Siam News Network

Politburo member Pham Quang Nghi has attributed Viet Nam’s glorious revolutionary victories over the past 81 years to the Party’s platform, guidelines and sound leadership based on Marxism-Leninism and late President Ho Chi Minh’s Thought, the development of national traditions and the quintessence of humanity’s culture and the entire people’s …

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The rapid development of the Bangkok condominium market over the past 10 years has greatly expanded the options for Thais and foreigners considering the purchase of luxury condos. At the same time, the average price of a new condo in central Bangkok has jumped by more than 150% over the decade. With the high selling prices of units in newly launched projects or brand-new buildings, some buyers may opt to purchase more affordable units in older developments. On a per-square-metre basis, the prices of some of these units could be as low as half of those commanded by units in newly completed buildings or those under construction. Findings from Jones Lang LaSalle’s recent market study indicate that newly completed or luxury units now being built in central Bangkok are being offered for sale at prices ranging between 160,000 and 350,000 baht per square metre, whereas units in older luxury buildings (aged 10 years or more) in the same area are available at between 90,000 and 120,000 baht per square metre. Although there are still compelling reasons to buy for investment, buying a used luxury condominium in the centre of the city as a residence is now a sound decision. The strong competition in the leasing market due to the rapid growth of new condominium supply has put downward pressure on rents. Many owners who bought condominiums for investment purposes many years ago may now find it difficult to let their units as most tenants prefer newer buildings. For this reason, certain investors are keen to divest their holdings. As a result, many luxury units are available at attractive prices and offer good value for money to those looking to buy condos to live in. As mentioned earlier, there are still opportunities to purchase an older condo as an investment. Units in certain buildings, as old as 20 years, that are well designed, well located and well managed, continue to enjoy high demand from tenants. They also have the potential to enjoy capital appreciation over the long term as sites available for new developments are becoming scarce, while development costs continue to rise. Managed by Jones Lang LaSalle, Langsuan Ville, an eight-year-old building on Langsuan Road, is a prime example. Resold units in this building are currently fetching between 90,000 and 100,000 baht per square metre. The building also sees continued leasing demand, with one-bedroom units achieving an average monthly rental of 40,000 baht. While the decision to buy a unit as a residence relies mainly on the buyer’s personal preferences and affordability, the purchase of a used unit as an investment is generally a more complicated process as more factors must be taken into consideration. Tenant preferences count. Location should come first in the selection criteria. Location in the heart of the city does not necessarily guarantee marketability. The unit must also offer proximity to amenities (shopping centres, restaurants, schools and hospitals), access to mass transit and main roads for commutes by private car. Space efficiency and communal facilities are also important. In this regard, most of the older buildings in the luxury segment offer relatively larger common space and full recreational facilities, including large swimming pools, fitness/sauna rooms and tennis courts, which are not typically provided in many new condominiums. Rental demand from locals is limited, so tenants are most likely to be foreigners living in Thailand. Many nationalities have preferred locations, amenities and furnishings, among other things. The largest group of expats officially working in Thailand is the Japanese. However, the number of nationalities, particularly from other parts of Asia, have been consistently increasing as evidenced by the numbers of work permits issued. Nevertheless, European and US expats tend to have the highest housing allowances. Consideration should be given to who the target tenant of an investment will be. The unit must be maintained in a like-new condition. In this respect, an investor may have to make a big cash outlay to refurbish a unit prior to putting it up for rent. Jones Lang LaSalle’s Project and Development Services division estimates that a full refurbishment of a condominium unit, including full Grade A furnishings, costs in the range of 40,000 to 50,000 baht per square metre. After renovation, a 20-25% increase in rent can typically be expected. The condition of some condominium buildings can deteriorate with age _ as can the asset value. Therefore, the quality of building and property management is another key factor. Rental strategy must be realistic. Condominium rents can vary greatly, depending on location, quality and age of the development, unit size, fittings and furnishings. Generally, brand-new units achieve rental rates 25% higher than used units of the same quality in older buildings in the same location. An investor in an older unit might be satisfied with a lower rental rate as it may actually reflect a higher yield. Given the varying needs of each individual, the decision to buy a used condominium in Bangkok should be carefully weighed. As a primary residence, the decision comes down to finding something suitable to one’s lifestyle and simply weighing up the affordability and value of older versus newer units. As an investment, obtaining a high return comes down to identifying the right unit and negotiating a good price. In the end, consulting a professional agent will help you minimise the uncertainty and help you set realistic expectations at the outset. Source:metroparksathorn.com

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Yuthachai Charanachitta, the third generation of the Ital-Thai Group, aims to rebrand the group by focusing on its five businesses and study into that is expected to be completed this year. “When you think of the Ital-Thai Group, you think about the contractor business – Ital-Thai Development. However, our group also has many other businesses and we are studying to rebrand the group by classifying our business in a way that will give a clear picture about the group,” Youthachai, who is director of Ital-Thai Development, said. Currently, the group has five businesses. Ital-Thai Development runs the contractor business, which generates total revenue of more than Bt40 billion a year. It also runs a cement manufacturing plant, and a steel plant. Then there is Ital-Thai Engineering. The group also has a trading business involved with wineries. The group’s real-estate business is managed by Amari Estates, while its hospitality business under the Amari brand is managed by ONYX Hospitality Group. The company has a registered capital of Bt700 million with the Charanachitta family holding a majority stake. For the real-estate business, the group has set up Amari Real Estate Co with a registered capital of Bt400 million. The first project was the Amari Residences Hua Hin, worth Bt2 billion, that was launched last year. It is expected to be completed in 2011 with transfer to customers in the third quarter of this year. Yuthachai, who is also the chief executive officer and president of Amari Estates Co Ltd, said the company will generate total revenue of more than Bt1 billion this year from its Hua Hin project. The company also plans to launch the latest condominium project in Patong beach in Phuket worth more than Bt2 billion in this year. This project will offer a 30-year lease to buyers with the right to renew after 30 years. The company also offers management for this project by Onyx Hospitality Group. This project will have 200 units. Of the total, 10 will be villas at a price of more than Bt200 million per unit, and the other 190 units will be low-rise condominiums at a starting price between Bt7 million and Bt8 million per unit, starting at 50 square metres per unit. Pre-sales will start in the second quarter of the year with construction beginning next year. Nearly 55 per cent of its target customers are foreigners. Amari Estate Co also plans to launch three or four projects in 2012-2013 worth more than Bt1 billion per project. They will be located in Phuket, Hua Hin and Pattaya. “In Phuket, it will be located on Nai Han beach, in Pattaya negotiations are going on for the land, while in Hua Hin the land has already been acquired,” he said. Meanwhile, its hospitality business, Onyx Hospitality Group plans to manage 51 properties by 2018. Currently, the company manages 33 properties in Thailand and overseas under four brands -Saffron, Amari, Shama, and Ozo. Thirteen of the properties are managed under the brand name Shama of which 12 are located in China, and one in Bangkok. There are 13 properties under the Amari brand, while seven properties are non-branded as some of them are managed under the customer’s brand, and some properties are still studying which brand will suit them. Onyx Hospitality Group president and chief executive officer Peter Henley said the company will manage two or three new properties this year, and one of them is the Ozo Koh Samui . This hotel has an investment budget of Bt600 million. The Oriental Residence Bangkok will be managed under the Saffron brand, while one in Maldives will be called Amari Addu Maldives. This will be the first hotel under the Amari brand outside Thailand. This project will undergo renovation and be opened this year. The company has signed a 20-year management contract for this project. The company also will sign contracts for five properties next year, he said. Source:nationmultimedia.com

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Vietnam’s leading tourism company Saigontourist said it is looking for Japanese partners to invest in the development of 12 new hotels and tourism complexes.

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Despite the Bank of Thailand telling commercial banks to lend no more than 90% of a property’s value to condominium buyers next year, Sena Development Plc is working with a local bank to create a lending package that still comes close to 100%. Kessara Thanyalakpark, Sena’s executive director, said the central bank’s curb will affect low- and middle-income buyers who until the end of this year could borrow the full purchase price on the transfer of a unit plus a little more. Customers have normally paid a 10% down payment during the construction period, followed later by the other 90% plus about 4% for the sinking fund, common area expenses and transfer fees. After receiving the full package amount, they usually had 6% left over. “This has helped to push condominium sales in the past, especially in the low-end and medium markets. But we’ve discussed this with a local bank and promised it a certain loan level, so we can help structure the package to offer almost 100% lending in the end,” said Dr Kessara. She expressed no surprise at the central bank’s decision to increase the policy rate to 2%, saying it is consistent with earlier measures capping home loan size and the loan-to-value ratio in order to curb a possible bubble in the property market. The core of the matter will be the reaction of commercial banks, whether they will increase their rates, said Dr Kessara. If a bank lifts its rate by 0.25%, a homebuyer’s instalment payments will rise by about 3%. “I think any effect from higher interest will not be immediate,” she said. “The loan-to-value cap is producing more of an impact, as only people with savings can buy a home.” With the outlook for the condominium market so unfavourable next year, Sena Development will maintain product variety including low-rises, condominiums and rental properties. It plans eight new projects next year – three low-rise housing developments, four condominiums and a rental project. Sena now has 14 active projects with a remaining sales value of 3.45 billion baht. The company is targeting 20% revenue growth next year from an expected 1.5 billion baht this year. For the first nine months of this year, it achieved revenue of 833 million baht, down by 14.6% year-on-year. However, the sales backlog is worth 1.29 billion baht, mainly condominiums. Sena is thus confident of achieving its revenue target, as three condo projects will be delivered in this quarter. Shares of Sena closed yesterday on the Stock Exchange of Thailand unchanged at 2.08 baht in trade worth 785,000 baht. Source : bangkokpost.com

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Argentine President Cristina Fernandez Saturday signed seven financial agreements which amount to about 1.877 billion U.S. dollars and aim to support education and technology, among others. Among the agreements, four were inked with the Inter-American Development Bank (IDB), two with the Andean Development Corporation (CAF) and another one with the World Bank (WB). The agreements with the IDB have a value of 4.25 billion Argentine pesos (about 1.07 billion dollars). They aim to promote edu …

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The property market next year will shift to single houses and townhouses from condominiums as the high-rise segment will experience pressure from curbs on mortgage loans, a change in accounting standards and scarcity of prime locations for new projects. The Bank of Thailand’s measure capping loan-to-value ratios at 90% for condominiums and 95% for single houses and townhouses will have a negative impact on condominiums and reduce their attractiveness, said Thai Condominium Association president Thamrong Panyasakulwong. He predicted no growth next year in the condominium market as only professional developers would stay in the segment after it slows due to the central bank measure. Larger developers have more funding choices to buy land than smaller-sized developers, such as loans, debentures and bonds. Therdsak Thaveeteeratham, senior vice-president of Asia Plus Securities, said the BoT’s preventive measure would reduce the popularity of condominium development as fewer buyers could obtain mortgages. The condominium backlog should also be watched as there may be sold units that cannot be transferred if buyers cannot find loans, adding to market supply. These backlogs will need to be resold in the market. At the end of the third quarter, the housing backlogs of 14 listed property firms Asia Plus is monitoring were worth 135 billion baht, up from 113 billion in the second quarter. Of the total, 78% were condominiums. Mr Therdsak said a change in accounting standards from percentage of completion to realisation by transfer, effective next year, would also change the development plans of listed firms that rely only on condos because these take longer than one year to clear. “If a developer builds only condominiums, its quarterly income will be volatile,” he said. “Good locations for development of new condo projects are scarce, meaning launches will be lower next year.” Asia Plus predicts presales of the 14 listed firms this year will total 160 billion baht, up from 126 billion in 2009. They plan to launch units worth 243 billion baht this year. According to the Real Estate Information Center, there were 270 condominiums with more than six units a project available for sale in Greater Bangkok, with a total of 120,700 units. Of this number, 20,000 were new launches. About 77% or 93,000 units were sold. From July to mid-November, there were an additional 40,500 newly launched units put in the market. There were 740 low-rise projects with over six units available for sale, totaling 144,600 units. About 63% were sold. Source : bangkokpost.com

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With both profits from property development and demand for precast low-rise units growing, the listed contractor Pre-Built Plc will expand its investment in two businesses for targeted annual growth of 30%. The company has earmarked one billion baht for land on which to develop three new condominium projects next year and will spend another 50 million baht to expand its production capacity for precast units. Chaiyarat Thampeera, the chief executive, said the gross profit margin from property development is 30% to 40%, while that from construction is only 10%. Thus, the company will bolster Built Land Co, one of its two property subsidiaries. Pre-Built entered property development last year, but revenue will only start to be realised from 2011. Next year, it will launch a 150-unit condo project called The Tempo Ratchada worth 340 million baht, in Bangkok’s Huai Khwang district. Currently, it is developing two 380-million-baht condominium projects under The Tempo brand _ one 90% sold in Soi Ruam Rudi and the other 60% sold on Phahon Yothin Road. Vilas Pilakasiri, managing director of PCM Construction Materials Co, the other subsidiary, said demand for precast low-rises was expanding significantly. Many large housing developers lack a precast partner to serve such construction. Some, such as Asian Property Development, have had to set up their own precast construction units, he said. At the same time, large firms such as Pruksa Real Estate and Land & Houses already have their own precast firms to support construction of precast single houses and townhouses, but have so many orders that they must outsource some. PCM, which enjoys a gross margin of 20%, plans to increase its precast production capacity from 5,000 square metres a month now to 25,000 sq m or about 500 units a year. The first phase of 6,000 sq m per month will start in next year’s first quarter, followed by the final second phase in the second quarter. Mr Vilas said work to recover after recent floods would expand PCM’s renovation sales, with orders for precast floors set to expand by 10%. Mr Chaiyarat said the floods would also increase Pre-Built’s core business of renovation, as contractors whose expertise is in road construction will turn to road repairs and delay their high-rise construction business. The company’s construction business received a big boost after a contract was signed last week with the Quality Houses subsidiary Confidence Co to build The Trust condominium worth 1.14 billion baht in the Pin Klao area of Bangkok’s Thon Buri district. It will also sign a contract with another developer to build a one-billion-baht condo building in the Rama III area, raising the company’s backlog to 3.8 billion baht at year-end. Pre-Built has targeted consolidated revenue of two billion baht this year and 2.74 billion next year, representing annual increases of 30% and 37%, respectively. Of this year’s total, 1.7 billion baht will be from construction and the rest from precast units. Shares of Pre-Built (PREB) closed on the SET on Friday unchanged at 3.04 baht. Source : bangkokpost.com

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