Thailand Real Estate News July 19-

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REAL ESTATE
Land may have been sold illegally
source: Bkk Post July 17 2008

PHUKET : Title deeds to more than 10,000 rai of land on the island may have been illegally issued six years ago and could be revoked.

An order to immediately examine the land documents was issued yesterday by Intarat Yodbangtoey, adviser to the natural resources and environment minister, during an inspection visit to Phuket.

He also warned would-be investors to beware of smooth-talking vendors who issue bogus titles to land they have no right to sell.

A recent case involves former provincial land registration official Tawatchai Anukul, who allegedly issued fake title deeds for 20 land development projects in 2002.

"The man has disappeared. We don't know whether he's still alive," Maj-Gen Intarat said before meeting Phuket governor Niran Kalayanamitr yesterday to discuss the issue.

The ministry will launch a full investigation into the alleged irregularities.

Forestry officials will be asked to determine if the blocks of land stated in the various title deeds are in forest areas.

Maj-Gen Intarat told Thai and foreign real estate investors to beware of being fooled into buying land in Phuket and ending up with fake title deeds.

Some gangs involved in the scams are masterminded by influential local figures, and there are a considerable number of them, he said.

"They have been heavy-handed when contacting and phoning [our officials], asking us to stop the inspection," Maj-Gen Intarat said.

"But I've never been intimidated."

The island, admired for its beautiful beaches and pleasant weather, attracts investors to build resorts and homestays and to develop new facilities.

But the land development boom has set off alarms, with environmental officials reporting more cases of illegal land acquisition.

This includes intensive occupation of land near Kathu waterfall, which poses a fresh threat to Phuket's water supply, and suspected encroachment on a national park at Koh Racha Yai, according to data being investigated by Maj-Gen Intarat.

Housing development in some hilly areas is also considered dubious because of a risk of landslides. Careless construction could also lead to tragedy if the island is hit by earthquakes, he added.
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Noble seeking rental stream
source: Bkk Post July 18 2008

New hotel/apartment to help hedge risks

After switching from condominiums for sale, Noble Development Plc has launched the Tenface hotel and serviced apartments on Soi Ruam Rudi 2 in order to establish a rental-income business in the long term, says president Thongchai Busarapun.

''Real estate business has its ups and downs. With the hotel venture, we will have an asset to generate steady recurring revenue in the long run,'' he said.

The SET-listed developer expects the building to break even within eight years.

The office rental market in the Wireless Road area has continued to grow with strong demand from multinational companies, leading to demand for executive accommodation as well. However, the area has fewer than 1,000 units, according to Mr Thongchai.

Tenface occupies almost two rai on Soi Ruam Rudi 2 in the Wireless Road area. Formerly known as the Noble Ambience Ruamrudee condominium, it has 79 serviced apartments sized at 61 and 140 square metres for one and two bedrooms respectively.

Launched early this month, Tenface is expected to have an occupancy rate of 60-70% in its first year and 80% afterward.

Tenface, formerly known as the Noble Ambience Ruamrudee condominium, has 79 serviced apartments sized at 61 and 140 square metres for one and two bedrooms respectively.

Room rates will be 3,700 to 30,000 baht a night and 60,000 to 100,000 baht a month.

At these rates, and with larger spaces than other serviced apartments and hotels in the area, the company is confident that its serviced apartment would attract guests working in the Wireless and Phloen Chit areas.

''It's not just a beautiful lobby or a nice room, but the experience of being a part of Bangkok living,'' he said.

Guests will receive a number of amenities including a BTS Skytrain card, an AIS SIM card and an iPod nano for complimentary use, into which video podcasts of must-see places and dining spots in Bangkok are loaded.

Mr Thongchai said the Thai-contemporary style design and the name Tenface were inspired by Tosakan, the 10-faced giant from the epic Ramakien, who embodied a fusion of passion and wit signified the essence of wisdom.

''He [Tosakan] is a charming giant. He is so passionate about what he wants to do,'' Mr Thongchai explained. ''This implies what the hotel offers guests _ knowledge and experiences of real Thainess and Bangkok lifestyles.''

Another attraction will be the Pipek concierge service, named for the astrologer who was Tosakan's younger brother.

The concierge will be an entertainment guru, providing information on people, cool places, parties, exhibitions and events.

For future investments in hotels, Mr Thongchai said Tenface would not be the company's hotel brand as it had a unique character.

In the third quarter of this year, Noble plans to launch three projects worth a combined 4.6 billion baht. One will be a condominium with 504 units worth 1.27 billion baht.

Another two projects would be in Pattanakarn area where it has a total of 100 rai.

The Noble Residence will have 70 land plots worth one billion baht and Noble Cube will have 409 townhomes worth 2.33 billion baht. Unit transfers will start by the end of the year.

The company expects to have three billion baht in presales by the end of the year.

NOBLE shares closed on Wednesday on the Stock Exchange of Thailand at 2.94 baht, down four satang, in trade worth 819,000 baht.

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HOTELS
Small players need to carve niches to survive hard times
source: Bkk Post July 18 2008

Small hotels need to differentiate themselves to survive tough competition and the price war with big hotel chains, says the general manager of a small boutique hotel in Bangkok.

The Thai economy is sliding along with the global economy and this will surely affect tourist arrivals this year. The slowdown has forced many big hotel chains to wage a price war to attract more guests, with average room rates cut by 30-50%.

Koravic Bhanubandh, general manager of Ma Du Zi Hotel, said this posed a big problem for small hotels which were in no position to join the price war.

''The big chains can cut their room rates, as they can offset the losses with profits from their other facilities,'' she said.

''We must differentiate from big hotel chains or even hotels at the same level. It is impossible to compete with big chains if we are not unique,'' she added.

The Ma Du Zi Hotel has its gate locked all the time to make guests feel more at home.

Small or boutique hotels have to do something different such as offering designs and decorations that attract some target groups since many guests tend to select hotels that match their lifestyles.

If a hotel's design and decorations could win the customers' hearts, they would come back and recommend it to their friends.

Ms Koravic recalled that her family was successful in running the 17-year-old Chom View Hotel in Hua Hin using only the word-of-mouth marketing strategy to expand the customer base.

But recently the family realised that it should expand the business. It decided to invest around 500 million baht in Ma Du Zi Hotel, whose name literally means ''come and see'' in Thai.

The 41-room hotel is located near the Asok junction and the prices start from 17,250 baht per room per night.

''The hotel's concept is to keep the rooms private and offer home-like services. Guests feel safe and have as much privacy as in their homes,'' she said.

Unlike most hotels, its gate is locked all the time and no strangers are allowed in unless the guests specifically instruct the reception desk to do so.

''Many people say we are crazy to do this _ it's like we don't welcome people. But since our concept is to make our guests feel like home, no home in the world opens its door to unknown people,'' she noted.

Besides, Ms Koravic said the hotel had customised its services to meet the demands of each guest.

''Our staff will memorise what each client likes or dislikes. Then, if they come back to us again, we will serve only the things they like,'' she said.

Since its opening in February, Ma Du Zi Hotel has had only a 5% occupancy rate.

It has yet to fully promote the hotel among foreign tourists out of respect to the mourning period of the late Princess Galyani Vadhana.

Ms Koravic said the hotel would register as a member of a foreign marketing group early next year and will also sign contracts with tour agents. The main markets are Hong Kong, Japan, Singapore and Malaysia.

Although today the Chom View Hotel has to shoulder Ma Du Zi's expenses, she believes the small hotel will earn more next year when the economic situation is projected to improve. She expects the hotel to break even within eight years like most of its peers in the business.
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Russian billionaire buys Trump beach villa for 95 million dollars
source: Dpa July 18 2008

New York - US real-estate mogul and casino operator Donald Trump has sold his villa in Palm Beach, Florida, for 95 million dollars to fellow billionaire Dmitry Rybolovlev of Russia, a newspaper reported.

The price was believed to be the highest ever paid for a single-family home in the United States and bucked the trend of falling home prices in the wake of its US subprime mortgage crisis.

"I love breaking records, and this is a record," Trump, who is also known for starring in the reality-television show The Apprentice, told the Palm Beach Post.

Trump's asking price for the 2-and-a-half-hectare, beachfront property had been 125 million dollars, and he told the newspaper that Rybolovlev had made a great deal.

Trump, 62, had bought the house in 2004 for 41.35 million dollars and renovated it.

The new owner, a 41-year-old fertilizer magnate, was listed 59th on Forbes magazine's 2008 list of the richest people in the world with a fortune of 12.8 billion dollars. //dpa
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MK planning B965m housing development
source: Bkk Post July 19 2008

M.K. Real Estate Development Plc is preparing to launch the 965-million-baht Chuan Chuen Modus Chaengwattana housing estate to attract middle-income buyers.

Located on a 50-rai plot on the Pakkret Bypass Road, the estate will house 260 units of twin and single houses on lots sized between 41 and 60 square wah and priced from 3.2 million baht.

MK shares closed yesterday on the SET at 1.90 baht, down one satang.
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Reality check for 99-year lease extensions (in Singapore)
source: Bkk Post July 19 2008

Recent decisions show extensions are no longer a certainty.

The market used to assume that the Singapore government would top up leases for sites to 99 years as they came up for redevelopment. A series of recent decisions - in which the authorities either declined lease extensions or allowed them, but for shorter terms - has called that assumption into question.

Property players say these decisions could affect investment sales of 99-year leasehold properties, or at least the way such deals are structured.

In January, when the proposal for Market Street Car Park's redevelopment into an office tower was made public, owner CapitaCommercial Trust said that the authorities had declined to top up the lease for the site, which has another 65 years to run.

More recently, the market learned that the former Crosby House site at 71 Robinson Road - which is being built into a new office block - had its lease extended in April, not to the usual 99 years but 85 years and 10 months instead. This was apparently to match the remaining lease term of the SIA Building next door. It has also been reported that no extension was granted for Marina House last year, which is proposed to be redeveloped, although the HMC Building nearby obtained a 99-year extension earlier. Sources say another building at Cecil Street has also had its extension application rejected; the Urban Redevelopment Authority (URA) may have plans for the location.

In recent years, the Singapore government has extended leases of nearby sites to the original 99-year term, including 1 Shenton Way (being redeveloped into One Shenton), NatWest Centre (being redeveloped into The Clift) and the HMC Building.

The decisions appear to run contrary to the perception that the government would generally agree to extend leases, so long as the planned redevelopment scheme is in sync with the URA's long-term vision for the area.

Instead, the Singapore Land Authority (SLA) said: "The government will generally allow leases to expire, without extension." It noted that the state generally sells land on leasehold "to allow it the flexibility to reallocate land to meet socio-economic needs".

"However, the government has considered and allowed lease extensions based on whether the proposed redevelopment is in line with state planning intentions and long-term development plans, and factors such as whether there would be significant intensification, or greater optimisation of land use. That remains the government's policy," the SLA said.

The SLA evaluates each application on its merits and in consultation with the relevant agencies. The specific circumstances of each development dictate whether it should be given a lease extension - and for how long.

The URA said it evaluated requests for extensions based on "a range of planning considerations in relation to the specific location and context of the area". This approach gives the state flexibility to review the longer-term plan for the area, "as and when the existing leases expire or come in for extension in future, and to reconfigure the parcels, if required, to provide for better land utilisation".

In the Central Business District, for instance, the considerations may vary from streetblock to streetblock, URA said, when queried about the unusual lease top-up to 85 years and 10 months for 71 Robinson Road. "This lease period is sufficient to allow for the owner to redevelop the site to a new modern office building," the URA added.

Ong Choon Fah, the executive director of the property consultancy DTZ, said: "In the past, the government may have been pretty liberal in topping up leases. Now, they have to think of Concept Plan 2011 and how to accommodate a long-term population of 6.5 million people. So they have to be more creative and safeguard land for the future, by having a common lease expiry period."

Mrs Ong said there were still many "pencil buildings" on tiny plots in the CBD. "It would be more efficient if the government has common lease expiry periods for adjacent plots so that they may amalgamate them into bigger land parcels and resell them in future."

"It's more efficient to intensify land use for bigger land parcels. Globally too there's a trend of mixed developments, with a live, work, play environment. It's more environmentally friendly and reduces commuting time. For that too you need bigger sites."
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BTS chief returns with big real-estate venture
source: The Nation July 21 2008

Keeree Kanjanapas talks about his Bt23-billion hotels plans

The BTS SkyTrain will continue to be Keeree Kanjanapas’ cash cow, while the property business, especially in hospitality, will be part of a new strategy to generate rental income for his group.

Keeree Kanjanapas, who owns property company Tanayong and the Bangkok Mass Transit System (BTS), has come back to expand his business by focusing on the hospitality industry and the BTS SkyTrain. He had faced a debt burden of up to Bt77 billion arising from the financial crisis of 1997.

In the the hospitality industry, Tanayong will work as Keeree's business arm. He plans to invest about Bt23 billion to build 16 hotel and resorts across Thailand and overseas territories, starting this year until 2013.

Tanayong will set up a joint venture with Minor Group's management - Jonathan Wigley, John Westoby, Thitiya Westoby and Nopparat P'Kulsiri - who call themselves Absolute Hotel Services and have a registered capital of Bt25 million. The company will provide property-management and other consultancy services to other companies in the hospitality and property industries.

Tanayong will hold a 50-per-cent stake in the joint venture.

Meanwhile, Keeree believes he will succeed in buying back the stake in BTS from creditors after BTS's debt-rehabilitation plan for Bt77 billion was completed in April.

BTS now earns an average daily revenue of Bt6 million, with 450,000 passengers using the service a day, lower than the original estimate of 600,000 a day.

The company's revenue for fiscal 2008 (April 2007 to March 2008) has recorded a growth of only 4 per cent compared to the last fiscal.

However, the company believes revenue will increase 7 per cent this year as raised fuel prices encourage commuters to use the SkyTrain rather than their cars.

Keeree had suspended his investment after he faced a debt burden of up to Bt77 billion in 1997.

Keeree took more than 11 years to rehabilitate his debt in BTS, while, his property business had to suspend a new project launch after Tanayong recorded a loss.

However, Keeree has now succeeded in restructuring his debt with his creditors. BTS and Tanayong also have two new strategic partners - Dubai Investment Group and Hong Kong-based New World Development. As a result, Keeree believes his businesses, especially Tanayong, will recover this year after suspended investments for 11 years.

Tanayong managing director Kavin Kanjanapas, who is Keeree's son, has started giving interviews to the media and has issued a press release announcing investments worth Bt23 billion from this year until 2013.

"We want to develop property projects that provide rental and service income to our business and will balance our portfolio between sales and rental income. The hospitality business, especially hotels and resorts, will help balance our portfolio in the long term," he said, while talking to a Thai newspaper last week.

Kavin said the mission is to increase the portfolio to 16 hotels and resorts - within Thailand, focusing on Chiang Mai, Koh Samui, Chiang Rai, Kanchanaburi, Phuket, Krabi, Khao Yai, Rayong and Bangkok, and three locations outside Thailand, Luang Prabang in Laos and Phnom Penh and Siem Reap in Cambodia - in five years.

The company that will take care of this business, U Hotels and Resorts, will have a maximum 100 rooms at each property and will include a residential element in some cases. The first property that is part of the plan is U Hotel in Chiang Mai, which had its grand opening last month. The company will introduce the hotel to the media this weekend.

The company will also launch new residential projects in the second half of the year and next year.

"We believe that our business is now strong enough for us to be able to expand our investment," Keeree said.

"We have no plans to sell our stake to the government. We also have the right to buy the stake back from our creditors following the rehabilitation plan," Keeree said in March, before his debt-rehabilitation plan was completed.

In the first quarter, BTS signed a US$70-million (Bt2.28 billion) contract for 12 four-carriage trains with Changchun Railway Vehicles and Citic International of China, and Mitsui (Thailand). The trains will be delivered next year. This is part of a planned business expansion for the time after the company's debt rehabilitation is complete, Keeree said.
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BYInvitation
Office growth mirrors the economy
source: CBRE/Bkk Post July 21 2008

The growth in Bangkok's office market increased in line with the remarkable development of the Thai economy in the late 1980s and early 1990s, as the total supply of office space expanded from around 1.5 million square metres in the early 1990s to about 7.5 million sq m currently.

Companies began to realise the advantages of having quality offices in terms of location, convenience, prestige and effects on employee productivity. Thailand's economic revolution drove demand for increased office space, and office projects began to offer better premises and facilities, including central air-conditioning, higher ceilings, and improved building floor plates. Tenants and developers soon moved away from office condominiums, as the strata title of such developments made it more difficult to offer seamless building management and services.

Bangkok's Central Business District (CBD) is now defined by CB Richard Ellis as the area incorporating Silom, Sathon, Surawong, Rama IV, Phloen Chit, Wireless, early Sukhumvit, and Asok roads, and sois in between, but in the early days, the CBD was synonymous with the Silom area. During the 1990s, Thaniya Plaza was one of the most sought-after addresses, with monthly rents of 800-900 baht per square metre. As development increased, the CBD expanded to Sathon and Rama IV, where both the U Chu Liang Building and Abdulrahim Place are located. Opened in 1995, Rama Land Building was one of the first mixed-use developments in Bangkok, combining office, hotel and retail space. Office projects also sprouted up in the diplomatic area of Wireless Road, with All Seasons Place, another mixed-use project, a landmark in this area.

Before the Asian financial crisis, Thailand was one of the most attractive Asian economies for foreign investment, which fuelled demand for and growth in the office sector. However, the 1997 crisis led to many finance companies closing, pushing up vacancies, while other office projects that were under construction were suspended, or in some cases, abandoned as developers ran out of funds. The oversupply worsened in late 1998, and the total supply of roughly 6.3 million square metres suffered through vacancy rates of more than 30%. Vacancies were more pronounced in the CBD.

Some of the buildings suspended during the crisis were later revived by investors who purchased them at a bargain and completed the projects. Q House Lumpini, one of the most prestigious buildings in Bangkok today, was one such case. Other examples include the soon-to-be-completed Chamchuri Square (formerly C.U. High-tech Square), and Exchange Tower, located at the Asok-Sukhumvit junction.

The landscape for office development has changed since the crisis in many ways, as developers recognise the need to distinguish their products in order to compete. Design, facilities and services have all improved. More attention has been paid to the need for regular floor plates to eliminate wasted space. As companies have focused on cost savings, there has been a move toward smaller, more efficient offices, which requires floor plans that allow for easy sub-division. Most new buildings now offer higher ceilings, along with designs that cut down on noise.

Office rents in Bangkok are low when compared to other major cities both regionally and internationally. According to a recent CBRE report, office rents in Bangkok are the lowest of any major city in Asia, with the exception of Jakarta and Kuala Lumpur, and only a fraction of those in Hong Kong and Singapore.

Occupancy rates are now high in Bangkok (close to 90%), and given continually rising construction costs and the scarcity of quality CBD land, we believe that rents will have to increase soon as demand increases, and also in order to make future development worthwhile. Bangkok's CBD is now firmly anchored by the BTS and MRT systems. Although office space outside the CBD can be had at a 10-30% discount over CBD space, this is a much smaller difference than in most other cities.

Going forward, demand for Bangkok office space will be driven by the country's growing services sector. Any changes in regulation that encourage foreign participation would accelerate this growth. At the moment, Thailand lags many of its competitors in terms of the incentives given to international companies for setting up in Thailand, but we are hopeful that this will change as the country adopts to an increasingly competitive global economy.

Nithipat Tongpun is director and head of office services of CB Richard Ellis Thailand.
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Bangkok and suburbs to witness market slump: research
By The Nation July 21, 2008

The property market in Bangkok and suburban areas is expected to drop 7.2 per cent this year compared to last year, due to a rise in cost of construction and a slump in consumers' purchasing power, research by Kasikorn Research Centre showed.

The research shows that although the government launched tax package to boost property demand on March 28 and a number of commercial banks introduced financial packages to boost their mortgage-loan business in the first half of the year, demand for residential units has continued to drop.

The government's tax package, which reduced special business tax, transfer tax, mortgage fee and transfer fee, did not have a positive impact on the market because home-buyers are facing far more negative factors, such as a rise in cost of living following the oil price increase and prices of several goods rising.

Home-buyers' income is also expected to drop due to the country's soaring inflation, which has touched a double-digit figure this year.

The research says that demand for residential units in Bangkok and suburban areas will stand at 67,600 units this year, a drop of 7.2 per cent from 72,808 units recorded at the end of last year.

Detached houses, double houses and townhouses are expected to drop 9 per cent from the 32,741 units last year to settle at 29,700 units. Home-builders market will also experience a drop of 16.8 per cent from 25,251 units last year to 21,000 units this year.

However, the condominium market will register a 14-per-cent growth, from 14,816 units last year to 16,900 units this year.

Demand for condominiums has registered growth despite the oil-price rise because many home-buyers have decided to buy city condominiums to reduce their transportation costs.

However, home-buyers have to select projects based on whether they offer ready-to-stay condominiums, as opposed to projects that are undergoing construction.

This is because property developers are expected to raise condominium-project prices after costs of key construction materials, such as steel, have risen significantly.
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MBK Resort to pour Bt12 bn into Phuket
By The Nation July 21, 2008

MBK Resort, a subsidiary of MBK Co, plans to spend Bt12 billion in Phuket over the next decade to renovate two golf courses and build hotels and residences.

At the same time, it will search for more land at all major tourist destinations on which to build more hotels.

Saradej Sudasna, managing director of the subsidiary, said the group wanted to focus on tourism now that it had signed an extended contract for its core business, MBK Centre in Bangkok. The new Phuket projects will cover 2,000 rai of land.

As part of the new developments, MBK Resort will build the Red Mountain Hotel, featuring 100 rooms consisting of 60 ordinary guestrooms and 40 pool villas.

The hotel will be part of the company's existing Red Mountain Golf Club. It will cost Bt800 million and be targeted at golfers and international tourists.

Saradej said a second planned hotel would be the 45-room Golf Lodge, located at the Log Palm Golf Club, which the group bought four years ago for Bt550 million.

"Red Mountain will be a premium product targeted at high-end visitors, while Golf Lodge will be aimed more at local guests," said Saradej.

He said residences and botanical gardens were also in the works. The residences will be under 30-year leases, with vacant units rented out to tourists.

Phuket already has six golf courses, but MBK sees room for more.

Meanwhile, Saradej said a golf course and residential project were being built in Pathum Thani province and would be finished by 2010.

MBK Resort will also build more hotels at all major tourist destinations and is scouting for land in Pattaya, Krabi, Chiang Mai and Koh Samui, as well as Phuket.

Apart from MBK Centre, the group owns three hotels: the Pathumwan Princess Hotel in Bangkok, the Sheraton Krabi and the in-house brand Tinidee Hotel in Ranong.

The group recently bought Bangkok's Premier Rama IX Department Store and is turning it into a shopping plaza and condominium.
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New tax law to hit land prices
The Nation July 22, 2008

Experts say proposal comes at a time when market is facing many negatives

Commercial buildings that are under construction in the Central Business District will have to pay the property tax when the Cabinet and the Parliament approve it.

Property tax will have a negative impact on the property market especially because land prices are expected to drop following the tax hike, property experts said.

Many property developers believe that if this law becomes effective, land prices, especially for undeveloped plots, will be adversely affected.

However, they also believe that it will be difficult to get the law approved at this time.

LPN Development managing director Opas Sripayak said if the Cabinet approves this law, undeveloped-land prices will drop.

Meanwhile, property developers could face higher land-related costs, especially if they have a large landbank, he said.

However, the law could reduce speculation in land prices.

"Although the tax will come into effect in the next two years, many landlords and property developers will have to manage their land before that. Because of this, land prices should undergo an adjustment before the law becomes effective," he said.

Property Perfect chief operating officer Dr Teerachon Manomaiphibul said, "I agree with the property tax. But it would be more appropriate during a property boom. Right now, the market is facing several negative factors," he said.

Yesterday, The Nation reported that Finance Minister Surapong Suebwonglee has approved the final draft and will submit it to the Cabinet in the next few weeks. But it may take about two years before it becomes effective because it will also need to be approved by the Parliament.

The new law will replace the existing one and will enable local governments, such as the Bangkok Administration, to collect more tax from owners of land and buildings.

The law divides property into three categories subject to different tax rates. The first group is land and buildings used for commercial purposes, to be taxed at no more than 0.5 per cent of their value, with undeveloped land facing double that rate at 1 per cent. The second is residential property, which will be taxed at no more than 0.1 per cent. The third is property used for agriculture, which will be taxed at no more than 0.05 per cent.

The new law will cover all owners of land and property.

Owners of residential property are not taxed by the existing land-tax law, which imposes a flat rate of 12.5 per cent annually on land over 100 square wah.

Under the new law, land speculators will be punished through the imposition of a higher tax, depending on how long the land has been left undeveloped. However, the tax will not exceed 2 per cent.

Local government officials are authorised to impose the appropriate tax rate on landlords suspected of tax evasion, a source said.
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Patong land hits up to 200m per rai
source: Bkk Post July 22 2008

Repeat visitors yearn for beach property

Land prices on Patong Beach in Phuket now reach 100 to 200 million baht per rai (250,000 to 500,000 per square wah), showing strong demand from high-end buyers, many of whom are repeat tourists, according to property consultant CB Richard Ellis (Thailand).

For prime beachfront plots, the land value has doubled from the levels in 2006 and yearly rises of 30-50% were not uncommon, said Khanitha Jarukirati, the company's associate director for Phuket investment and services.

Factors pushing up the land prices in Phuket include the scarcity of quality beachfront and sea-view land and sustainable growth in land prices. In addition to Patong, other prime locations with new developments are Karon and Kata beaches, where land prices stand at 40 million baht per rai.

According to the Phuket Land Office, 2,416 land transactions were recorded in the first quarter of 2008, a dip from 2,642 in the same period last year. Of those, 2,251 transactions were for land or land with buildings, 53 for buildings alone and 112 for condominiums.

She said Phuket's property market had grown continuously over the past few years. Developers are increasingly sophisticated, in line with buyers' demands, and come from both from Bangkok and abroad.

The property sector in Phuket heavily depends on repeat high-end tourists as most buyers were foreigners. Over 90% of all visitors to Phuket were there for leisure purposes, as reflected by the pattern of growth in infrastructure and entertainment options.

According to the Tourism Authority of Thailand, the number of tourist arrivals to Phuket almost doubled to 4.7 million in 2007 from 2.4 million in 2005. Total foreign tourist arrivals to Thailand in 2007 were 14.5 million, of whom one-fifth or 3.1 million went to Phuket.

In the hotel segment, a majority of upscale hotel rooms in Phuket were mid-range, followed by first-class or 37% of total supply. The luxury segment accounted for about 4% of upscale hotel supply in Phuket and is concentrated in the southern west coast.

Based on current information, the company estimated that 10 luxury hotels with over 800 rooms would be completed by 2010, along with over 2,100 first-class and 1,300 mid-range rooms.

Condominium sales in Phuket are strongest on the central west coast and the southern west coast where there are the greatest number of launches. Roughly half of the total units under construction are sold while almost all completed units were taken up.

On the contrary, sales were the lowest in projects still in the planning stages where construction has not yet begun.

For the villa segment, 32% of the total existing villa units in Phuket were located on the central west coast, followed by the southern east coast, with 19% of total units, and the northern east coast with 16%. The area with the least amount of supply was the northern west coast, with just over 100 units.

As of the first quarter of 2008, 64% of the total units at projects being marketed were sold, with the highest percentages seen for inland projects.

Ms Khanitha said Phuket property buyers did not depend much on debt to finance their purchase so the island is relatively isolated from the global slowdown.
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PROPERTY
Fund eyes 80% capital gain
source: Bkk Post July 23 2008

Star Property Fund, a local property fund, expects a 80% capital gain from the sales of all of its 30 freehold units worth a combined 800 million baht at All Seasons Mansion on Wireless Road after holding them for six years, according to its sales agent Nexus Property Consultants Co Ltd.

The fund, managed by One Asset Management, acquired the units, totalling 8,000 square metres, at an average price of 70,000 baht per sq m in 2002, said Apisit Limlomwongse, the managing director of Nexus.

''Though the fund can generate more gains if it holds on to the property, it has a commitment with investors to sell it. Generally, a property fund holds an asset for no longer than five years,'' he said.

The fully furnished units are among the 170 units at All Seasons Mansion, a condominium building at All Seasons Places. The fund's units are being sold at price of 120,000 baht per sq m or between 16.6-36 million baht for sizes between 130-300 sq m.

In face of rising construction costs and a shortage of prime sites, he said the price was attractive when compared to other prime condominiums which are quoted in the range of 150,000 to over 200,000 baht per sq m.

After launching the sales in the past few weeks, 35% of the total area has been sold. The company expected to close sales within three months.

Mr Apisit said the units were the only freehold condominium units on Wireless Road and some were being rented out at the rates of 70,000 to over 100,000 baht a month, depending on size.

''Buyers would be able to generate annual yields of between 6-7%, the same rate as the fund. At the same time, the capital gain is expected to rise to 200,000 baht per sq m in the next five years,'' he added.

During 2004 to the first half of 2008, condominium supply in Bangkok totalled 100,000 units, 80% of which were acquired and 40% were in inner Bangkok. The average selling price per sq m was 72,000 baht, up from 70,000 baht at the end of 2008.

''If there are no new supplies or fewer than 20,000 units are added to the market next year, the gap between demand and supply will be narrowed to 15% from the current 20%,'' he said.

Many factors are likely to obstruct additional new condominium supplies. They include increases in oil prices, unknown construction costs, soaring inflation and uncertain political situation.

Nexus Property Consultants, established seven years ago, recorded four billion baht in sales during the first six months of 2008.

It expected the sales to double by the end of the year.

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Hemaraj ups target

PROPERTY :Thailand's largest industrial land developer, Hemaraj Land and Development Plc, will revise up industrial land sales target for the second time this year due to the demand by overseas investors.

David R. Nardone president and chief executive said the company was considering revising its sales target as it already posted better-than-expected sales of industrial land sold totalling 1,200 rai for the first seven months of this year, which nearly met its earlier target for the whole year of 1,500 rai.

It also expected to post growth between 10-15% in terms of sales value to over 5.7 billion baht from 5.12 billion baht recorded last year.

Major investors includes producers of automobiles, auto parts, steel, food and consumer products, who are expanding their production capacities.

He said the group would issue bonds totalling three billion baht for its industrial land expansion and its joint venture with Glow to build a power plant called GEGCO One.

Hemraj shares closed at 1.13 baht, unchanged in trade worth 3.64 million baht.

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Israeli investment

PROPERTY :Industrial Buildings Corp, an Israeli real estate company controlled by Eliezer Fishman, agreed to spend 100 million shekels ($29 million or 953 million baht) for a 50% interest in a venture to develop two buildings in Bangkok.

The project, which it will build with three Thai partners, will include a 70-floor residential, hotel and commercial structure, Herzliya Pituach, Israel-based Industrial Buildings said in a statement to the Tel Aviv Stock Exchange yesterday.

The residential area will take up 55% of the total tower while the hotel and commercial space will occupy 20% and 25% respectively of total area, it said.

The Thai companies involved in the development are currently seeking to expand the current 12,300 square metres designated for the two buildings by 20%, the company said. The towers are scheduled to be completed by 2012, Industrial Buildings Corp said.BLOOMBERG NEWS

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QH optimistic

PROPERTY :Quality Houses expects second-quarter earnings to top the 307 million baht made in the first quarter and better full-year profits due to higher prices and control over costs. Its 2007 net profit was 1.07 billion baht.

QH plans to sell bonds worth 2.5 to three billion baht in August or September, with maturities of three or four years, to refinance its short-term debt and acquire land for future development, managing director Rat Phanitphan said yesterday.

"Our six-month sales were better than our earlier target. Second-quarter sales were almost 30% higher than the first quarter," Mr Rat said.

The company plans to start 11 housing projects this year, at a cost of about 16 billion baht.

QH shares closed at 1.56 baht, down three satang, in trade worth 54 million baht. REUTERS
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Developer Hemaraj expects 10-15% growth
The Nation July 23, 2008

Hemaraj Land and Development, a leading industrial-estate developer, expects revenue growth of 10 to 15 per cent this year, driven by manufacturing expansion in several sectors.


President and CEO David R Nardone said yesterday that the company was in talks with companies in the automobile and electronics industries to purchase sites in Hemaraj's industrial estate in Rayong. He said negotiations were going well.

"More than 50 per cent of our clients are in the automobile industry. The government is encouraging companies to expand into new areas such as eco-cars and we expect our business to grow in line with the auto industry," he said.

Nardone said Tata Motor was still negotiating to purchase land in the Hemaraj Eastern Seaboard Industrial Estate in order to invest in an eco-car project. In April, Tata Motors won tax privileges from the Board of Investment for the project.

Earlier this year, Hemaraj signed a land-purchase deal with Suzuki Motor for a 412-rai plot at the estate.

Nardone added that the company had sold sites in its industrial estates totalling 1,200 rai in the first half of the year, compared to its sales target of 1,500 rai. Hemaraj will revise its land-sales target next month after the company announces its second-quarter operating results.

"Although sales from the industrial-estate business are still good, revenue from the property sector as a whole has not been good because of sluggish sales of a condominium development. We may adjust the price of the remaining units in The Park development in order to close the project," he said.

The company yesterday signed a land-purchase contract with Danieli Far East, a designer and manufacturer of equipment for the steel industry, for an additional 121 rai in the Eastern Seaboard Industrial Estate. However, Nardone declined to disclose the contract value.

Asia Plus Securities said in a research note that Hemaraj's land sales could exceed 1,300 rai this year due to expansion in the automobile industry, which is a major part of the company's customer base.

Asia Plus revised upward Hemaraj's net profit forecast to Bt1.48 billion, which would represent 27-per-cent growth from last year.

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Raimon Land opens doors to residents of Pattaya at The Lofts Southshore

Property company Raimon Land has launched The Lofts Southshore in Pattaya at a starting price of Bt2.9 million.

The Lofts Southshore site is perched on a hillside in the Khao Pratamnak area overlooking Pattaya Bay.

The Lofts Southshore condominiums range from 33-square-metre studios to one-, two- and three-bedroom units between 58 and 169 square metres. Duplexes and penthouses with private gardens are also available.

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Sitharom Property launches Phuket@Town 2

Sitharom Property Group has launched a residential project worth Bt1 billion called Phuket@Town 2 that includes commercial buildings, townhouses and vacant plots.

The company's project manager Surasak Borisut said the project would have a three-storey commercial building with prices starting at Bt6.99 million per unit. It will also have 155 townhouse units at a starting price of Bt2.79 million each and six vacant plots of 1 rai each priced at Bt55,000 per square wah.

The project will be developed in a modern and contemporary style, focusing on buyers looking for a second home in Phuket.

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Asian property launches 2 detached-housing projects

Asian Property Development will introduce two detached house projects worth a combined Bt2 billion in the current quarter.


The mid-market project will offer houses priced between Bt3.79 million and Bt5.89 million.

The first project on Sukhumvit 113, called The Centro Sukhumvit 113, is worth Bt800 million. The project will be located close to the new BTS SkyTrain station. This project will have only 208 units with a utilisation space of between 130 and 230 square metres.

The project offers houses with three bedrooms and two bathrooms and three bedrooms and three bathrooms at a starting price of Bt3.79 million per unit. The company will open presale bookings this weekend.

The second project on Rattanathibet Khaerai, called The City Rattanathibet Khaerai, is worth Bt1.2 billion. The project will be built in a modern contemporary style and will have 216 units with a utilisation space of between 180 and 230 square metres, comprising units of three bedrooms and three bathrooms.

The project will be located close to the new BTS Purple line that links Bangsue and Bang Yai. The company will open presales for this project next weekend.

"We believe demand for residential projects will grow, especially projects located close to the mass-transit system. This is despite house prices having increased 5 to 10 per cent compared to last year, following a rise in construction costs. Our customers are not worried about the price but they are concerned about the location," Asian Property Development senior executive vice president Visanu Suchatlumpong said.
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[NBT TV11 Phuket]

MiniVDO: officials inspected reserved land and plots under Sor Por Kor status in Phuket.
http://thainews.prd.go.th/newsenglish/previewnews2.php?news_id=464

Wednesday 23 July 2008
An operation unit in prevention and suppression on encroachment on natural resources inspected national reserved forests and the plot of land under Sor Por Kor 4-01 at Tritrang beach south of Patong on Tuesday. The move followed Maj. General Intarat Yodbangtoey’s aerial inspection last week which saw construction sites on the hill. Maj. General Intarat is the advisor to the Natural Resources and Environment Minister Anongwan Thepsuthin. The group found a construction project of a resort on a 58 rai plot and an asphalt road built into forest land. The contractor however did not allow the officials to get in the site telling them to check with the property owner first. The team also inspected another 38 rai plot of land on the foothill which was adjusted and leveled to construct Thai style villas. The owner showed the officials copies of legal papers. The head of the operation group Popphol Sirilaksanapong said around 20 projects in Phuket need to be examined for the land acquisition, construction permits and that all owners will be treated fairly and equally. They would focus on more vulnerable locations as priorities.
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MiniVDO: Phuket Deputy Governor inspected a private airfield in Paklok and found no public land encroachment.
http://thainews.prd.go.th/newsenglish/previewnews2.php?news_id=465

The Phuket Vice Governor Smith Palawatwichai yesterday morning inspected a temporary air park belonging to Phuket Airpark Company which is located in Thalang’s Paklok, north of Phuket. The visit followed residents’ complaints that the company has encroached upon public land and earthed up the public channel. The managing director of the company Suchart Ruck-Sangob said that he had legally bought these 100 rai from local villagers with over 100 million baht. The air park is also licensed from the Department of Civil Aviation since March this year. As for the earth-filling in the public channel, the company had promptly removed it after the Paklok local government ordered them. The vice governor explained that he would focus on the public land (encroachment) issue which proved to be legal, and the permission for a temporary tent structure for small aircraft which he asked the company to legalize. As for its future project of property development, it is still not clear and he needs to check which laws are applicable.

MiniVDO: An inspection by helicopter indicated public forests are encroached upon in many locations in Phuket.
http://thainews.prd.go.th/newsenglish/previewnews2.php?news_id=444

Monday 21 July 2008
After an aerial inspection tour by helicopter over land under the Department of Forestry in Phuket’s Kamala, Patong and Karon, the advisor to the Minister of Natural Resources and Environment Maj. General Intarat Yodbangtoey indicated that many locations are suspected to be encroached upon. He voiced his concerns over construction sites on the hill at Tri Trang in south Patong in particular, worrying about possible mud slides in case of heavy rains. He said the ministry will work with the Department of Forestry to check and investigate the encroached or illegal sites. The senior officer also called for Phuket people to act against businesses and investors who encroach on forest land. He also touched on local politicians who run or govern local government calling for residents to elect the ones caring about the environment or natural resources conservation. Maj. Gen. Intarat who is advisor to Minister Anongwan Thepsuthin also found rubber plantations and housing in reserved areas which he asked the Phuket Governor and responsible agencies to take action on to stop the encroachment, while construction on suspicious sites on hills should be stopped until officials step in to check and resolve the problems.

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Andaman News NBT (VHF dial) + FM90.5 Radio Thailand at 8.30am & perhaps relays/repeats on local Cable TV channel 1, broadcast to Phang Nga, Krabi & Phuket provinces, & possibly FM108 Mazz Radio 7.30pm in Phuket, & http://thainews.prd.go.th/newsenglish/ Contact AndamanNews@yahoo.com