotels forecasts the average occupancy rate at its Laguna Phuket property would be down 20-25 per cent in the second and third quarters of this year.

The average occupancy rate at the region's largest resort complex fell 27 per cent in the first quarter, to 65 per cent because people cancelled bookings to Phuket following the closure of Bangkok airport in November.

Thailand's political instability and the global economic crisis are key factors for the downturn and this has been exacerbated by the spread of the flu virus.

Debbie Dionysius, Laguna's assistant vice president for destination marketing, said it had offered 100,000 free rooms earlier this year so occupancy rates were pretty high in January to March. However, revenue was down.

Dionysius expected to see an improvement by the fourth quarter year as tourists should hopefully be returning to Thailand.

"We have seen some positive signs such as the economy picking up," she said.

Dusit Thani Laguna recorded the best performance in terms of revenue in 2007-2008 while Banyan Tree has recorded the highest occupancy rate over the last two years.

The hotel operator is trying to attract more tourists to the island by adding more activities and implementing new marketing strategies.

An upcoming event is the fourth Laguna Phuket International Marathon, which is scheduled for June 14. The event is expected to draw 4,000 runners from overseas and Thais. The event is also hoped to generate revenues of around Bt30 million for the province.

According to Dionysius, Laguna Phuket is working with international schools in Thailand, Hong Kong and Singapore to organise activities and camping trips. The scheme will run from June to September.

Moreover, the group will try to attract more customers from China where it has Banyan Tree offices in Beijing and Shanghai. Laguna expects visitors from China to increase from 5 per cent this year to 15-20 per cent over the next few years.

Source: The Nation 21 May 2009

Peaks and troughs

Bali has been little affected by the economic downturn

In Hong Kong, where real estate is an obsession, a recession is not taken seriously until property owners start slashing their asking prices. And, in the second half of last year, that happened. Across the territory the numbers on signs in real estate agency windows were crossed out and replaced with lower ones – usually in red ink. More recently such scribbling has given way to formal advertisements, with the bargains highlighted by downward-pointing red arrows.

On the Peak, Hong Kong’s most exclusive residential neighbourhood, this kind of salesmanship is considered unseemly; at the sales offices of realtors Midland and Centaline, both just a short walk from the upper terminus of the world-famous local tram, there is not a red arrow in sight. But, even if it’s not advertised, prices in this triangular enclave – bounded by Victoria Peak to the west, Mount Kellett to the south and Mount Gough to the east – also fell sharply late last year.

Bonnie Braidwood, an agent in Centaline’s “stately homes” division, is marketing a 3,200 sq ft, four-bedroom townhouse in the Strawberry Hill development on Plantation Road priced at HK$95m ($12.3m), or about 20 per cent less than it would have been 18 months ago. Savills meanwhile brokered four Peak transactions valued at HK$106m-HK$180m in the first quarter of this year, with two of the properties selling for 30 per cent below their original asking prices.

“We did well in the first quarter but for the coming quarter I don’t know,” says Savills’ Angel Law, who now has five detached homes on Rosmead Road with asking prices of more than HK$200m on her books. “After [the collapse of] Lehman Brothers [in September 2008] sellers were willing to adjust their prices [but now they are] conservative because they know it’s difficult to buy again. They will only sell at prices they know they won’t regret.”

Christina Brun, a dentist who runs a charity foundation, and her husband, Christian, a headhunter, timed their exit – and re-entry to – the Peak property market almost perfectly. With two children and another on the way, the couple bought a slightly “dark and dingy” flat on Peak Road in early 2007. “We wanted it as a home; particularly as an expat, the only way for me to settle down is to own the bricks I live in,” Brun says. But as prices soared through early 2008, “I became uncomfortable living there; those walls contained too much equity.”


The Peak in Hong Kong
They sold in August 2008 but were eventually tempted back into the market earlier this year thanks to the price falls. Their new townhouse on Mount Kellett Road has beautiful views over the island’s south side and it cost them just 15 per cent more than the amount they got for their first flat.
Such bargain-hunting is becoming increasingly common, says Victoria Allan at Habitat Property, who worked with the Bruns. And, buoyed by a 50 per cent rebound in the Hong Kong stock market since last October, Peak values are starting to recover – up 15-20 per cent over recent months. “The property market is remarkably active at the moment,” Allan says.

“The worst time was October-November last year,” Braidwood confirms. “At the moment it is relatively stable.”

For decades deep-pocketed developers and landlords have dominated the Peak market, with the latest census showing that only 40 per cent of the area’s 5,682 homes are now occupied by owners, compared with 56 per cent in the similarly exclusive Repulse and Deep Water Bay neighbourhoods. This helps explain why, for an area once synonymous with colonial grandeur, the architecture can be disappointingly graceless. Builders paying top dollar for sites ended up cramming as many “row houses” on to it as possible.

Yet, given the area’s exclusivity and the limited supply of housing, demand remained high. The peak of the Peak’s market probably came in July 2007, when Sun Hung Kai Property sold a townhouse at a record price of HK$41,100 per sq ft – following a December 2006 purchase of a lot on Mount Kellett Road for HK$1.8bn, or HK$42,200 per sq ft. But the ensuing economic turmoil has led to development and sales activity being slow ever since.

At 1 Barker Road, right next door to the US consul general’s residence, for example, realtors speculate that redevelopment work has been pushed back in an effort to coincide with the economic recovery. SHKP’s Mount Kellett Road development is meanwhile scheduled for completion, the company says, in “financial year 2011/12 and beyond”.

A four-hour flight away on the Indonesian island of Bali, a popular holiday-home destination for wealthy Hong Kong residents, the property market is surprisingly in much healthier condition. “Some foreigners here are in trouble and might be looking to get rid of their assets so, yes, we’ve got opportunities to pick up well-priced properties but it’s not like the market is crashing and everything is dropping in price,” says Dominique Gallmann, chief executive of Exotiq Real Estate in Bali.

“I’m quite staggered by the resilience of the market,” adds Matthew Georgeson, a former Hong Kong resident who set up a real estate company, Elite Havens, on the island. He recently heard of two “brilliant” properties, one worth more than Rp31.bn and the other just under Rp20.5bn, coming on to the market. “And offers of about 70 per cent of the asking price were rejected straight away”.

There are three reasons for the relative buoyancy in the market. The first is that it has always been virtually impossible for foreigners to obtain financing for a purchase on the island. “Because you’ve got to buy with cash you’re mostly talking about people who have the power to keep it,” explains one Hong Kong banker who recently spent more than $1m on land and the construction of a villa near Canggu, in the south-west.

The second is that Indonesia, with its non-export-oriented economy, has escaped the worst of the financial downturn and so most property owners are not feeling the pinch as much as people from other countries. Very few of the original Balinese landholders are in a hurry to sell and will wait until they get an offer that interests them.

The third reason is that while demand has dropped, it has not dried up. Bali is increasingly luring buyers away from Phuket in Thailand, despite the latter’s better beaches and infrastructure. “We had a very good January and February,” Gallmann says. “March and April were a bit slow but now the pipeline is filling up again.”

Having said all that, the market is not homogenous. While Georgeson says sales of $1m-plus properties are strong, the middle range of properties priced from $300,000 to $1m is suffering. “These [buyers] were spending bonuses [but now they are] more careful about job security,” he says.

Villa resales are also challenging, adds David Leadbetter of consultancy Hot Property. “There’s not much of a market unless the property’s relatively new or in an existing estate,” he says.

Yet land prices continue to show resilience. The cost of seafront property on the relatively undeveloped Bukit peninsula on Bali’s southern tip has doubled in the past three years to about Rp500m ($48,000) per are, the standard 100 sq metre unit of measurement on the island, while parcels in more developed Seminyak, considered the “Chelsea of Bali”, in reference to the upmarket London neighbourhood, are up by more than a third to Rp600m per are. And experts expect the trend to continue. “Prices might not rise at the rapid pre-crisis levels but they’re almost certainly going to keep rising,” Leadbetter says.

Most Bali owners are blissfully unaware of all this, motivated by the desire to maintain an island idyll not an investment. “I intend to keep my place indefinitely,” says Darren Fraser, an Australian who lives in Hong Kong but keeps a four-bedroom villa in Seminyak. “You wouldn’t buy here just for an investment because you’re unlikely to get more than 5 to 7 per cent return a year.”

Tony Carey, who works for Oakley eyewear in Hong Kong, bought a 40-acre cliff-front plot on the Bukit two years ago for Rp15.2bn and is planning his villa. “We used to do the Phuket thing but I prefer Bali in many ways,” he says. “It doesn’t have the sleaze in your face in the same way. I love Indonesian food. I prefer the culture, the surf.”

Source: FT.com 23 May 2009

Tom Mitchell is a reporter in the FT’s Hong Kong bureau. John Aglionby is the FT’s Jakarta correspondent

Phuket property under fire: Developer Lersuang revisited

Left: An artist's rendering of the stalled Infinity Heights project, high up over Bangtao Beach. Some say it's the altitude itself that may put the project at risk.

PHUKET: Earlier this month, Web blog thephuketinsider.com and the Phuket Gazette reported on an article in the UK’s Daily Mirror about the Phuket-based Lersuang Group. The Mirror story put Lersuang in the international limelight, saying that customers were demanding their money back but offering no comments from company management.

The Phuket Gazette promised to get comments from the companies involved and to compile a report on the holding company as well as the fate of several of its individual development projects.

Here is our report, based on comprehensive interviews with Lersuang CEO Errol Salih as well as property industry insiders, Lersuang customers and a new investor in one of the Group's key properties.

Background on the Holding Company

Lersuang Group Holdings Co Ltd was established with registered capital of 30 million baht (approx US$ 860,000) on July 19, 2005. Documents obtained from the Phuket Companies Registry office list five individuals as directors and shareholders: Selwyn Casey, Errol Salih, Viroj Chinpracha, Jumlong Sittichok and Maedta Vissesombat.

Mr Maedta is the only director not profiled on Lersuang’s website. However, buyers of units in Lersuang’s incomplete Tamarind Hills project are being told that “Dr Maedta” is now handling that project, according to Lersuang CEO Errol Salih.

Completed Projects in Phuket

Phuket residential projects successfully completed by Lersuang include Club Lersuang, comprising 56 apartments; Lersuang Apartments, 12 units; Lersuang Town Houses, with four free-standing villas plus six duplex homes; and Lersuang Apartments Phase 2, comprising six premium apartments. All five of these projects are located in the Bang Tao/Surin Beach area.

Owner Comments

According to a Lersuang property owner who, like most, was willing to speak to the Gazette only on condition of anonymity, early buyers of Lersuang properties are satisfied. “It’s the ones who came in later who are having problems,” he said.

Asked if he was happy with the quality of the construction and workmanship of his home, he said that he had been living there since its completion about three years ago and was satisfied with the construction standards. However, although he lives in the property, he and his neighbors are concerned that their assets might now be at risk.

“Nothing that I’ve paid for can be registered. The land that they [the project’s units] sit on is in question. We’re in limbo at the moment and we’re negotiating to get the matter settled,” he said.

The homeowner wouldn’t reveal which of the Lersuang developments he resides in but said that the issue he and his neighbors face is whether the units should have been built in the first place.

“I don’t think it’s a con,” the homeowner said. “There is a road that was laid around the property by the OrBorTor. It has drainage and electricity poles running along it but there’s an issue with the Land Department, who claim that the road is in the wrong place and should have been put somewhere else. Hopefully, there is no need to go to court over this issue and everything can be sorted out,” he said.

An Insider's View

A respected local property professional, who also insisted on anonymity and who claimed to have insider knowledge of the Lersuang Group’s operations, contacted the Gazette and said that the group began having difficulties with cash flow in November 2008. “They did do some small developments in the Bang Tao area which were completed and very successful. But the later ones were too big, way out of their league,” he added.

He went on to explain that the company stopped paying some of its staff and suppliers late last year. “I know they were having land issues. They didn’t exercise enough due diligence. I believe they were still trying to sell to customers while having the land issues,” the source said.

“On one of the projects, the access was not correct. It went across land belonging to a temple,” he added.

The source told the Gazette that he’d watched Lersuang attract a series of investors one after another from around the world. The company would use up the advance payments from their first buyer and then find a new buyer to cover their debts, he said.

“Eventually, the growth in debt outstripped the company’s ability to generate cash, and they couldn’t attract any more investors,” he added.

Asked if he thought Lersuang intended to run away from its debts, the source said ‘no’, that he knew the directors were still on the island and that they had been making efforts to pay the people they owed.

Stalled Projects – Phuket

About two years ago, Lersuang launched Turtle Cove. About a year later, Tamarind Hills was started in Layan. Both projects remain unfinished.

The group went on to launch Infinity Heights – two- and three-bedroom luxury apartments above Bangtao Beach, with prices starting at 13.4 million baht – again selling off plan. They also launched Lersuang Village, which comprises detached and semi-detached houses in Cherng Talay.

Lersuang Group CEO Errol Salih told the Gazette that Lersuang has a 50% share in the Infinity Heights project with the remaining 50% belonging to a company called A-Plan, which initially raised the capital to start the development.

Pressed for reasons behind the stalling of Infinity Heights, Mr Salih admitted that one of the issues, ironically, is the ‘height’ of the site.

He said that on the strength of advice from an early survey, his company initially believed the entire site was within Phuket’s legal height limit of 80 meters over sea level, but that it now appears that some parts of the land are higher than that. He adds, however, that there is still enough land below the 80-meter level to build ‘financially viable’ homes.

Mr Salih also blames construction delays on local political turmoil and global economic issues, adding, however, that buyers would eventually see their homes completed.

When asked to comment on Turtle Cove, he said that Lersuang originally owned 40% of the shares in that project, but that those shares had now been ‘given away’ to a private investor who is currently revamping the plans.

On Tamarind Hills, he said that Lersuang initially owned 1/3rd of the project, but had also ‘given away’ its shares – in this case, to Sepco Sustainable Energy Products – and that Mr Maedta Vissesombat was now running the operations and dealing with the project's customers.

Stalled Projects – Hua Hin

On its website (www.lersuang.com), Lersuang lists Infinity Heights, Lersuang Village, Turtle Cove and Sariya Kamala Villas as its current Phuket projects. Also listed are developments in Hua Hin, including the Hua Hin Country Club Apartments (123 luxury units with five penthouses) and the Black Mountain Golf Course.

Joe Cole, the Daily Mirror, and the Hua Hin Country Club Apartments

It was the Hua Hin Country Club Apartments that received attention in the Daily Mirror story, which focused on Chelsea Football Team celebrity Joe Cole’s association with that project as the result of his appearance in widespread publicity for it. It’s not clear precisely what the footballer’s deal was with the developer, and Mr Salih was not at liberty to elaborate, saying only that Lersuang’s association with the Hua Hin Country Club Apartments was “as a brand name only”.

“No one has lost any money there [Hua Hin]. There will be a project that is done there,” he insists.

Mr Salih went on to say that a “new partner” has agreed to take over the Hua Hin Country Club project.

“He’s got some other investors. He is going to build something that is maybe not as grand, but something that nobody will lose money [on]. Whatever money we have received is going back to do that development,” Mr Salih said.

“As far as I know, they [Joe Cole and the new Hua Hin partner] are on very amicable terms; nobody's going to lose money. Most sales were done prior to Joe Cole being involved. He has not lost any money and neither have the people there. Nobody has lost any money at all in any of our projects,” he said.

The new Hua Hin partner, who also required anonymity to speak with the Gazette, confirmed that he was one of the original investors in the Hua Hin Country Club project and that he is working on a “rescue package” to ensure that those who had invested in the development will eventually get something.

“The land in question covers 8.5 rai but we won’t need all that for what we have in mind. Nothing has been built so far. At the moment, I’ve got some drawings; I’ve got some ideas; and I’ve spoken to one or two of the buyers,” the partner said.

He confirmed that initial plans were for 123 condo units, but that the new plans are for something a lot smaller, a residential project that he expects to be finalized and underway by July this year.

“What I’m telling people at this end is that Errol and the guys down there [in Phuket] haven’t run away. If they were going to run away they would have run away with a couple hundred million baht a few years ago,” he said.

“The whole thing will be new. It will be a totally new name, new design, new prices – everything,” he enthused.

Asked if Lersuang would continue to be involved in the Hua Hin project, he said that it wouldn't carry the Lersuang name or have anything else to do with that company, but that if Lersuang wanted to help out with sales, they’d be “very welcome” to do so.

Cash Flow, Buyer Defaults, and the Crisis in Phuket

Back in Phuket, Mr Salih admitted that Lersuang has had “some cash flow problems”, and that some Lersuang customers were “understandably upset”.

“We could not manage Phuket and Hua Hin under the circumstances and the present political climate.

“Tamarind Hills was probably one of the most difficult ones for us and we really didn’t know how to cope with it. It’s complex,” he said.

Hong Kong-based companies and financial advisors were responsible for raising the initial capital to start Tamarind Hills, Mr Salih says. “They were looking after all the money in Hong Kong via lawyers’ accounts. They have had some internal problems,” he said.

“We were originally the minority shareholder... But we ended up having to take over the shares of various parties at Tamarind Hills to protect the original land owners. We had...no choice but to take that project, even though it was too big for us. We would never have done it on our own [in other circumstances],” he said.

Mr Salih gave several reasons for Lersuang’s cash flow problems, namely buyer defaults on progress payments; political instability; insufficient support from the banks; and taking on too many projects at the same time.

“After the army took out the government, our turnover went from 80-100 million baht per month to zero for seven months,” he said.

“If the political unrest hadn’t happened, none of these projects would have been that much affected. Our brand name would have been very valuable. And that’s what we were trying to achieve. For the future, our plan was to sell the [Lersuang] name, like a franchise,” Mr Salih explained.

“We had very little bank support. Any foreign company in Thailand finds it very difficult to obtain credit from the banks [here],” he said.

Asked why Lersuang took on too many projects at once, Mr Salih explained that following his company’s initial success, land owners began approaching Lersuang to help develop projects. “It wasn’t a plan; it just happened,” he said.

Predictably, he also blamed the global economic slowdown. “Many of the buyers cannot complete their purchases,” he said. “We’ve got one guy with two penthouses. He’s lost 22 million pounds [sterling] in the last year in England. He told us that he would lose all his money if we finished his house,” he complained.

“We have a lot of these cases. The people would rather go to court and delay a project because they couldn’t afford to pay if the project was finished. We’ve actually written letters to say that we wouldn’t enforce the contracts. We would actually do a resale and give them their money back,” Mr Salih explained.

Salih's Summary

Asked what else needs to be done to solve the issues, Mr Salih told the Gazette that, “Going to court is pointless because no one wins. It actually jeopardizes the project because it gets bad publicity,” he said.

In closing, he stressed that Lersuang wasn’t the only company experiencing financial difficulties in the current economic climate and pleaded for more support from the government and banks for property developers.

“Who wants to invest in a country where they are shooting each other in the streets? We are here. We promote the country and we love the country. It’s difficult, though, when the BBC is reporting Thailand as one of the top five most dangerous places in the world,” he said.

Source Phuket Gazzette 20 May 2009

Century 21 seeking local realty foothold in Thailand

Brokerage aiming for 30 franchisees in the Kingdom of Thailand

The local unit of the giant US real estate brokerage Century 21 plans to manage sales of at least 10 projects worth 20 billion baht and have 30 franchisees by the end of this year, says executive chairman Kitisak Jampathipphong.

"We will expand our network, build the brand and develop technology, aiming to be among the top three property service providers in Thailand," said the former executive vice-president of Harrison (Thailand).

Century 21 Realty Affiliates (Thailand) Co Ltd was established two months ago and is currently managing sales of six projects, including the three-billion-baht 340-unit Hua Hin Heritage condominium in Khao Tao, developed by Thai Factory Development Plc.

In June, it plans to begin sales of two condominiums near the Charoen Nakorn BTS station, developed by General Environmental Conservation Plc with 171 and 79 units respectively.

It will also manage sales of some freehold units of the Waterford condominium in Sukhumvit Soi 50, which would be leased for 15 years at prices of 30,000 baht per square metre, half of the freehold selling prices.

The developer Waterford Property also plans to sell 50 of the current 160 serviced apartment units at its Water Diamond project in Sukhumvit Soi 30/1 for leasehold with sales managed by Century 21 (Thailand).

The brokerage has also signed a contract to manage sales of a new 500-unit condominium worth 1.6 billion baht on New Phetchaburi Road near the Thong Lor junction, being developed by Pool Asset Co.

Besides property sales, Century 21 (Thailand) offers a broad range of services, including international sales, valuations, property management of condominiums and offices, and business affiliation opportunities or franchises.

Mr Kitisak said that after the company held talks with 20 property brokers, two had signed on as franchisees. Century 21 (Thailand) charges an upfront fee of 600,000 baht for five years, plus an additional 30,000-50,000 baht per month, which would be waived during a promotional launch.

By the end of the year, Century 21 aims to be managing 30 properties, rising to 80-100 next year.

This year it expects to have 20 franchisees nationwide to sell across its database and share commissions.

"Property developers can be our franchises as we have a worldwide network, including buyers and sellers," he said.

Thailand is the 68th country where Century 21 has opened operations. It has 8,800 offices worldwide.

"The US property market is alive now. The Thai market is also resuming, following China," said Donald Lawby, president of Century 21 Asia Pacific. "Despite the political unrest, we believe there's an opportunity here."

Source: Bangkok Post 22 May 2009

Century 21 seeking local realty foothold in Thailand

Brokerage aiming for 30 franchisees in the Kingdom of Thailand

The local unit of the giant US real estate brokerage Century 21 plans to manage sales of at least 10 projects worth 20 billion baht and have 30 franchisees by the end of this year, says executive chairman Kitisak Jampathipphong.

"We will expand our network, build the brand and develop technology, aiming to be among the top three property service providers in Thailand," said the former executive vice-president of Harrison (Thailand).

Century 21 Realty Affiliates (Thailand) Co Ltd was established two months ago and is currently managing sales of six projects, including the three-billion-baht 340-unit Hua Hin Heritage condominium in Khao Tao, developed by Thai Factory Development Plc.

In June, it plans to begin sales of two condominiums near the Charoen Nakorn BTS station, developed by General Environmental Conservation Plc with 171 and 79 units respectively.

It will also manage sales of some freehold units of the Waterford condominium in Sukhumvit Soi 50, which would be leased for 15 years at prices of 30,000 baht per square metre, half of the freehold selling prices.

The developer Waterford Property also plans to sell 50 of the current 160 serviced apartment units at its Water Diamond project in Sukhumvit Soi 30/1 for leasehold with sales managed by Century 21 (Thailand).

The brokerage has also signed a contract to manage sales of a new 500-unit condominium worth 1.6 billion baht on New Phetchaburi Road near the Thong Lor junction, being developed by Pool Asset Co.

Besides property sales, Century 21 (Thailand) offers a broad range of services, including international sales, valuations, property management of condominiums and offices, and business affiliation opportunities or franchises.

Mr Kitisak said that after the company held talks with 20 property brokers, two had signed on as franchisees. Century 21 (Thailand) charges an upfront fee of 600,000 baht for five years, plus an additional 30,000-50,000 baht per month, which would be waived during a promotional launch.

By the end of the year, Century 21 aims to be managing 30 properties, rising to 80-100 next year.

This year it expects to have 20 franchisees nationwide to sell across its database and share commissions.

"Property developers can be our franchises as we have a worldwide network, including buyers and sellers," he said.

Thailand is the 68th country where Century 21 has opened operations. It has 8,800 offices worldwide.

"The US property market is alive now. The Thai market is also resuming, following China," said Donald Lawby, president of Century 21 Asia Pacific. "Despite the political unrest, we believe there's an opportunity here."

Source: Bangkok Post 22 May 2009

Thailand - Local shift in investment

Local investors are likely to play a key role in the property market in the downturn, according to the latest investment report from international consulting firm Colliers International.

The report found that industry players expect the local market to prefer domestic assets because overseas markets may continue to carry a higher degree of uncertainty over the near term.

In the first quarter, local real estate continued to interest a broad range of investors, including property funds and major developers, as property in Thailand is still cheaper than in many Asian countries, said Colliers research.

A major transaction in the first quarter was SMC Motor Plc's purchase of 3,400 square metres of retail space on Ratchadaphisek-Tha Phra Road for B53m from Chaopraya Mahanakorn Co.

Foreign property funds with strong financial status have been waiting for the right entry level to acquire Thai real estate. Investors have been keenest on land plots, followed by hotels and offices. However, as prime condominium prices flatten, land prices based on the sector's future appreciation now look expensive.

The shutdown of Suvarnabhumi Airport has scared off many foreign investors and buyers. The local property market has seen fewer retail sales to foreigners, who often buy in a high season from December to February, as well as less institutional and corporate investment.

Over recent years, one of the major foreign investors in Thai property has been Lehman Brothers, which is now in Chapter 11 bankruptcy in the US and has no need to speed up the sale of its property projects to raise funds.

Lehman Brothers (Thailand) has accumulated investment in real estate in Thailand of 50 billion baht. Key assets include Pacific Place, Mercury Building, Ital-Thai Building and undeveloped land in Koh Samui, as well as shares in Grande Asset.

"While many investors are targeting these assets, the complications of ownership and equity structures may delay the final deals. It is also not clear whether investors will be able to achieve discounted prices on these assets in the near future," the report said.

Source: Bangkok Post 23 May 2009

Rash of low-rise projects - Bangkok suffers from a significant oversupply of condominiums

Switch in property demand

Demand in Thailand's property market has performed an about-turn, sending developers who last year were selling city condominiums scattering to launch low-rise projects offering townhouses, double houses and detached houses.

Demand for condominium units has fallen significantly, leaving property firms to launch low-rise projects to boost their chances of achieving revenue targets this year.

Preuksa Real Estate is one firm that has faced lower-than-expected sales at three condominium projects at Thonglor, Pinklao and Yaowarat. All were launched in the first quarter of this year. The company has now revised its business plan to focus on low-rise residential projects, especially townhouses. It has added five new townhouse projects to its portfolio this year and is now planning to launch 27 projects instead of 22.

Property Perfect is planning to launch seven or eight new residential projects this year, including detached houses, townhouses and a condominium project.

Darvid Property is planning to launch two new detached-house projects with a market value of Bt1 billion on Bang Na-Trat Road.

Asian Property Development plans to launch 12 new residential projects this year. Five of them will be low-rise projects and the rest condominiums.

Leading developer Land and Houses has also focused on townhouses and detached houses after seeing strong demand in this market.

Preuksa Real Estate director and chief operating officer Prasert Taedullayasatit said his company saw home-buyers' behaviour change from buying condominium units to townhouses or detached houses, particularly townhouses located near to the central business district. Consequently, Preuksa's new business plan will focus on townhouses, rather than condominiums.

However, the company will go ahead with the launch of its latest condominium on Sukhumvit 26, worth between Bt500 million and Bt600 million, in the current quarter. It will be a low-rise condominium with only eight storeys, he said.

Property Perfect CEO Chainid Ngow-sirimanee said his company planned to launch eight new residential projects, worth Bt8 billion, by the end of next month. This follows the nascent market recovery in the first quarter of this year, following the slump in the final quarter of 2008.

More than half of the new projects will be detached-house and townhouse projects. The company may also launch one or two condominium projects, he said.

"We are launching fewer condominium projects because we can see stronger demand for detached houses and townhouses than for condominiums," he said.

The Agency for Real Estate Affairs said there were 51 new residential projects launched in the first quarter. They are offering 10,451 units with a total market value of Bt35.41 billion.

Nearly 40 per cent of the new projects are condominiums, and the rest are low-rise projects like detached houses, townhouses and double houses.

The agency's research has found that the switch in demand from condominiums to detached houses and townhouses has left Bangkok with a significant oversupply of new condominium projects.

Source: The Nation May 20, 2009

Sansiri to overtake L&H as Thailand's biggest developer

Sansiri is poised to become Thailand’s largest real estate developer this year, overtaking Land & Houses (L&H) for the first time. In 2008, Sansiri recorded sales of Bt15.1 billion, just short of L&H´s Bt15.4 billion. L&H expects 2009 revenue to be flat from 2008 at Bt14.4 billion, but Sansiri is currently targeting Bt17 billion, said the company´s president Srettha Taveesin.

“The first quarter of 2009 was the second best quarter ever for us. After the first three months of this year, we were already at Bt12.5 billion,” said Srettha.

“This year we will overtake Land & Houses as the number one developer in Thailand.”

The high level of sales recorded since the beginning of the year is partly a reflection of pent up demand carried over from last year, according to Srettha.

“The end of last year was bad for everyone; buyers were reluctant to commit at that particular time because of the political crisis, but despite the bad conditions, people do still want to buy.”

The uptick in sales that was apparent in the first quarter has not, however, benefited all developers equally. Purchasers are becoming more cautious, and, wary of projects that may struggle to close sales and reach completion, they are increasingly favouring the big developers who can more easily obtain finance and maintain cash flow.

“The big players benefited the most, because the banks will still finance them. Brand is very important, and consumers are still confident in the major developers. So the market may have only shrunk a little, but the number of players to take a share of the cake has definitely become smaller,” explained Srettha.

“I am sure we will see some small and medium sized players disappear from the market, but at Sansiri, we are lucky in that we can still obtain finance with no problem at all.

“We announced 16 projects at the start of the year. For those we had already acquired the land, but we are now looking at launching three or four extra projects at the end of this year or the beginning of next year. At the moment we have about Bt2 billion in cash in the bank,” said Srettha.

While all the projects launched by Sansiri this year have been located in Bangkok, going beyond the capital will be an important factor in the company’s future growth, Srettha explained.

“We definitely plan to do more outside of Bangkok; we are already the biggest player in Hua Hin. We have done six or seven projects there in the past, and although we haven’t had any new launches there this year, we are certainly still looking. We will look at Phuket, Pattaya, Samui, probably the only place we won’t look at is Chiang Mai.”

Source: The Property Report 21 May 2009

Real estate investors see opportunities in Asian markets except Thailand

Global real estate investors are looking to tap on to growing opportunities in Asian markets.

Experts speaking at an industry event, Cityscape Asia 2009, in Singapore on Tuesday said China currently offers the most potential.

This is due to a number of good valuations available in the market, and the economy's positive growth outlook.

China's industrial property sector has been hit hard by the global economic downturn -- over 100,000 factories closed shop in 2008. But experts say these properties offer good value as they are now undervalued.

And once these properties get snapped up, re-employment will start to boost commercial and residential real estate sectors.

John Evans, Managing Director, Tractus Asia, said: "In the Asian region there are opportunities across most of the countries. However, if you look at what's happening with the economies, the only one that is showing significant growth is still China. And while that growth is nowhere near the sort of stated eight per cent that the government said, it is still a healthy three to four per cent.

“With the crisis here, you've seen a decrease in property prices and... a lot of investors are trying to get out of non-performing assets, so you are seeing a lot of opportunities in China. In the real estate sector (China) is one place I will recommend."

Duncan Owen, CEO, Invista Real Estate, said: "Many of our investors that followed us from the UK and into continental Europe are looking increasingly to diversify, and diversify into long-run growth markets. And the mature Asian markets potentially give us just that type of opportunity to deploy capital and get the long-run types of returns that investors are looking for."

But market watchers say not all markets are equally attractive and warn of potential risks in the region.

Despite growing global investor interest in opportunities in the Asian property market, experts say that investors should be wary of the Thai property market as further decreases are expected in the year ahead.

They say prices in the Bangkok residential property market could decrease by some 25 to 30 per cent in the coming year.

Mr Evans said: "One to steer clear right now is Thailand. It is pretty obvious with political and economic instability that property values will be going down. Foreign direct investment has basically dried up in Thailand.

“My personal opinion is that we are going to see some further political instability. The Thai market tends to lag behind the economy and political situation by at least a year if not 18 months. So I think we are going to see a big decrease, maybe even 25 to 30 per cent in residential property in Bangkok as there is an oversupply and more supply coming online."

But observers also do not rule out future opportunities in the Thai market if the global economy and the Thai political situation begin to stabilise.

Source: Channel News Asia 19 May 2009

Two Thailand hotels in Asia Top 10 luxury hotels

Asia has long lured travellers with its fair share of exotic locations and ancient cultures. US-based luxury travel firm Kipling & Clark have issued a list of their favourite hotels in the region.

This list, complied by the firm's founder and seasoned traveler Randy Lynch, is not endorsed by Reuters.

1. Tied: Tawaraya Ryokan and Hiiragiya ryokan - Kyoto, Japan

Two of the most famous ryokans, or Japanese inns in Kyoto are located directly across the alley way from each other. It's difficult to distinguish Tawaraya from Hiiragiya -- they both represent the highest levels of service. Both ryokans successfully integrate the finest Japanese traditions and wabi-sabi philosophy, which emphasizes simplicity and purity, with contemporary conveniences that seasoned travelers expect. An added once-in-a-lifetime experience is arranging for a private Geiko and Maiko geisha dinner at either ryokan.

2. Four Seasons - Chiang Mai, Thailand

Smaller in scale than the much more expansive Mandarin Oriental Dhara Dhevi in Chiang Mai, the Four Seasons projects a more understated sense of luxury, engendering an intimate, Zen-like feel. Similar to the Mandarin, the Four Seasons staff is truly sincere and kind. With the expansion of the Four Season's Kid's Club, the family luxury travel experience here is similar to the Mandarin's. The spa and cooking class are extraordinary.

3. Tied - Mandarin Oriental Hong Kong & Mandarin Oriental Bangkok

The Mandarin in Hong Kong truly represents understated luxury, a peaceful oasis from the noisy, frenetic city outside. A recent renovation has resulted in the Mandarin's former balconies being converted to lounge/study area extensions, with stunning Victoria Harbor views.

The Mandarin Oriental Bangkok boasts a 130 year history of tradition and the highest level of service, making it a truly unique luxury property. It's unpretentious, understated and attentive and may have the largest, most varied breakfast buffet in all of Asia.

4. Gora Kadan Ryokan - Hakone, Japan

A short 45-minute bullet train ride from Tokyo, the Gora Kadan is a quiet, Shinto-Buddhistique oasis from the big city, offering rejuvenating hot mineral springs. Proprietress Mikawako, the third generation of Fujimotos to run Gora Kadan, has blended traditional Japanese ryokan hospitality with modern Western design in creating a luxurious spa experience. The Gora Kadan's original building dates back to 300 years and was the summer home of the Kan'in-No-Miya imperial family.

5. Tied - Raffles Grand Hotel D'Angkor & Amansara - Siem Reap, Cambodia

Most hoteliers would describe the Raffles Grand Hotel D'Angkor as a luxury 5-star hotel/resort, while Amansara, part of the Aman Resorts, fits into the elite category.

The Grand Hotel D'Angkor boasts an early 20th Century French colonial style property while the Amansara is formerly the guesthouse of Cambodia's King Sihanouk. The friendly, airy Raffles offers guests many opportunities to mingle with others, while the Amansara may be better for couples and high-profile travelers wishing privacy.

6. Peninsula - Tokyo, Japan

The 24-story Peninsula has the best luxury hotel location in Tokyo, directly across from lovely Hibiya Park, Imperial grounds, and adjacent to the Ginza shopping district. Envisioned by architect Kuzukiyo Sato to look like a giant Japanese lantern, the Peninsula combines subtle, Japanese hospitality with the Peninsula tradition of understated luxury.

7. Four Seasons - Shanghai, China

There is no disputing the level of service here -- personal, friendly and focused on individual comfort. The corner executive suites even have an extra room for the kids.


Banyan Tree Lijiang
8. Tied - Banyan Tree Lijiang - Yunnan, China & Hotel of Modern Art (HOMA) - Guilin, China

Located just outside the UNESCO World Heritage Site of Lijiang, the Banyan Tree Lijiang has created the perfect harmony of the local matriarchal Naxi culture and Banyan Tree's predictably friendly customer service.

With all 55 of its villas looking out at Jade Dragon Snow Mountain, this place has a spiritual soul-searching feel. The spa offers wonderful massage service from their Thai staff

The Hotel of Modern Art was founded by a Taiwanese business entrepreneur in 1997 and represents a lovely balance of world class sculpture, architecture, and art set against the backdrop of the natural beauty of the lush grounds. Despite the somewhat limited English among the staff, the genuine kindness and warmth delivered here is truly heartwarming.

9. Sofitel Metropole - Hanoi, Vietnam

Conceived in 1901, the Metropole combines wonderful French colonial architecture and history with Vietnam's cultural traditions of hospitality and service. Although there are really no bad rooms at the Metropole, the Opera Suite is a treat.

10. Maison Souvannaphoum Hotel - Luang Prabang, Laos

Formerly the residence of Prince Souvannaphouma, the small, Maison Souvannaphoum is a boutique French-colonial inspired property that is the perfect place to immerse oneself in the local Laotian culture. The friendly, intimate service here is like staying with close relatives. An added bonus of staying here is that the Maison is located on the street for the daily early morning Buddhist monks' rice offerings.

Source: AsiaOne 17 May 2009

Politics hurts Club Med in Phuket Thailand

PHUKET : Vacances Siam (Club Med) Ltd expects the performance of Club Med Phuket will improve in the third quarter of this year if local political uncertainties ease.

Chavalin Rodsawaddi, the company's country marketing and sales manager, said the occupancy rate of Club Med Phuket has been around 50% since the Songkran riots, down from 80-90% in normal times. But this is still higher than the 20-30% rates of nearby hotels on Karon beach.

"Many international tourists have shifted from Club Med Phuket to Club Med Bali and the Maldives because they are very sensitive to political issues here," said Mr Chavalin.At least 100 Thais per month have made reservations with Club Med to go to either Bali or the Maldives.

Mr Chavalin expects reservations for Club Med Bali will increase at least 10% this year, while the Phuket property will contract from 80-90% last year, and the Maldives will have flat growth.

The turnover for properties in the region this year will be on par with last year, due mainly to the global economic recession. Tourism worldwide has been affected, not just in Asia Pacific, said Caroline Puechoultres, president & CEO for Asia Pacific Club Med.

"It is a good time to gain market share from rivals like luxury hotels because many customers are downgrading their accommodations and looking for value-for-money services," she said.

Ms Puechoultres believes that people still travel when the economy is bad but they spend less and shorten their stays.

According to Club Med, about 80% of its customers will not change their vacation plans and 61% feel that all-inclusive packages are more attractive in today's economic climate.

"Occupancy rates and reservations at five-star hotels in Asia will drop this year due to the downturn," she said.

The company plans to expand its business to new destinations including China, Vietnam, and Cambodia. It plans to add one project each in the Maldives and Japan. The investment plan will start when the global economy improves.

Initially, it plans to open two resorts in China - one each for ski and beach locations. The company sees high potential in China due to its rapid economic growth during the past few years.

Club Med now has 80 properties worldwide and 10 in Asia-Pacific.

Source: Bangkok Post 14 May 2009

Thai hotel industry in deep storm

While the tourism industry worldwide is being buffeted by the economic crisis and swine flu, Thailand’s hoteliers have their own special problems, such as persuading guests that airports would stay open and protesters won’t invade the premises.
Bookings, especially at five-star establishments, have been down since December when anti-government protesters called yellow shirts seized Bangkok’s two international airports, closing the capital to international travel for 10 days and leaving hundreds of thousands of tourists stranded.

Then, last month, a rival group of anti-government protestors called red shirts invaded the posh Royal Cliff Beach Beach Resort in Pattaya, south-east of Bangkok, forcing the cancellation of a regional summit of Asian leaders who had gathered there.

“In December, the yellow shirts shot themselves in the foot, and then last month, the red shirts shot themselves in the head,” soon-to-retire Kurt Wachtveitl said at an event marking his 42 years as general manager of the famed Oriental Hotel in Bangkok.
“There is simply no one coming anymore - or nobody with money,” Wachtveitl said. “It’s the perfect storm, particularly for Thailand.” And particularly for five-star establishments.

Although statistics are hard to come by - tourist arrival figures have been elusive in Thailand ever since the Tourism Ministry took over the job of compiling them from the Tourism Authority of Thailand - Thai hotels are definitely hurting this year.
First-quarter earnings of the hotel groups listed on the Stock Exchange of Thailand were down by an average of 70% with some of them in the red.

“This is the worst year I’ve seen in my 25 years in the business,” Surapong Techaruvichit, vice president of the Thai Hotels Association, said, citing the industry’s litany of problems - the recession, swine flu and Thai political instability.

Thailand is hardly a stranger to political unrest. The kingdom has experienced 18 coups in the past 76 years, the latest of which took place in September 2006.
“In the past, the political upheavals lasted two to three days, so there was a shock, and then little by little, things returned to normal,” Surapong said. “But for this one, the shock is long. The closure of the airports and the Pattaya disturbances - these surprised everyone.”

According to Surapong, Thai hotel occupancy rates in May were down 50% compared with the same month last year.

Hotels are slashing prices and offering deals, making Thailand a cheap destination again after years of rising prices and healthy profits for the industry.
“Since 1998 to last year, the hotel industry went through a fantastic run,” said Andrew Langdon, senior vice president of Jones Lang LaSalle (Thailand), an international property consultant.

Langdon predicted that some hotels, especially the family-managed ones, might look for buyers this year or international brand management in response to the current downturn.

“Basically, the good times for the hotel industry are over for a year or two,” Langdon said. But nobody is expecting any fire sales.

“I would say everyone is suffering in this current crisis, but I haven’t seen any major bargains,” property consultant CB Richard Ellis chairman David Simister said.
One reason Thai hoteliers are unlikely to be selling their properties cheap is the tremendous confidence many have in Thailand as a tourist destination despite its current political problems.

“Thailand is down, but it’s not out,” said John Koldowski, head of research at the Pacific Asia Travel Association.

Source: Gulf Times 16 May 2009

Thaksin wants to buy island in Montenegro

BANGKOK - THAILAND'S fugitive former leader Thaksin Shinawatra has acquired a passport from Montenegro and is considering buying a resort island there, an adviser said on Wednesday.

Removed from power in a 2006 coup, Thaksin has been on the run since he fled Thailand ahead of a corruption conviction last year.

Last month, the Thai government revoked the personal passport of Thaksin, whom it accuses of stoking anti-government riots in Bangkok that left two people killed and hundreds wounded.

Noppadon Pattama, a lawyer who has been an adviser to Thaksin, said the ousted prime minister has a Montenegrin passport and at least a few others.

'Leaders of a few countries have given Thaksin passports because they sympathize with his position and know the injustice he suffered,' Mr Noppadon said but did not specify which countries have offered him travel documents.

In January, Nicaragua named Thaksin an 'Ambassador on a Special Mission' to bring investment to the Central American country and issued him a passport.

Mr Noppadon said Thaksin has also expressed an interest in buying Sveti Nikola island, despite also recently saying he is short on cash since the Thai government froze his assets after convicting him in absentia violating a conflict of interest law while in office.

'He thinks there is a lot of potential there in terms of developing its tourism business,' Mr Noppadon said. 'But I am not sure about the status and whether he has officially entered a bidding process or anything.' The acquisition of a new passport is expected to further complicated Thailand's efforts to extradite the ousted premier.

Vice Foreign Minister Panich Vikitsreth said the ministry has ordered several Thai embassies to look into confirming the issuance of the passport.

The ministry has earlier submitted extradition requests through diplomatic channels to the United Arab Emirates and Nicaragua to facilitate the repatriation of Thaksin who fled the country before the court issued its verdict and sentenced him to two years in prison.

Source:

Hotel earnings in Thailand plunge 70 per cent

The first-quarter earnings of major listed hotel companies plunged by an average of more 70 per cent year on year, with the depressed state of the sector expected to worsen in the current quarter and continue until the high season returns in the final three months of the year.

Kosin Sripaiboon, a senior vice-president at UOB Kay Hian Securities, said the earnings drop would continue for at least two quarters, due mainly to the domestic political uncertainty.

"Political instability concerns hotel operators more than the economic recession. The slow response by Asean leaders to invitations to the Asean Summit in Phuket showed many leaders did not want to join the event," he said, adding that the Pattaya violence that led to the previous summit's postponement had severely tarnished Thailand's image.

The government yesterday decided to postpone the Asean meetings to October. Earlier, it had tried to convince other nations to convene in Phuket next month, including granting permission for their leaders to bring in their own security details.

The Kingdom's tarnished image is expected to lead to a sharp drop in tourist arrivals. According to brokers, about 100 hotels are currently up for sale.

Thailand has been hit hard by the global economic downturn, anti-government protests and the flu scare, Kurt Wachtveitl, departing general manager of the Mandarin Oriental, Bangkok, told the Foreign Correspondents' Club of Thailand on Tuesday night.

"It's the perfect storm, for Thailand in particular. We have 45 suites, and for the next two to three months, we don't have a booking for a single one of them," he said.

Research by Asia Plus Securities advised investors to limit investment in hotel stocks, due to the political conditions as well as the

outbreak of type-A (H1N1) influenza, which will likely have a further negative impact on the tourism industry.

Kosin said the recent hike in oil prices would also pressure hotels' operating costs, while room rates could not be cut further, as hotels were concerned about margins and their brand image.

"The hotel and tourism business is one of the worst-performing securities sectors this year," he said. "The situation is not likely to recover until the fourth quarter."

Four listed hotel companies have reported their quarterly results so far. Shangri-La Hotel's earnings dropped 98 per cent to Bt3.2 million in the first three months, from Bt154.46 million in the same period last year.

It attributed the drop to declining room rates and revenue from food and beverages in light of the political situation and global economic crisis.

Laguna Resorts and Hotels suffered a plunge of more than 80 per cent in its quarterly net profit to Bt109.3 million, from Bt718.6 million a year earlier. Its occupancy rate fell to 60 per cent in the first quarter, from 87 per cent in the same period last year.

Minor International's consolidated net profit

contracted 47 per cent to Bt400.36 million, from Bt750 million, although revenue declined only 1 per cent year on year to Bt4.25 billion.

The average occupancy rate at Minor's properties was down from 80 per cent in the first quarter last year to 58 per cent this year, due to the prolonged political unrest and the aftermath of the Bangkok airport closures late last year.

Minor's revenue from the hotel business - which contributes 30 per cent of its income - was Bt1.27 billion in the quarter, down from Bt1.76 billion in the same period last year.

The Erawan Group booked a net loss of Bt20.95 million in the quarter, against a net profit of Bt134.24 million a year ago.

Source: The Nation May 14, 2009

Foreign visits to Thailand down by half

The number of international tourists plunged more than 50 per cent year on year in the first four months, tourism associations said yesterday.

Forward bookings are reportedly very slow as well, due to the recent flu outbreak.

Association of Thai Travel Agents president Surapol Sritrakul said Chinese, Japanese and South Korean tourists represented much of the drop in visitor numbers between January and last month.

The recent outbreak of flu has become the latest obstacle to tourism, along with the prolonged worldwide economic crisis and internal political problems.

However, Surapol said while it was too soon to predict what effect the type-A (H1N1) flu virus would have on tourism, his association had discussed preventive measures with all of its members.

He said tourists in many countries were worried about the flu even though it had not yet been found in Thailand.

"If the disease reaches this country, the tourism sector will suffer an even greater impact," said Surapol.

The flu is also hitting outbound business, with local operators now receiving cancellations.

Surapol, who also runs Jalpak Tour and Travel, said some families had cancelled trips to Japan to avoid flu infection.

Thai Hotels Association president Prakit Chinamour-phong said new bookings from abroad were reportedly very slow, particularly for the next two months.

"There are many problems in our country causing the decline in tourism," he said.

However, hotels and tour operators see potential from the Middle East, where they joined the Arabian Travel Mart held in Dubai last week.

Tourism Council of Thailand chairman Kongkrit Hiranyakit estimates the tourism sector will decline 30 per cent in the first half of the year and possibly 20 per cent for the full year.

Source: The Nation 12 May 2009

Warren Buffett Speaks: 25 Best Warren Buffett Quotes on His Strategies, Investments, and Cheap Suits

He’s called the Oracle of Omaha, and for good reason: not only is he one of the best investors of all time, but he’s also a witty communicator. If you read one of Berkshire Hathaway’s annual shareholder letters (BTW–I love their Web site design!), you’ll feel like Warren Buffett is one of the Good Guys–someone you can trust, someone who will tell it like it is, and someone who’s always willing to laugh with you at mistakes.

Here are twenty-five awesome quotes from the man himself. I find these quotes to be especially comforting when you’re ‘financially depressed’–after all, he views a market slump as a good thing!–so I hope these can remind everyone that we just need to do the basics, and we”ll be OK. Be a consistent net saver, buy the market through ups and downs, be a decent human being, and rest easy.

On Investing

“Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.”
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
“Why not invest your assets in the companies you really like? As Mae West said, “Too much of a good thing can be wonderful”.”
On Success

“Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.”
“The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.”
“You do things when the opportunities come along. I’ve had periods in my life when I’ve had a bundle of ideas come along, and I’ve had long dry spells. If I get an idea next week, I’ll do something. If not, I won’t do a damn thing.”
“Can you really explain to a fish what it’s like to walk on land? One day on land is worth a thousand years of talking about it, and one day running a business has exactly the same kind of value.”
“You only have to do a very few things right in your life so long as you don’t do too many things wrong.”
On Helping Others

“If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.”
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
“I don’t have a problem with guilt about money. The way I see it is that my money represents an enormous number of claim checks on society. It’s like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GNP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing. I don’t do that though. I don’t use very many of those claim checks. There’s nothing material I want very much. And I’m going to give virtually all of those claim checks to charity when my wife and I die.”
“It’s class warfare, my class is winning, but they shouldn’t be.”
“My family won’t receive huge amounts of my net worth. That doesn’t mean they’ll get nothing. My children have already received some money from me and Susie and will receive more. I still believe in the philosophy - FORTUNE quoted me saying this 20 years ago - that a very rich person should leave his kids enough to do anything but not enough to do nothing.”
On Life

“Chains of habit are too light to be felt until they are too heavy to be broken.”
“We enjoy the process far more than the proceeds.”
“You only find out who is swimming naked when the tide goes out.”
“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
“A public-opinion poll is no substitute for thought.”
Funny Ones

“A girl in a convertible is worth five in the phonebook.”
“When they open that envelope, the first instruction is to take my pulse again.”
“We believe that according the name ‘investors’ to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a ‘romantic.’”
“When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.”
“In the insurance business, there is no statute of limitation on stupidity.”

Source: Banking.com 7 May 2009

Downturn leads to hotel sales in Thailand

More than 100 hotels and resorts nationwide are being put up for sale, as operators succumb to the impacts of the economic crisis and political unrest, industry insiders said.

The number is expected to rise if the situation does not improve within two years, said Chanin Donavanik, chief executive officer of one of Thailand's largest hotel chain operators, Dusit International.

"This year is the worst for our hotel industry in 20 years," he said.

As if the worsening global economy and domestic political unrest weren't enough, Thailand's hotel and tourism industry now faces the threat of swine flu.

A property sales representative in Samui, who declined to be named, said most of the hotels being sold are in the major centres and provinces of Bangkok, Phuket, Koh Samui, Hua Hin, Pattaya and Chiang Mai.

"They include not only small hotels but also five-star hotels," she said.

Hotels in famous destinations such as Samui and Phuket have been the first to feel the pinch of the economic and political problems, as their local economies mainly rely on tourists, whose numbers have declined continuously since November's temporary seizure of Suvarnabhumi and Don Muang airports by opponents to the then government.

Phuket's visitor numbers declined by 60 per cent in the high season from November to March.

Koh Samui benefited after The tsunami wrought its destruction on the Andaman coast in 2004, which saw many foreign tourists opt not to visit Phuket. Hotels mushroomed on the island in subsequent years.

"But the situation has changed. Many new hotels on Samui are suffering from waning tourist numbers. Some owners have decided to sell as they cannot make any income from tourism, while still being saddled with loans," said the sales representative.

Forward booking for Koh Samui's high season at the end of this year has been very slow, as tourists seek to avoid turbulence in Thailand.

According to the property agent's firm, Samui Buri Resort and Spa is selling for Bt1.1 billion, while newly opened Villa Lawana wants Bt1.5 billion. Meanwhile, Ban Taling Ngam is being sold at public auction, listed at Bt1.8 billion with 250 buyers, and Nora Beach Resort and Spa is offered at between Bt2 billion and Bt2.5 billion.

Some hotels in Chiang Mai have suffered the same fate. Unlike Phuket or Samui, Chiang Mai's tourism sector relies mainly on Thai visitors. The province has witnessed shrinking domestic tourist numbers this year, as Thais are hardly in the mood to spend and travel amid the gloomy economic conditions.

As a result, one of the top luxury hotels in the province is reportedly being put up for sale, along with three other hotels in Chiang Mai.

In the capital, 24 hotels are reportedly on the market, including the Millennium Hilton, Swissotel Le Concorde and The Emerald Hotel.

Prakit Chinamourphong, president of the Thai Hotels Association, said many hotels have struggled to survive the impacts of the economic and political unrest, offering heavy room discounts, making staff cuts and selling off businesses.

Up to 70,000 hotel employees are expected to lose their jobs if the problems are not solved, he said.

To deal with the crisis, the Tourism Authority of Thailand (TAT) and the private sector are preparing a series of tourism promotions.

The agency also plans to venture overseas to rebuild confidence, joining the Arabian Travel Mart in Dubai this month. Moreover, the TAT is revising its marketing strategies to encourage non-high season tourism.

Nonetheless, the agency has revised downward its projected number of tourist arrivals for this year from 14.8 million to approximately 12 million.

Source: THE NATION May 11, 2009

Ao Po Grand Marina, Phuket’s latest and most spectacular superyacht marina

With the official opening of the Ao Po Grand Marina, Phuket’s latest and most spectacular Marina development in the North East of the island, Yacht owners can now berth their superyacht there. Construction of the Marina started in 2006, and the Marina is now open for business. With an impressive capacity of 200 berths, the Marina can host yachts of any boat length from 6m up to 80m+ and has a special focus on facilitating Superyachts.

Since the official opening, a significant number of superyachts have already visited the new marina, including Blue de Nimes, JeMaSa, SuRi, Moecca and Vie Sans Soucis. These superyachts have already enjoyed the comforts of a deep water fuel dock, a high capacity fuel pump and 3 phase electricity up to 200A.

“Private yacht owners and yacht charter companies choose Ao Po Grand Marina for its 24 hour access with zero tide restrictions and its prime location at the gate of Phang Nga Bay, Phuket’s premier sailing grounds. Ao Po Grand Marina is close to the main sailing destinations and only 15 minutes from Phuket International Airport and major hotels and resorts”, explained Khun Kasem Chiarasomboon, Managing Director, Ao Po Grand Marina.

The Marina, located just 15 minutes from Phuket International Airport, is the first phase of a larger real estate development project covering 150 rai of uniquely located land. Upon completion in 2013, this prestigious project will consist of a Marina Village (featuring all major facilities like restaurant, bistro, clubhouse, retail outlets and offices for marine-related businesses), a five-star and 80-room boutique hotel, two man-made lagoons and an exclusive array of private real estate villas.

Phang Nga Bay is a favorite destination for charter boats. As Ao Po Grand Marina has direct access to the Bay and no tide restrictions it is attracting some of the big players in sailing charter holidays. Sunsail moves to the Grand Marina as of May 2009 and Amancruises (charter operator for the Amanpuri resort) and Tawan Cruises already did so in October last year. Also for quite a few of the up-market resorts located on islands in the Bay the use of the Grand Marina to transfer their guests was a logical choice.

A fleet of 60 odd yachts settled itself comfortably and safely in Ao Po Grand Marina on January 26, 2009 in anticipation of another great regatta around Thailand's most famous bay, Phang Nga Bay. The Ao Po Grand Marina sponsored the opening party of this 2009 edition and invited all competitors to stay overnight free of charge in order to have an easy and quick start of the regatta the next morning. This generous offer was taken up by most of the yachts taking part, resulting in a very well attended opening night where as usual food was aplenty (also sponsored by the Grand Marina) and drinks fully in line with that.

"Everybody was greatly pleased with the event. The opportunity to have their yacht in the Grand Marina cut down on their logistics enormously", says Mr. Simon Grant, Marina Manager of the Ao Po Grand Marina. No catering with rocking dinghies as usual but provisions went straight from the walkways on to the boats. The yachts left early Tuesday January 27 to start their regatta around the Bay. The Phang Nga Bay Regatta is a unique annual event attracting more competitors every year. Now in its 12th year some 60 yachts went out competing in 6 classes.

Source: www.superyachttimes.com 11 May 2009

Thai investors look to overseas property

An increasing number of Thai investors are taking an interest in property projects overseas, in the light of declining asset values and the prospect of a global economic recovery next year, international property agency Jones Lang LaSalle (Thailand)'s managing director said.

Thai investors have shown a strong interest in expanding their investments in commercial buildings in overseas markets including the UK, Japan, Hong Kong and Singapore, Suphin Mechuchep said.

"If they wait to buy at the bottom price in the second half of this year, they stand to lose a business opportunity because investors from other countries also sense a bargain. As a result, Thai investors are keen to buy or take over commercial assets overseas," she said.

Investments made now could generate average returns of 7 to 10 per cent a year, she said, adding that their break-even period should also be shorter.

Suphin pointed out that Central Group invested in CentralWorld and @Office on Ratchaprasong Junction during the financial crisis of 1997. Central Group now sees an average return on investment from the project of 7.5 to 8 per cent a year.

Quality Houses took over the QH Lumpini office building in 1998, shortly after the crisis. Its return on investment averages 7 to 8 per cent. Returns on investments made during economic slumps tend to be bigger and come in quicker than investments made in normal periods, Suphin said.

Meanwhile, Tonson Property, a development and investment arm of the Rattanarak tycoon family, has set aside Bt500 million a year to invest in commercial properties such as hotels, resorts and office buildings in both the domestic and overseas markets.

The Rattanarak family holds a major stake in Bank of Ayudhya.

The company's managing director, Kanis Saengchote, said now is a good time to invest in property and commercial buildings because asset values are between 30 and 50 per cent lower than in normal periods.

"We are negotiating with French, British and Middle Eastern investors to raise money through property or other funds. This will be combined with our capital to expand our investments," he said.

TCC Land, the property arm of beverage tycoon Charoen Sirivadhanabhakdi, has set aside Bt4.5 billion to invest in commercial property overseas this year, with a focus on the retail and hospitality businesses, deputy CEO Soammaphat Traisorat said.

Early this year, the company took over a hotel in New Zealand worth nearly Bt1 billion.

"This is a good time to invest, as we can bargain for a discount of more than 30 per cent compared to last year," he said.

TCC Land owns a number of hotels in Thailand and overseas.

Source: THE NATION May 11, 2009

Paris Hilton wants to be the next Donald Trump — she’s eying up a career in real-estate

The 28-year-old socialite and hotel heiress says she is keen to become a serious businesswoman.

“I’m a brand. I’m a businesswoman,” she told Tatler. “I do everything — I act, I sing, I design, I write books. What I love the most is the business part. I like what it is leading to. I eventually want to get involved in real-estate.”

Hilton also revealed the worst moment in her life was when she realized her beloved pet dog Tinkerbell had gone missing.

“It was so scary — she was gone for a week and I wasn’t sure if she’d ever come back,” she said.

“It was like losing a child. She was a couple of blocks away at an old lady’s house. The lady didn’t watch TV so she didn’t know my dog was missing. Then she saw the sign and I got her back.”

Source: Showbizspy.com 11 May 2009

Dutch investment group ECC sees potential for its destination malls in Thailand and Vietnam

Pictured Left: The Promenada Chiang Mai will have two floors with a tropical feeling and resort style, with a focus on fashion shows and other events.

'You should be fearful when everyone is greedy and greedy when everyone is fearful," is one of the maxims of billionaire investor Warren Buffett. The saying resonates these days with Tjeert Kwant, whose Netherlands-based ECC Group is looking to tap into retail markets across the region including Thailand.

As companies start become increasingly cautious about expansion, few are looking at the opportunities becoming available as prices of land and construction costs drop.

"I must admit that in past there was an overvaluation of property assets but lately the prices have started to normalise and it has started to give us some hope of being able to make our moves," said Mr Kwant, the CEO and partner of ECC.

ECC is a real estate development and investment group with a focus on emerging countries. Since its establishment in 1991, it has specialised in developing and managing large-scale retail projects under the Promenada brand name.

The group is active in many markets in Europe and Asia including Poland, Hungary, the Czech Republic, Vietnam and Thailand and has so far invested $350 million in completed projects. Another $500 million in investments are in the pipeline, focused mainly on retail development in Southeast Asia.

The group's success in Budapest encouraged ECC to look beyond eastern Europe and it sees markets in this region as underdeveloped, especially the likes of Vietnam.

Even in countries where the retailing market is mature, such as Thailand, there is a market for a niche retailing, says Mr Kwant. ECC aims to open at least one or two new malls in Bangkok and is also building a mall in Chiang Mai.

ECC, he says, focuses on developing new projects and is not very keen on taking over older ones and renovating them, or even becoming a financial investor. The reason is that returns on new projects are in excess of 20% but such high figures are not available in investment projects.

‘‘I must admit that in past there was an overvaluation of property assets but lately the prices have started to normalise and it has started to give ussomehopeof being able to make our moves’’ TJEERTKWANT CEO and partner, ECC Group

The focus on destination malls has helped push ECC to look for markets where the demand exists but the supply is lacking. Chiang Mai is one such market as it has only one major mall, Central Airport Plaza.

"If we create a resort-style shopping mall, the acceptance would be relatively good," he said.

The Promenada Chiang Mai would have two floors with a tropical feeling and resort style, with a special focus on fashion shows and other attractions for shoppers. "Our aim is to create an ambiance of a high-street shopping that is covered and cooled," Mr Kwant said.

The Promenada Chiang Mai is expected to open in the second half of 2011, located along Ban Sahakorn Road, linking the Superhighway and second ring road, in an area well known by Chiang Mai residents for its accessibility and shopping opportunities.

With 75,000 square metres of retail and entertainment space, Promenada Chiang Mai will offer an innovative mix of international and local brands in fashion, food and beverages, as well as leisure and entertainment.

The project represents an investment of 3.1 billion baht. When completed, it will employ 3,000 Thai people. Construction is scheduled to start in the second half of 2009.

ECC International Real Estate, ECC Group's holding company in Thailand, has received a licence from the Board of Investment (BoI). For the development of the Promenada Chiang Mai, it has formed a partnership with VGF Design, a Chiang Mai-based company specialising in the design, manufacturing and retail of luxury furniture.

Although some Thai retailers have expressed interest in Vietnam, none have taken the plunge yet, says Mr Kwant. "There is no destination shopping mall in Vietnam and ours would be the first."

ECC plans to invest $105 million in a shopping mall that would have 82,000 square metres, in collaboration with Singapore's GuocoLand Group.

Singapore@Canary, a project similar to Promenada Chiang Mai, will be located on the outskirts of Ho Chi Minh City. Phase I is expected to be completed in the third quarter of 2011 and Phase II in the fourth quarter of 2012. It would be Vietnam's first international standard destination mall.

Mr Kwant said ECC aimed to have at least a few malls in Vietnam as there was a major demand but the number of sites was very limited.

To help finance its projects in Southeast Asia, the group established ECC Invest in 2007. It is launching a fund, ECC Retail Investment Holding, with a total size of $250 million. The group says that its investment in Asia is likely to be financed mainly through internal sourcing.

Source: Bangkok Post 9 May 2009

Exchange-traded index of commercial property firms rallies

Dow Jones U.S. Real Estate Index up nearly 60% from March lows

The stock market has for weeks been dogged by talk of trouble lurking in commercial real estate, yet an exchange-traded fund of commercial property companies has rallied 50% in the last two months - despite commercial mortgage delinquencies hitting 11-year highs in April.

Delinquencies are up "by a factor of five from a year ago. Even though commercial real estate lags the cycle, the numbers highlight the battle banks face in producing profits," said Nick Kalivas, equity analyst at MF Global Research.

Property research firm Trepp LLC on Thursday reported the level of loans 30 days or more behind in payments last month climbed to 2.45%, with the credit squeeze making it hard for landlords to refinance bank loans. 'The numbers highlight the battle banks face in producing profits.'

— Nick Kalivas, MF Global Research

"We're very concerned about commercial real estate," said Bill Feingold, managing director at Newport Value Partners. He believes the stock market has gotten ahead of itself, rallying on earnings from banks and other companies that stem from cost cuts as opposed to growth.

On Friday, financial shares paced strong gains after the Labor Department reported job losses slowed in April. See Economic Report. The Dow Jones Industrial Average ($INDU: 8,574.65, +164.80, +2.0%) was up 164.80 points, or 2%, to stand at 8,574.65, giving the blue chips a weekly gain of 4.4%. The S&P 500 ($SPX: 929.23, +21.84, +2.4%) added 21.84 points, or 2.4%, to 929.23, which translates into a 5.9% rise from the week-ago close. The Nasdaq Composite (COMP: 1,739.00, +22.76, +1.3%) advanced 20.76 points, or 1.3%, to 1,739.00, up 1.2% for the week.

Also rallying, the Dow Jones U.S. Real Estate Index (IYR: 34.81, +2.21, +6.8%) rose 6.8% to 34.81, up nearly 57% from its March 6 close of 22.21. In the same time, the S&P 500 has gained 39% from its March 6 low. The index's components include Simon Property Group Inc. (SPG: 53.93, +1.88, +3.6%) , the nation's largest mall owner and biggest publicly traded U.S. real estate company.

Simon Property on Wednesday said it would sell $800 million in new stock, its second foray into the equity markets in less than two months, illustrating its need for capital.

Shares of Simon Property on Friday gained 2.8%. The company earlier this month reported first-quarter earnings rose 14% amid higher rents, although occupancy rates weakened as retailers hit by declining sales posed difficulties for mall landlords, some of whom are saddled with large debt.

One case in point is Simon Property rival General Growth Properties Inc. (GGWPQ: 0.94, +0.01, +0.5%) , which last month filed for bankruptcy protection as the Las Vegas developer and shopping mall owner struggles to restructure $27 billion in debt. Read more.

Once one of the most highly valued REITs [Real Estate Investment Trusts] in the market, Nasdaq has since suspended trade of General Growth Properties' stock, which in recent weeks dived under one penny. A year-ago, its stock priced at $42.00 a share.

One of the key stand-outs in the most recent Senior Loan Officer Survey is "the extent to which demand for commercial real estate loans has collapsed," Merrill Lynch & Co. Inc. analysts Drew Matus and David Rosenberg wrote in a Tuesday note.
The net percentage of banks reporting weaker demand for commercial real estate jumped to 66% in the second quarter from 55% in the first quarter in what the analysts called the weakest showing on record.

"Meanwhile, the majority of banks continue to tighten their lending standards on commercial real estate loans. Fully 66% of banks tightened standards and, though that is marginally better than the 79% in Q1, this tells us that we can expect continued declines in commercial construction the quarters ahead," Matus and Rosenberg said.

Source: MarketWatch 8 May 2009