Bangkok Real Estate

The company’s chief executive officer Alan Lin said that property prices, especially for city condominiums could rise up to 20 per cent in a couple of years time due to increase in cost of land. However, he said, they are still priced at an affordable level, especially compared to many countries in the region such as Singapore and Indonesia.

“It’s not a surprise now to find a condo unit in downtown area that could cost up to THB 100,000-200,000 (US$ 3,080-6,160) per square metre. The city condo price has increased 5-10 per cent from last year and I’m sure that it could go up more in the years to come”.

Lin also had similar views towards land prices. “Since 2006-2008 land prices in popular locations in Bangkok like Silom, Sathorn, Ploenchit, and Sukhumvit have increased up to 50 per cent

Despite that fact, Lin is confident that demand for properties in prime locations will remain high.

In Q3, Lin said the company will be adding 10 new projects worth about THB 12 billion (US$ 370 million) into its portfolio, all of which are located in the prime area of Bangkok. It also plans to launch the sales of another 10 new projects, worth over THB 6 billion (US$ 185 million), during the remainder of 2010.

The country’s second-largest developer has already spent 4 billion baht on new land aquisitions in the first four months of the year.

Pruksa president and chief executive officer Thongma Vijitpongpun said the firm would invest more in land acquisition even though there was no clear end in sight for the country’s political problems.

“If they [the political problems] prolong as long as the end of the year without any violence, we will continue investment and maintain our business target and expansion plans,” he said yesterday.

The developer plans to launch 32 new projects, worth a combined 25 billion baht, by the year-end.

By June, Pruksa will launch three new condominium projects worth a total of between 5-6 billion baht. They will be located on Soi Aree, Soi Suan Phlu and the Saphan Taksin area, with unit prices starting from 2.2-2.9 million baht a unit.

Mr Thongma said the new condominium projects would help boost the firm’s presales in the second quarter to be on par with the first quarter despite expectations that property sales would be poorest during the current quarter.

Pruksa recorded first-quarter presales of 8.58 billion baht, the highest in its history. It also launched 17 projects worth a combined 8.79 billion baht.

To date Pruksa has a sales backlog of 17 billion baht — with 5 billion to 6 billion baht to be realised in the second quarter and a total of 10.9 billion to be realised within the year, said Mr Thongma.

The company expects the expiry of property tax incentives at the end of this month to impact on its net margin by at least 3%, but tax privileges under the Board of Investment’s home programme will increase Pruksa’s margins by one percent this year.

As a result, the company’s net profit margin would not fall below 16% for the whole year, he said.

Pruksa yesterday reported first-quarter net profit of 1.23 billion baht, up by 79% year-on-year but down by 25% quarter-on-quarter, on sales of 6.67 billion, up by 76% year-on-year and down by 14% quarter-on-quarter.

The company plans to issue debentures with a maximum value of 2.5 billion baht with maturity of between three and five years to fund business expansion and an investment of one billion baht in a precast factory. Bangkok Bank, Kasikorn Bank and CIMB Thai Bank would be the underwriters.

PS shares closed yesterday on the Stock Exchange of Thailand at 15.7 baht, up 60 satang, in total trade of 82.58 million baht.

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From the research firm Real Binswanger Brooker (Thailand) shows that the price for converting specific areas Ploenchit center of town past the violence of 2008 as developers, such as SIRI, Raimon Land and Central Group invested significantly for converted safety only. Future development and investment in the distribution of critical view of their business.

To protest in March this year the number of record of the events two high value placed belying air political current that has seen violence on the streets add to the opposition ‘red shirts’ in Parliament will be dissolved and the election of a new call. that

Company indicated that the purchase by SIRI’s conversion meters 3,200 square adjacent to residential diplomacy American Road Price: $ 36 million set new record for land prices in Thailand, confirmed that the site CBD will grow rapidly in value because of the lack of them.

Research published today by real estate company Binswanger Brooker (Thailand) revealed that
prices of prime plots in the central Ploenchit area of the city have risen by 88 per cent since 2007 as listed developers such as Sansiri, Raimon Land and the Central Group invest heavily to secure prime plots for future development. Major local investors are also looking to diversify from their core businesses, the report says.

In 2006, Tiang Jirathiwat Co., Ltd, a subsidiary of Central, purchased a nine rai site in front of the British Embassy for a price approaching THB1 million per square wah. This was followed by Raimon Land Park View Development Co., Ltd, a Raimon Land subsidiary, securing a prized four rai plot (the site of the 185 Rajadamri development) at a cost of approximately THB800,000 per square wah in 2007.

In 2008 Ploenchit Residence Co., Ltd, a joint venture with Raimon Land and Dubai-based IFA Hotels and Resorts, invested again, paying approximately THB1.2 million per square wah for a prime nine rai plot in Ploenchit shortly before the global financial collapse.

March 2010 saw unprecedented amounts of activity, with two high value transactions taking place. A plot a little under three rai (1,105.7 square wah) next to Wave Place on Wireless Road was bought by Thai Summit Grand Estate for THB1.2 million per square wah. The company is understood to be planning to build a hotel on the site.

Also in March, the purchase by Sansiri of a two rai plot adjacent to the American ambassador’s residence on Wireless Road for THB1.5 million per square wah set a new record for land prices in Thailand, according to the research, and confirmed that sites in the central business district of the Thai capital are rapidly growing in value due to their scarcity. Nowhere is this more apparent than in the Ploenchit district.

Binswanger Brooker (Thailand) Chief Executive Officer, Nigel Cornick, said that a limited supply of freehold land combined with high demand for central locations was driving prices up, even during the current political impasse.

He said: “There is very strong demand for compact but high-end residential condominiums in downtown locations from the domestic market, which is boosting land values as suitable plots are increasingly few and far between for developers to purchase. Some developers also plan to construct hotels on the prime plots, which further demonstrates that this is an asset class that local investors still have confidence in.”

Mr. Cornick added that prices would continue to rise sharply, and one of the reasons for the flurry of activity in recent months was due to the withdrawal of the transfer fee, stamp duty and business tax exemption on the newly revised date of May 31.

“The resale value of this category is also high as this aspect of the market matures, which is another factor drawing local investors to this product. We expect this positive outlook for these areas to very much continue in the future as values rise. It is also good news for Thailand generally as this research indicates the property market remains healthy despite the exposure Bangkok has to current political activities,” he said.

Mr. Cornick added that with land values for freehold plots increasing, there was a likely knock-on effect for leasehold sites that would also increase in value, with major benefits going to the Crown Property Bureau who have significant leasehold land holdings in prime central areas of Bangkok.

Investors seeking cheap land cannot bargain as they did earlier as the economy is set to improve next year, said Sahatchai Kwancheun, an executive-director of the property broker Harrison Plc.

Recovery would therefore slow land acquisition activity in 2010, he said.

Early in the year, some investors bought land for property development and speculation as they had plenty of room to negotiate prices, which reportedly dropped about 20% from the peak.

Most of the buyers are low-profile but cash-rich investors including Indian-Thai investors, small-sized local developers and non-property-related businessmen who have capitalised on cheaper land to enter the property sector.

Buyers who picked up land cheaply early in the year will start launching projects from the end of the year until early 2010, said Mr Sahatchai.

Next week, the developer Pool Asset Co, for instance, plans to launch a condominium on Phetchaburi Road with Century 21 as a consultant and sales agent. The new property firm One Property Development has also launched a condo project at the current House & Condo Fair.

Kitisak Jampathipphong, chief executive of the property brokerage Century 21 Realty Affiliates (Thailand) Co Ltd, said land prices in good locations, especially near mass-transit systems, have risen in the past two months.

Despite the slowdown, landlords with plots in good locations are rarely open to bargaining as they believe good plots are always sellable, he said.

Bangkok land is now going almost at asking prices, or about 5% above market prices, said Mr Kitisak.

* Published: 3/10/2009 at 12:00 AM
* Newspaper section: Business
Writer: Kanana Katharangsiporn
Position: Business Reporter
BangkokPost.com