Minor International Plc (MINT) expects its earnings in the second half of this year will grow by 20% thanks to stronger hotel revenues in the fourth quarter.

Falling oil and food costs, plus easing political tensions, should also support operations, said chief financial officer Pratana Manomaiphiboon.

She said the company was confident of achieving its target of 15% revenue growth and 20% net profit growth.

MINT reported a second-quarter net profit of 351 million baht, up from 230 million in the same period last year, on revenues of 3.8 billion baht, up from 3.1 billion. First-half net profit rose to 1.1 billion baht from 681 million a year earlier, and revenue rose to 8.2 billion baht from 6.8 billion.

The hospitality business contributed 815 million baht in profit, food services 198 million baht, and residential property the rest.

MINT has set a budget of 17.6 billion baht for investment plans in the next five years. The budget allocates 6.1 billion baht to restaurant businesses, 8.5 billion baht to hotels, and three billion baht to the residential segment.

‘’We still have five billion baht for new opportunities,'’ Mrs Pratana said.

In the food business, MINT expects its restaurant outlets in Thailand and abroad will increase to 1,700 in 2010, from 964 now. It aims to open between 50 and 70 new outlets in the rest of this year, including three new The Coffee Club outlets in Thailand. Recently, it signed a 10-year franchise agreement for The Pizza Company and Swensen’s in India.

‘’In the second quarter, The Pizza Company’s average same-store sales dropped 7.2% because promotion and pricing strategies didn’t work. This was the first-ever [decline] for the brand,'’ she said.

Mrs Pratana acknowledged that same-store sales continued to drop 2% year-on-year in July, but had turned around in August thanks to new promotions.

Same-store sales for all MINT restaurants, including Burger King, Dairy Queen and Sizzler, rose 6.2% in the first half, with total store sales up 18.4%.

In the hotel sector, MINT plans to add 657 new hotel rooms to its portfolio with a total investment budget of 8.5 billion baht in 2010. The company operates hotels under the Four Seasons, Anantara, Marriott and Naadhu brands.

By 2010, MINT’s hotel portfolio will rise to 4,296 rooms from 2,700 now, including rooms managed under contract. The company will open the Anantara Phuket within the next two months with 83 pool villas as well as a new hotel and residence in Bangkok under Anantara by the end of the year. The 80-villa Anantara at Baa Atoll in the Maldives will be opened in October 2009, increasing its Maldives properties to four.

‘’Luxury hotels have seen occupancy affected by new competition, but we have hotels both locally and abroad. This will offset the impact if one market is down,'’ Mrs Pratana said.

For the first half, occupancy rates across MINT’s hotels averaged 72.1%, down 0.4 percentage points from the same period last year but outpacing the 62.1% average for the industry. Average daily room rates for MINT’s hotels were up by a strong 18% year-on-year at 6,408 baht, compared with 5% growth to 1,540 baht for the Thai hotel industry.

MINT shares closed yesterday on the SET at 14 baht, down 20 satang, in trade worth 52.58 million baht.

Minor projects 20% H2 profit growth

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‘’It’s our chance to make higher margins. Demand is so strong and we don’t want to miss the market opportunity,'’ he said yesterday.

He added that the company would raise prices despite having locked in construction costs with contractors.

Sansiri plans price rises for 343 units at seven projects priced at an average of 86,000 baht per square metre in the first half of the year, while market prices have been quoted at 90,000 baht.

‘’Higher inflation rates and fuel prices have pushed resale prices of condominium units to almost double in some locations,'’ he said. ‘’New condominiums cannot sell at our prices due to higher construction costs _ so if we sell at the same prices, we will lose the benefits.'’

Mr Srettha added that resale prices at some Sansiri projects had risen to between 140,000 and 150,000 baht per sq m from a 90,000-baht launch price, as the units could be rented at 60,000 baht per month or 1,000 baht per sq m a month _ a yield of 8% to owners.

The seven projects included five in Bangkok: Prive{aac} on Wireless Road with 14 units remaining, Preen on Sukhumvit Road with 17 units, Siri on Eight on Sukhumvit Soi 8 with 3 units, Hive Taksin with 139 units and Hive Sukhumvit 65 with 32 units. The other two projects are in Hua Hin: Baan Nub Kluen with 67 units available and Baan San Suk with 71 units.

Price increases will depend on unit sizes, with penthouse units seeing the highest rise.

By the end of the year, Sansiri also plans to launch two condominium projects with a combined value of eight billion baht in the central business district, as well as seven low-rise projects with almost 1,000 units worth a total of six billion baht in locations including include Bang Na Km 8, Rarm Intra, Prachachuen and Ratchapruek-Chaeng Watthana in the Pak Kret area.

Although in the first half of the year Sansiri lost expected revenue of around four billion baht from its subsidiary Plus Property due to its condominium construction exceeding the legal height limit, the company has not altered its revenue target for the year of 17 billion baht, as it expects this sum be recorded in the second half.

Sansiri last week reported a first-half net profit of 364 million baht, an increase of 208% from 118 million baht in the same period last year, on sales up 6% to 5.87 billion baht. Second-quarter net profit rose 290% year-on-year to 179 million baht, on sales up 15.4% to 3.32 billion baht.

SIRI shares closed yesterday on the Stock Exchange of Thailand at 2.58 baht, down four satang, in thin trade worth 615,000 baht.

Sansiri lifting prices on Oct 1

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The listed developer Supalai Plc plans to launch 10 projects worth 7.6 billion baht in the second half of this year, according to deputy managing director Atip Bijanonda.

The 10 projects are seven low-rise residential units worth 3.93 billion baht and three high-rise projects worth 3.67 billion baht.

Next week, Mr Atip said, the company would launch a condominium on a five-rai plot on Ramkhamhaeng Road, its first phase consisting of 500 units sized from 29 square metres and up and priced from 1.2 million baht.

A 1.88-billion-baht condominium in the Tiwanon area will offer units at prices starting from 1.3 million baht. The third high-rise is the new phase of Casa Riva, worth 610 million baht and offering units starting from 2.4 million baht.

Supalai’s seven low-rise projects will be outside Bangkok at locations including Phuket, Pathum Thani, Rattanathibet in Nonthaburi and Prakasa in Samut Prakan.

As of June 30 the company had a sales backlog of 13.4 billion baht, of which 2.16 billion baht will be transferred in the second half of this year, 4.48 billion next year, 5.2 billion in 2010 and 1.55 billion in 2011.

The company now has 23 ongoing projects with units worth 13.39 billion baht _ 1.81 billion baht worth of townhouses, 4.62 billion baht worth of single houses and 6.95 billion baht worth of condominium units.

Mr Atip said that this year the company also was earning revenue from renting its office building on Rama III Road, but could not achieve the target occupancy rate due to the unfavourable sentiment.

Supalai reported a first-half net profit of 649.3 million baht, an increase of 68% from 386.8 million in the same period last year, on sales up 36% to 3.26 billion baht. Second-quarter net profit rose 160% year-on-year to 476.3 million baht, on sales up 96% to 2.21 billion baht.

Supalai shares (SPALI) closed yesterday on the Stock Exchange of Thailand at 2.88 baht, down six satang, in trade worth 7.57 million baht.

The value of new property projects launched in July was down by 50% from June, according to the real estate consulting firm Agency for Real Estate Affairs.

The AREA survey showed that 21 new projects were launched in July with 3,820 units worth 10.15 billion baht. The greatest drop was in condominiums with only 1,033 units, down by 67.47% from 3,176 units. The value dropped to 3.13 billion baht from 9.07 billion.

The largest drop in value was in townhouses with 1,076 units worth 1.39 billion baht, down 61.7% from 3.63 billion in June.

Significantly, AREA found that detached houses took over the lead from condominiums in July with 1,161 new units (30.4%) worth 4.256 billion baht (41.9% of total value).

The company said fewer new condominiums might reflect high remaining supplies, and increasing construction costs that have hurt small developers in particular.

Launch value down

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Raimon Land Plc is seeking Thai buyers for its unsold condominiums at two sites as the 49% quota for foreign buyers is full.

Henri Young, sales and marketing director, said foreign buyers had taken up their quota at The Lofts Yennakart in Bangkok and North Point in Pattaya. The former has 40 units left while Northpoint is 70% sold.

He said the company had drawn interest from Thais by showing them that the rental yield at The Lofts Yennakart was between 6.3% and 8%. It offers three units under a rent-to-buy programme. At Northpoint, rental yields are up to 11%.

Foreign quotas full - Raimon Land woos Thais

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Investment not linked to SC Asset

The Shinawatra family plans to develop a luxury residential project comprising a hotel, condominium and villas for sale priced at $2-3 million each on a 160-rai plot on Mai Khao beach in Phuket next year.

An industry source said the development was not linked to the family’s property arm, SET-listed SC Asset Corporation Plc.

‘’If SC were to have resort developments in tourist destinations outside Bangkok, it would be over the next few years, not in the next year. This may be the family’s own investment,'’ said SC vice-president Kree Dejchai.

The property consultant Colliers International estimated the project would require an investment of at least 10 billion baht, excluding land cost. The market price for land plots on Mai Khao beach is 10-12 million baht per rai.

Mai Khao is emerging as an attractive area to local and overseas investors as land prices are lower than for other beachfront locations on the island. Patong beach, for example, can command 30-40 million baht per rai and available plots for new development are scarce.

Mai Khao is only a 10-minute drive from the airport and most of the land is still held by local people who do not want to wait for price appreciation.

In the past decade, there was no new development on Mai Khao except for the JW Marriott Hotel. Minor International Plc, which owns the JW Marriott, plans to launch the luxury villa Anantara at rates of 20,000 baht per night next month. By the end of the year, it will develop a four-storey building housing a Villa Market supermarket and high-end restaurants to support its guests.

The family of former Prime Minister Thaksin Shinawatra, who fled to England last week claiming his pending court trials in Thailand would not be fair, bought the Phuket plots through its representatives late last year.

A Dubai-based group also spent US$60 million to acquire 180 rai on Mai Khao from Thai owners and it plans to invest another $250 million to develop a Venice-style hotel.

As well, a Hong Hong-based investor is taking up 380 rai, and a joint venture between local and foreign investors is taking another 100 rai to develop a five- to six-star hotel and luxury villas.

SC Asset, meanwhile, will be sticking to its core business of mid-market residential development in Bangkok for now, according to Mr Kree.

This year the company plans to launch five new projects worth 2.1 billion baht, comprising two single-house projects and three townhouse estates.

After launching Vista Park Vibhavadi 2 early this month, only seven of 37 units remain for sale. The prices of three-storey townhouses range between 5.9 million and 6.9 million baht each. The company plans a similar project in the Chaeng Watthana area to tap rising demand from people working at the new government centre.

SC Asset reported a first-half net profit of 280 million baht, down 10% year-on-year, on sales of 1.91 billion baht, up 17%. Last year, its recorded high profits because of it had extra earnings from investments in three subsidiaries.

SC’s net profit in the second quarter 129 million baht, up 21%, on revenue of 958 million baht, up 34%. Revenue in the second quarter included 757 million baht from sales of units and 199 million baht from rentals.

The company plans to launch a resale service for its customers in order add value for its products.

SC shares closed on Friday on the Stock Exchange of Thailand at 8.00 baht, up five satang, in trade worth 8.73 million baht.

Shinawatra family plans luxury project in Phuket

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A widening bid-ask spread has emerged in major real estate markets across Asia, as property owners, supported by solid market fundamentals, remain reluctant to lower their asking prices, according to CB Richard Ellis’ Asia Pacific Investment Market Report for the second quarter of 2008.

Although Asian markets have been affected by slowing economic growth and unsettled capital markets, financiallysound institutional investors, including pension and sovereign wealth funds, remain active across major cities in Asia, and direct commercial property transactions in Asia were up moderately yearonyear in the first half of 2008, according to the company.

A number of large transactions were completed in Thailand, with the focus squarely on hospitality properties and the country’s major resort markets, where investment sentiment remained robust on the back of sustained growth in the hospitality and tourism sector. Numerous hotels in Phuket changed hands, with some to be renovated and rebranded. Land transactions included the sale of a freehold plot for around Bt1 billion on Koh Siray, and CB Richard Ellis expects this trend to continue as some investors realise sizeable capital gains from holding properties for the past two to three years.

Investment activity in the Bangkok property market, in comparison, was highlighted by the acquisition of a plot of land in Sathorn for Bt1.4 billion by AIA, demonstrating that investors retain confidence in the sector’s prospects. Other notable transactions in the capital included the sale of multiple hotels and commercial properties.

Regionally, Japan continued to attract the most investor interest, accounting for over 30 per cent of Asia’s major investment transactions.

Banks and financial institutions have been curbing lending activities this year in Japan. Highly leveraged investors therefore sought to reduce debt by bringing assets to the market and this resulted in a repricing of residential, suburban retail and fringe offices properties.

However, asset pricing for the best located and highest quality properties remained relatively firm.

Singapore’s investment market turned quieter compared with the preceding year.

However, financially sound investors remained fairly active and a total of Bt321.6 billion worth of investment transactions were recorded in the first half of 2008. Slower global economic growth and a volatile equity market served to cool sentiment in the Hong Kong property market, as overall investment activity was subdued during the first half of 2008.

Owners wary of lowering prices for properties

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The Koh Daeng video was produced by Steve Pigott, who over the past fifteen years has worked with most of the biggest names in the music business; names like Rod Stewart, Cher, The Who, Celine Dion, Cliff Richard, Gypsy Kings, Paul Young, Pet Shop Boys and many, many more… Click here for his full profile.

Private island for sale Thailand

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Kanana Katharangsiporn

Phuket’s property development boom is expanding to four small nearby islands with total project investments of around 20 billion baht, says Risinee Sarikaputra, head of research at property consultant Colliers International Thailand.

“It’s a trend toward private islands,” she said.

“World celebrities, Hollywood stars and people in the ultra high-end segment love privacy and prefer buying a resort on a private island where no one can interfere with them. That’s why many property developers move to small islands.”

She said the largest investment on Phuket’s neighbouring islands is from the huge Indian conglomerate Tata Group’s Taj Hotels Resorts and Palaces on Koh Lone, located on southeastern Phuket near Chalong Bay.

The Indian-based hotel firm is investing almost 10 billion baht to develop Taj Exotica Resort and Spa on 125 rai, comprising a 100-room hotel worth two billion baht to be operated late next year. It will also include 19 villas priced between 128-384 million baht a unit, which is the first time the Taj has ever sold villas.

The second largest is an investment of Prime Minister Samak’s nephew Dilokpol Sundaravej and a Canadian partner that is developing Jumeirah Private Island Phuket worth around six billion baht on Koh Raet northeast of Phuket.

Another investment is on Koh Maphrao where a British investor late last year started developing The Village worth two billion baht. Of the total 62 villas for sale at prices between 18-45 million baht, 17 units are remaining.

This year there will be a development of a hotel and villas worth around two billion baht on a 180-rai site on Koh Mai Thon, southeast of Phuket. The owner is a group of local Phuket investors that are asking for a Board of Investment approval to allow the investment of foreign investors.

Ms Risinee said this trend also emerged in small islands in the Gulf of Thailand, including Koh Kood near Koh Chang where Six Sense opened Soneva Kiri resort. On Koh Tao near Samui an overseas fund will start an investment. and new hotel developments have started on Koh Phangan.

In Phuket, there are at least 17 residential projects in the pipeline with a total of 969 units worth more than 20 billion baht which will be completed in the next few years.

Land prices on Phuket’s west coast with good sea views climbed by 30-40% year-on-year but there is no availability of such plots of land for future development.

Land prices per rai in the western area average 35 million baht while they are 17 million baht a rai in the eastern area. However, the selling price of residential units in the east is about 130,000 baht per square metre while those in the west are 100,000 baht per sq m.

The trend of residential projects in Phuket is for projects integrated with hotels and managed by the same group that manages the hotel and the letting of property.

She added that Phuket tourism would soon vie with the Malaysian island of Langkawi as two new marinas will be added to the current three to offer a total of 800 yacht berths.

“Phuket is having high season all year long as tourists from the Middle East fill in during the low-season period between June and September, a time of hot weather in their region.”

Phuket property is also attracting South Asian investors. Last week institutional investors from Bangladesh and Pakistan with total funds of at least 10 billion baht asked the company to seek Phuket property projects in which to invest, she added.

For more information on our private island near Krabi, click here.

Phuket development shifts to private islands

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Returns of 8.6% are better than forecast average inflation rate for the year

Thai property funds may appeal to investors wishing to beat inflation, as their returns averaged 8.6 per cent over the past 12 months, the highest rate in Asia, experts said yesterday.

The average inflation forecast for this year is about 8 per cent.

Already 20 property funds have been listed since they were approved as an investment vehicle five years ago and 21 are heading for a public offering.

SCB Asset Management will launch two property funds this year, while Kasikorn Asset Management will debut one next month.

The spread between the dividend yield of property funds and the interest rate of Thai government bonds was as much as 3 percentage points, said Yupharet Likitsansuk, vice president for research at SCB Securities Co Ltd.

Currently the return on a government bond maturing in 10 years was 5.55 per cent, he said.

Four out of the existing 20 property funds can generate dividend yields above the average rate, he said.

The Samui Airport Property Fund (SPF), which invested in Samui Airport, returned 10.9 per cent in dividends.

The Future Park Property Fund and CPN Retail Growth Property Fund, which invested in retail property assets, gave 9.8 per cent and 8.9 per cent, while Q House Property Fund (QHPF), which owns office buildings, provided 9.5 per cent in dividends, he said.

While property funds are a good option for investors, their weak point is a lack of liquidity.

Adisorn Sermchaiwong, executive vice president of Siam Commercial Bank, said that if investors need to cash in their property funds now, they might have to sell at a price lower than the funds’ NAVs.

That makes this kind of investment suitable for those who are comfortable with long-term

holdings and satisfied with a re-gular stream of dividends from rental income, instead of capital gains.

Yupharet said the total value of the 20 trading property funds is about Bt53 billion. With 21 funds going through the process for a public offering and the existing funds planning to expand in size, the total value of Thailand’s property funds will rise to above Bt100 billion, he said.

“SCB will launch two property funds which will invest in a distribution centre and a hotel. Besides we will expand the QHPF. Right now the price of QHPF [stock] is about Bt8, which is over a 20-per-cent discount from the NAV, which is Bt10.60,” he said.

What the investor should consider in a property fund was whether it offered a high dividend, how liquid it was and how good was the quality of its real estate assets.

Aliwassa Pathnadabutr, managing director of CB Richard Ellis, said office rents in Thailand were presently about Bt800 per square metre, which was very cheap compared to other countries in Asia such as: Singapore at Bt4,000, Japan at Bt6,000 and China over Bt1,000, while the demand for office rentals was about to reach supply.

“About the investment in the distribution centre, the return will be more secure because of the long-term lease, but if the businesses using the warehouse get into trouble, the property fund will also suffer,” she said.

Tawit Thanachanan, first senior vice president of Kasikorn bank, said that next month a property fund would be offered as a new investment product for customers.

Thai property fund results best in Asia

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