Thailand's Tonson Property plans property push

The development and investment arm of the Ratanarak family, Tonson Property, plans to invest an average of Bt500 million a year in property projects - including hotels, resorts and office buildings - after the launch of a Bt780-million luxury condominium project this year. The Ratanarak family holds a major stake in Bank of Ayudhya.

Tonson managing director Kanis Saengchote said yesterday, after introducing its first luxury condominium project - the Sathu Residences-Bangkok - that the company's business strategy would be as both property developer and investor, setting aside an average investment budget of Bt500 million a year for commercial building.

Investment funding will come from both company capital and property funds, and the company is negotiating with French, UK and Middle Eastern investors.

The investment target will be both domestic and overseas assets, whose recorded price has dropped since better economic times, he said.

"When we decide to invest, we expect a return on investment of at least 10 per cent," he said.

For developing projects, the company has undeveloped land of about five rai for its first project, the Sathu Residences-Bangkok, on Rama III.

The company will develop other projects in this location after selling out these units, mostly by the end of this year. Forty per cent of the Bt780-million project has been sold so far.

The Sathu Residences-Bangkok has only 22 units, with a starting price of Bt120,000 per square metre, or about Bt32.4 million per unit, and average utilisation space of 270 square metres per room.

The main customer target for the Sathu Residences-Bangkok is domestic buyers shifting savings from the bank to the property sector. Most buy the luxury condos for cash. Some customers have asked the company to find tenants for their units.

The company offers a guaranteed yield averaging 3 per cent within two years for customers wanting to buy and rent out their units, Kanis said.

Sathu Residences-Bangkok is now under construction, with completion scheduled for November.

The company expects to transfer to its customers 75 per cent of the 22 units by the end of the year and the remainder in 2010, generating revenue of Bt585 million and covering the investment cost of Bt550 million. More than a half of its investment cost came from the company's cash flow and capital, and Bt200 million as a project loan from Thanachart Bank.

Tonson Group holds a 98-per-cent stake in the Tonson Property's registered capital of Bt100 million. The Ratanarak family holds all of the shares in Tonson Group.

Source: The Nation 7 May 2009