The phenomenon will likely be a repeat of what happened to the housing market in the United States, he said. After the incentives ended on April 30 this year, new-house sales in the US dropped by 33% month-on-month in May.

Mr Samma said buyers of low-rise units hurried to wrap up the deals in the first half while many condominiums rushed to transfer units to be eligible to the tax breaks.

“It is natural that a decrease will happen a month after the incentives end,” he said.

The number of new housing units transferred in March, the original deadline of the incentives before they were extended, were double the figures in January and February. It slowed in April to below a normal level due to the long holidays and the political violence.

It then rose to a normal rate in May and jumped by 50% month-on-month in June, the last month for the incentives, Mr Samma said.

A decrease in the number of transfers after the end of the incentives would last only a month and the market would recover in August and the fourth quarter, the high season of home purchases.

The REIC said new housing unit transfers in the first five months of the year rose by 40% year-on-year, to approximately 84,000.

Of the total, about 36,000 units were condominiums, 24,000 townhouses, 14,000 single houses and 10,000 other residential units. Combined with non-residential properties, transfers totalled about 109,000.

In May, the number of transfers totalled 14,800 units.

“After the end of the incentives, we don’t think housing prices will rise as there will be a large number of new housing supply waiting to be launched,” Mr Samma said.

Another negative factor in the second half would be political problems and the impacts from the European economy, which remain unpredictable.

To avoid an oversupply in the second half, developers should slow down project launches or delay them to the first quarter of next year instead, Mr Samma warned.

“We believe that demand for home-office and town-home projects in eastern Bangkok will continue to grow. As a result, we have an aggressive investment plan to launch new property projects in the area, including Romklow Road and Suwinthawong Road,” said the company’s managing director, Visit Kittiudom.

The company has set aside an investment budget of between Bt100 million and Bt300 million to buy a land with which to develop three or four new projects a year, he said.

Currently, the company has a land bank of 46 rai; 20 rai of that is located at Hatairat in Minburi district, and the remainder on Suwinthawong Road. Both areas are slated for residential projects in the next year.

The company also plans to buy undeveloped land to develop residential projects in the next year.

This year, the company plans to launch four new property projects worth Bt2.75 billion. Last week saw the launch of the Bt950-million RK Biz Centre, a home-office project with just 177 units. Also due to launch this quarter is the Bt650-million RK Office Park at Ramindra-Ramkhamhaeng. The next two projects, due to launch in the third and fourth quarters of this year, are RK Office Park on Shathairat Road and RK Office Park at Kubon, worth Bt700 million and Bt450 million, respectively.

Most of its investment budget comes from the company’s cash flow, Visit said.

“We have made a huge expansion in our investments for this year and next, because we see business opportunities and demand in the market,” he said.

Visit said that the recent 5- to 10-per-cent increase in the price of construction raw materials had not impacted the company’s construction costs, because the company has signed long-term materials purchase contracts to help manage costs. The firm’s return on investment averages between 10 and 15 per cent, he said.

“Our business risk is controlled using cash-flow management. When we succeed in selling out property projects, we use that cash, rather than borrow from banks, to reduce risk,” he said.

The country’s economic and political situations also represent business risks, but are out of the firm’s control. The company can manage its cash flow, however, in such a way that helps it survive, he said.

Rung Pattana Property is a property firm with origins in the construction business. It has more than 10 years experience in developing residential projects, especially home-office projects in eastern Bangkok under the Rung Kit brand.

The company now has three subsidiaries focusing on different types of residential projects. They include RK Housing and Space Co, with registered capital of Bt5 million, which develops home-office projects. Rungkit Real Estate Co, which has registered capital of Bt50 million, develops single-detached housing projects. RK Office Co, a developer of home-office and town-home projects, has a registered capital of Bt50 million.

SOURCE: The Nation

Bangkok houses

Angpao Assets Plc plans two new condominiums worth a combined 3 billion baht and will resume development of five projects worth a total of 5.8 billion this year, said CEO Visanu Thepcharoen.

In addition to condominiums, Angpao is developing single houses worth more than B10 million.

The new condominiums would be located on Soi Ekamai where the company is negotiating for a one-rai plot to develop a mid-priced project with units priced from 60,000 baht a square metre.

Another project will be located on Kaset-Navamin Road where it will buy a 20-rai plot for a low-rise condominium with units of 35 sq m priced around 35,000 baht per sq m.

The company will spend 500-600 million baht to buy the two plots. The Kaset-Navamin project will be developed under a new brand, Park Exo, while Ekamai project will be branded Nusasiri Grand Condo.

Mr Visanu, formerly CEO of the developer Nusasiri Group, said the company acquired Thai Durable Group Plc (TDT) last year under a back-door listing.

“We made a shortcut to be listed on the stock market for tax benefits in the long term,” he said.

“TDT had a cumulative loss of 300 million baht so the company would get a tax shield of 30% for this year. The listing also helps the company reduce financing pressure with only dividend payment to shareholders once a year instead of a repayment schedule to service loans from financial institutions.

“We outperformed in the first quarter with more than double the profit required by the Stock Exchange of Thailand. We expect to have 10 billion baht in revenue in 2012 and this will place us in the top five of the development industry.”

Mr Visanu said the company aimed to achieve at least 3 billion baht in presales by the end of 2010 and about 1 billion baht in revenue.

The company has transferred five projects owned and developed by Nusasiri Group to Angpao’s portfolio. They include seven plots in Nusasiri Sathorn-Wong Waen, to be developed for single houses priced above 10 million baht each.

There are also 19 plots in the Nusasiri Sathorn-Pin Klao project for single houses priced 17.5 million baht, and 120 plots on Rama V Road in the Krissana project for single houses priced from 5-9 million baht.

Retail space in the Nusasiri Grand Condo in Ekamai will also be booked in the portfolio and should generate recurring income of about 3-4 million baht a month, he said.

The company also has a 350-rai plot on Rama II Road where it has launched the first phase of a development comprising 57 luxury single houses worth 500 million baht with 20 units sold. Phase two with 80 units and phase three with 100 units will be launched later this year and next year.

Mr Visanu said the company expected to resume trading on the SET in June under the symbol A-PAO. Its financial adviser is Seamico Securities.

To avoid conflict of interest, Mr Visanu plans to sell his Furama Jomtien Beach Pattaya, formerly the Nusa Playa Hotel, into a property fund worth around 3 billion baht. The three-year-old hotel with 600 rooms was financed by Kiatnakin Bank with a debt obligation of 600-700 million baht.

SOURCE: Bangkok Post

The Rise 39

The Rise, located on Soi Prommitr 1, Sukhumvit Soi 39, was launched in 2007 by Thai Nissan Rinkai Mark Co. Limited. The completed 77-unit property comprises two, three and four bedroom homes over seven storeys, with sizes ranging from 99 square metres to 318 square metres.

Property Report understands the investor paid an average of THB55,000 per square metre for the bulk purchase – significantly below the average THB80,000 per square metre being asked commercially. Condominiums were originally priced from THB10.7 million for a two-bedroom unit, upwards to THB34.4 million for one of six Penthouse units.

A spokesperson for the developer was able to confirm a Thai investor had purchased 35 units, but was unable to confirm the price paid nor elaborate on the identity of the investor. She added the development was now sold out.

SOURCE: Property Report.com

The company said there was insufficient supply of rental houses in the city that were purpose-built for foreigners, particularly those looking for a residence in an exclusive housing compound. Providing for this lucrative niche offers an appealing investment option for land holders in the capital.

Daonum Lilavivat, JLL’s head of residential agency, said the company continually receives inquiries from expatriates with family living in Bangkok who are seeking accommodation in small housing compounds with six to seven units, each with 400 to 500 square metres of usable space, good security, estate management and maintenance services.

JLL has been appointed to let houses in several rental compounds where units fetch monthly rentals between 180,000 and 300,000 baht.

“These compounds are leasing out very well,” Ms Daonum said. “In fact, demand for this type of houses outstrips the available supply in the leasing market.”

Although the difference between the monthly rental rates per sq m of rental houses and luxury apartments or condominiums may be minimal, purpose-built rental houses typically generate stable income streams as the minimum lease term is usually two years, compared with one-year terms for condominiums or apartments.

Stand-alone detached houses are less popular due to security concerns. Houses in large estates can fail to attract expatriates due to the lack of exclusivity and the fact they typically lack a single estate manager, she said.

“Given the lack of supply, developing a small housing compound in central Bangkok to accommodate expats may be an interesting investment option, particularly for those who already own land, which they do not want to sell or lease on a long-term basis,” said Ms Daonum.

Plots of at least 300 sq wah can be used to develop such high-end compounds, she said.

SOURCE: Bangkok Post

* Keeps revenue target growth of at least 15 pct

* Plans 17 new housing projects worth over 30 bln baht (Adds details)

By Saranya Suksomkij

BANGKOK, March 2 (Reuters) – Land & Houses PCL LH.BK, Thailand’s biggest home builder, said on Tuesday it expected to report only single-digit growth in net profit in 2010 due to higher costs as government tax breaks expire in March.

It maintained a revenue growth target for the year of at least 15 percent because it is boosting new housing projects to tap rising demand in the middle-class market as the economy improves, company executives told reporters.

“Without the tax breaks, the company will shoulder an additional cost of about 4 percent of sales … Our bottom line will show single-digit growth this year instead of dougle-digit,” said Senior Executive Vice-President Adisorn Thananun-narapool.

It planned to raise house prices after March as it passed on higher costs, and expected an average gross margin in the region of 31.3 percent, slightly better than last year, executives said.

Revenue from house sales would rise 13.5 percent to 19.6 billion baht ($597 million) this year, with sales in the first quarter higher than last year’s as home buyers rush to purchase before the tax breaks end, they said.

Last week, the developer posted a better-than-expected 14 percent rise in 2009 net profit to 3.9 billion baht, boosted by higher sales of detached houses and city centre condominiums [ID:nBAK003000]

Land & Houses, 12.41 percent owned by the Government of Singapore Investment Corp [GIC.UL], taps the high-end and middle-class market. It builds detached houses, town houses and condominiums at an average price of over 5.0 million baht.

According to StarMine SmartEstimates, which predicts earnings by putting more weight on recent forecasts of top-rated analysts, the developer is likely to post a 4 percent increase in 2010 net profit to 4.07 billion baht on revenue of 19.8 billion baht.

Land & Houses planned to spend 6 billion baht on land purchases this year and to sell 17 new housing projects valued at over 30 billion baht, mostly in the capital, Bangkok, executives said.

It would spend another 1.5 billion baht on investment, of which 1.1 billion would go towards a planned capital increase by unlisted subsidiary LH Bank and the rest for its LH Property joint venture.

The developer would sell a combined 3 billion baht in bonds in the first quarter of this year, with a three-year, 2 billion baht bond offering a coupon of 3.0 percent and a 3.6-year, 1 billion baht bond paying 3.4 percent, they said.

At the midsession break, LH shares were up 1.7 percent at 6.05 baht while the main Thai stock index .SETI was 0.94 percent higher.

Government agencies should clarify regulations related to suspended buildings and consult businesses on how to continue construction on a case-by-case basis, says Yodyiam Teptaranon, a former president of the Association of Siamese Architects.

He said regulations of different agencies sometimes conflict and impede further construction. In many cases, investors bought a suspended building to continue development but could not obtain approvals from some agencies.

For example, an abandoned building might have had a permit for factory construction but changed city planning or zoning rules for the site meant the Bangkok Metropolitan Administration (BMA) could not allow new approval.

Mr Yodyiam recommended basing decisions on the city plan if there is a conflict with the Building Control Act.

“There should be a detailed summary of each suspended building remaining in Bangkok. Everyone involved should be asked to clarify their legal concerns so that investors or buyers and end users need not take a risk,” he said at a seminar.

Real estate professionals should educate investors on how to continue, complete and use those buildings.

According to the Real Estate Information Center (REIC), as of January, there were 205 suspended buildings with a total area of 4.96 million square metres, down from 508 buildings with 11 million sq m in 2001. Most were victims of the 1997-98 financial crisis.

Of the 303 suspended buildings where redevelopment occurred, 278 were completed with a total of 5.1 million sq m. Of the completed buildings, 219 were residential, 41 were offices and 10 commercial buildings.

Trairat Jarutat, an architecture lecturer at Chulalongkorn University, said the successful revival of suspended buildings depended on locations that should be close to the central business district or mass transit.

Investors in suspended buildings should also do good marketing, choosing to develop buildings where supply was limited and demand very strong. They should also focus on buildings where at least the steel structures had been completed above ground.

“Projects successfully developed from suspended buildings were mostly developed by developers with similar expertise, or where their usage remained the same,” he said.

However, legal issues and debts incurred by former owners of some abandoned buildings remained a problem.

The REIC survey showed the 205 unfinished buildings comprised 158 residential buildings, 20 offices, 17 commercial buildings, two hospitals, a department store and seven buildings.

It also found 74% of suspended buildings or 152 were located farther than 500 metres from mass-transit stations. There were 24 suspended buildings near BTS stations, followed by others close to the MRT and the proposed Green Line between Mor Chit and Saphan Mai.

REIC director-general Samma Kitsin said many investors acquired suspended buildings and redeveloped them from 2003-06.

“Now that the Interior Ministry announced an amnesty on suspended buildings, the remainder will likely face the same future,” he said.

The ministry last November announced a ministerial regulation providing the amnesty to 178 suspended buildings with expired construction permits granted between Feb 17, 1992 and Aug 7, 2000.

Pinit Lertudomthana, a civil engineer with the BMA’s Building Control Division, suggested investors check construction permits, title deeds and city planning rules for the sites they like.

Veera Visuthiratanakul, a lawyer with the Department of Public Works and Town & Country Planning, said if a construction permit was approved, land use was already approved so city planning rules should not affect a building.

SOURCE: Bangkok Post

While doubts linger about how the property industry will perform this year, the market for used homes should do well because prices of new properties have risen as buyers continue to benefit from low interest rates, said Visit Kunatharakul, managing director of Realty World Alliance Company.

Aside from more attractive prices, the secondary market also offers buyers properties in locations where it is no longer possible to develop new projects, either because the required land is not available or is far too expensive.

Condo fever seems to have swept the second-hand market too. Mr Visit points out that a lot of Thais have overcome their basic desire to own a house and are opting for condominiums instead because of high transport costs and traffic jams.

Clearly from what they are building, developers believe it is small units sized from 35 to 45 square metres that most buyers are looking for, as a first home for one or two people. Later these people might buy a bigger property in a suburban area, but they would try to keep their condo if they can.

Mr Visit said very few developers were building condominiums in the 250 to 350 square metres range these days. The largest units in new buildings are around 100 square metres. Steeply higher prices in the inner city areas, where units cost 120,000 to 150,000 baht square metres, have led to this shrinkage in living space. Also, under Bank of Thailand regulations buyers are now required to put up a minimum 20% deposit if they purchase a new property costing more than 10 million baht.

This desire to own a condo has led to these properties selling very quickly in the secondary market unless they are very pricey units in a project that has not yet sold out.

While buyers continue to like the Sukhumvit and Sathon areas, Mr Visit has noticed that other zones such as Ratchadaphisek, Phaya Thai and the lower sois off Phahon Yothin near Soi Ari have become very popular and the prices are no longer low.

ON THE WATERFRONT: The Victoria Lake View Condominium towers at Muang Thong Thani in Chang Wattana.

These areas have become more attractive because some people are turned off by the large supply in Sukhumvit, which might make reselling their units in the future a lot tougher.

“If we look at Phaya Thai or the early part of Phahon Yothin as well as the area around Siam Centre and Ratchadaphisek, the total number of condominium units is not that high compared to demand,” he said.

Looking back at 2009, Mr Visit said there was steady improvement, from poor sentiments in the first half of the year due to the global economic crisis to an improved outlook in the third quarter. In the final three months, said Mr Visit, the market reverted to normal.

“The market that shrank or perhaps disappeared would be the foreign market, and it is still shrinking today.

“Right now the buying power is actually emerging from Thais.”

He said the main pressure on the property market this year would come from politics, which might affect confidence regardless of whether the buyers are Thais or foreigners.

The supporting factor is the low interest rates and the substantial tax breaks that last until March 27 this year. It is not yet certain whether these incentives will be continued.

Mr Visit has also noticed that those with large budgets are currently quite keen on buying apartment buildings for anywhere from 30 to 200 million baht, because it is easier to run an entire building than owning units in several buildings. Trade in vacant land continues to be good, with developers still securing good plots for future projects. However, industrialists are mostly staying still and not buying additional land. The Map Ta Phut case definitely is behind their stalling and reconsidering further expansion.

This is because the case is not yet clear, said Mr Visit. Those who have already invested will hang in there, but other s who were contemplating investment might decide to scrap their plans and move on. There might also be a relocation of some projects or a reduction in size, he added.

Mr Visit pointed out that while there are a few people interested in buying hotels, hotels here have not had good occupancy rates because of poor global economic conditions over the past two years and the drawn-out Thai political troubles.

“Those who have borrowed a lot of money to build a hotel might now have to sell because the revenue is not keeping up with expenses.”

Because there are not that many buyers out there, only hotels in good locations can be sold now. But this of course also hinges on price.

Realty World also saw an increase in properties that companies put up for sale last year.

“If they have borrowed and their main business cannot service the loan, then they have to sell their assets. These might be non-income generating assets that they had acquired for their future plans but are now selling to ensure adequate cash flow in their business.”

Mr Visit added that these companies were also willing to give more discounts than in normal times.

The property brokerage focused more on the provincial market last year and will continue to follow this strategy this year as it is helping increase revenue.

While it is active in the practically every province in the country, trading has been especially good in Chiang Mai, Khon Kaen and Chon Buri.

Mr Visit said that one should not compare the provincial market to Bangkok because prices in some key areas do not differ significantly from the capital. Even when there is a difference it is usually due to cheaper land values, because the construction cost is the same regardless of where one builds.

The Chiang Mai market in particular has improved markedly and is now attracting both Thai and other Asian property buyers.

“Japanese, Koreans and Chinese like Chiang Mai because it’s cool there and has a very good culture.”

Another big drawing card is that Chiang Mai’s road network has improved greatly over the past few years, with there now being inner and outer ring roads that have opened up new residential areas. The cost of living there is also low, added Mr Visit.

SOURCE: Bangkok Post

“Rules should be rules. Some regulations are not clear enough – like foreign property ownership. Investors want clarity. It builds confidence. Unclearness will obstruct investment,” he said.

As the Thai government aims to make the country a hub for regional offices, Mr McKay suggests the authorities set up long-term plans such as those implemented by Singapore.

“You need to know what type of business you want to attract,” he added. “Pharmaceutical and biotech is a good opportunity to tap but key factors to building a regional hub include infrastructure, the tax system and education.

“Thailand should make a big investment in education to create more jobs and improve working skills. For instance, in the Philippines people can speak English and now it is becoming a rival to India in the call centre business.”

The country also needs more aggressive strategies to compete with other countries and also should differentiate itself from others, he said.

The property market has bounced back and continues to improve in 2010 after a sluggish year in 2009, he said. Colliers recorded a 20% decline in the first half of 2009 but ended up with results on a par with 2008 as the second half was quite strong.

“The situation in Europe was worse but the Asia-Pacific region has come back, pushed by emerging markets like India, China and Southeast Asian countries,” he said.

Colliers and FirstService Real Estate Advisors (FirstService REA) recently announced that they would combine their operations and global real estate services platforms. The combined entity will operate as Colliers International in 61 countries.

FirstService REA is an autonomous subsidiary of publicly traded FirstService Corporation on Nasdaq. With the announced integration, Colliers International is now ranked as the world’s third-largest real estate services firm.

Grade A rents rose 1.5% Q-o-Q but were down 5.4% Y-O-Y from 414 THB in Q 2 2009 to 420 THB in Q2 2009.

We expect that around 348 new apartments units will be completed by the end of 2009. In the same period we expect there to be around 4,845 new condominium units completed raising the total stock of downtown condominiums to 66,376.

Many purchasers of condominium units are “buy-to-rent” investors and the competition between apartments and condominiums for the expatriate rental market will increase.

Many of the new condominium units are small studio and one bedroom units, competition will be greatest for these unit types.

Tenants prefer new buildings and there is a constant turnover of expatriates. The buildings that will suffer will be older apartment buildings that have not been refurbished and older individual condominium units in buildings with outdated common areas and decoration and interiors that have not been refurbished.

In Q3 the number of expatriates holding work permits dropped to 104,267 from 145,493. This was due to the department of employment revising numbers to adhere to the Working Alien Act of 2008. The system for monitoring expatriate work permits was reviewed once before in 2001 with similar results, however rebounded quickly in 2002. We also contacted a number of local international schools in Bangkok who reported steady numbers of expatriate pupils, with no notable changes since Q2.

SOURCE: CBRE