Asia’s real estate markets are outperforming the slowing US and European
markets. The main countries benefiting from this trend have been the larger
markets such as Japan, Hong Kong and Singapore, and there is now an
increasing focus on Thailand, according to a recent report from leading
international property consultants CB Richard Ellis.
Kulwadee
Sawangsri of CB Richard Ellis Thailand (pictured) says property investors
are now looking for “worldwide opportunities.”
Property investment has become a global market with a rapidly increasing
number of cross-border transactions.
“Property markets used to be dominated by local investors but this is no
longer the case. In many ways, property investment has become similar to the
equity markets with investors looking for worldwide opportunities,” said Ms.
Kulwadee Sawangsri, Director of Investment Properties at CB Richard Ellis
Thailand.
Many Asian property markets have performed strongly over the last two years
and international investors now see the possibility of Thailand
outperforming regional competitors.
Last year, office rents in Singapore doubled, whereas there was almost no
growth in office rents in Bangkok. International investors are focusing more
on Thailand because they feel that there is more room for growth.
Investors’ confidence in Thailand has improved because of some of the early
policy measures of the new democratically elected government such as the
removal of inbound capital controls and tax incentives to help the property
sector. An escrow law is also being put in place which will facilitate large
property transactions.
The Thai market is challenging because there are restrictions on foreign
ownership and a scarcity of income-producing buildings available for sale
and so most international investors have focused on new development rather
than the acquisition of existing assets.
High-end Bangkok condominiums, hotels and residential resort developments
have been the most active sectors.
Foreign investors have in some cases formed strategic joint ventures on
multiple projects with a Thai partner. For example, Singapore-based Capital
Land is in a joint venture with Charoen Sirivadhanabhakdi’s TCC Group and is
just completing the Athenee Residence, a luxury condominium on Bangkok’s
Wireless Road.
IFA Hotels and Resorts, listed on the Kuwait Stock Exchange, acquired a
stake in Raimon Land, a Thai publicly listed luxury property developer.
Istithmar, a private equity firm based in Dubai, has agreed to invest in the
W Hotel which is currently under construction in Golden Land’s Sathorn
Square project.
The resort market was also very active last year, with Hong Kong’s PCPD
buying the Thai Muang golf course in Phang Nga and Destination Properties
buying two hotels in Phuket.
CB Richard Ellis believes that, this year, investors will be focusing on
site acquisition for condominiums, offices and hotels in Central Bangkok.
“The mass transit routes have firmly anchored Bangkok’s Central Business
District. There is now a scarcity of development sites in the Central
Business District and strong competition from developers when freehold sites
come on to the market,” added Ms. Kulwadee.
CB Richard Ellis has recently been appointed as sole agent to sell a prime
site on Sathorn Road and already strong interest has been shown by potential
purchasers.
Meanwhile, in Bangkok’s suburban locations, developers continue to acquire
sites for mid-market condominium developments.
Competition will also remain strong for any grade A building that comes onto
the market. This is a rare occurrence in Bangkok, where only three grade A
office buildings have been sold in Bangkok in ten years, and is because
there are relatively few vendors.
Thailand’s resort markets continue to attract investors with the focus being
on development because few existing properties are available for sale.
There are large amounts of both Thai and foreign capital looking for real
estate investments in Thailand. The limited number of buildings for sale
means that many investors will continue to take the development route, with
residential properties (for sale) both in Bangkok and resort locations being
the most popular.
