Phuket development shifts to private islands

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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By Ekarin Bumroongpuk The Nation

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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Source: Bangkok Post

Property stocks have been downgraded to neutral from overweight on the Stock Exchange of Thailand as the result of rising political uncertainties, according to a research report by CIMB-GK Securities (Thailand) Ltd.

The downgrading of the property sector rating was in line with the brokerage’s earlier decision to lower the rating of the Thai stock market to neutral from overweight with a new SET index target of 850, from 950.

The brokerage house kept its earnings forecasts for property stocks under its coverage unchanged but has cut their target prices. The company said it took into account the 10% and 30% cut in its rating of the market and property sector respectively due to rising political uncertainties.

CIMB’s economists also cut the GDP growth forecast for Thailand for this year to 5.3% from 5.7%.

The company continues to believe that major property companies are in a position to meet earnings forecasts for this year due to tax incentives and real demand; cost-savings from tax and transfer fee exemptions; and moderate price increases for properties.

However, it viewed that the outlook beyond 2008 is tougher to evaluate as inflation continues to rise, resulting in a margin squeeze, adding that most developers have prepared for the challenge.

Major developers have been more careful about construction-material procurement and project management in an effort to shorten the business cycle. They have also stressed value engineering for high-quality construction structures, lower costs and lager saleable floor areas.

CIMB believed that the property market should remain one of key vehicles for the government to stimulate the economy and said that tax incentives might be extended for another year or so.

The firm did not expect banks to raise their rates aggressively from now due to risks to loan growth.

Property stocks snubbed

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Koh Daeng is completely undeveloped and uninhabited, sitting off the coast of Krabi. The island is 20 minutes south of Krabi airport. There is a stunning golf course nearby, which has been created from a lithite mine.Krabi is one of Thailand’s most natural tourist zones. Phi Phi island and Phuket can easily be reached by boat from Koh Daeng, which means ‘red island’ in Thai.

The island has a small hill at the top end, with a beautiful white sand beach on one side, and rocky coastline with mangrove swamps surrounding two-thirds of the island. It has its own freshwater resource.

The total area of the whole island is around 500 rai (approx 200 acres). The area zoned for development is about 100 rai, complete with full chanote land title. The buyer would, in effect, be buying the entire private island, as no one else can get access to the land. The island has been owned by the current owner for 30 years.

There is ample water under the island, and a well has already been dug that provides plenty of water year-round to supply a resort. There is also a small dry dock which the previous owner installed to service his yacht. The owner is also offering a further small section of land on the mainland with its own jetty. The island and surrounding area is famous for its deep waters which are suitable for yachting and is a very popular diving area.

We are currently in the valuation process and will have a price in the next couple of weeks along with building regulations. With the Island also comes a private pier and a small piece of land on the mainland adjacent to the island.

The island was untouched by the December 2004 tsunami, as it was sheltered by the large island at the mouth of the bay.

On Google Maps you can find the island (Koh Daeng) at:
Latitude 7°53′7.08″N and 99°3′8.08″E

See Islands for sale

Island for Sale Thailand: Koh Daeng

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As environmental awareness goes from buzz to best business practice, real estate investment trusts at the forefront of the so-called “green” movement could reap long-term rewards.

An earlier adopter of eco-sensitive development and redevelopment, industrial REIT AMB Property Corp. has unveiled a 3 million square foot green distribution facility in Savannah, Ga., and announced plans to provide its customers with renewable solar electricity.

“A lot of our customers now are focused on the issue when a few years ago, green would not be on the top of their list,” said AMB Chief Executive Hamid Moghadam.

Amid higher costs for energy and raw materials, environmentally sustainable buildings often are more cost-effective for landlords and tenants, even after factoring in the premium to build or retrofit buildings.

“These are all businesses. They’re not going green for green’s sake. It’s the cheapest way to run their businesses,” UBS AG analyst James Feldman said. “The two paths of cost savings and ecological sensitivity have finally crossed.”

The McGraw-Hill Green Building SmartMarket report said green buildings can reduce operating costs by 8 percent to 9 percent; increase building values by 7.5 percent, rents by 3 percent and occupancy rates by 3.5 percent; and improve returns on investment by 6.6 percent.

“If it’s not green, in the near future it won’t be considered Class A space. Green is a must-have. It’s the best way to attract key tenants and retain them,” said Doug Gatlin, vice president of market development at the U.S. Green Building Council. The council has set up a building environmental rating system called Leadership in Energy and Environmental Design, or LEED.

Note: LEED Green Building Rating System is a voluntary, consensus-based national rating system for developing high-performance, sustainable buildings. LEED addresses all building types and emphasizes state-of-the-art strategies in five areas: sustainable site development, water savings, energy efficiency, materials and resources selection, and indoor environmental quality.

Long-term gains with ‘green’ REITs

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With the support of the Board of Investment of Thailand and the Tourism Authority of Thailand, The Beaches will be the new shining symbol of the country and will be the benchmark of destination resorts in Asia.

It has also joined with True Corporation, one of Thailand’s largest technology companies, to create Thailand’s first wireless lifestyle convergent communities which will feature state-of-the-art technology throughout the entire project.

The masterplan architect and designers behind the success of The Beaches Resort & Residences are award winning world class design firms – Carl Ettensperger of C&C Studio and Terry Henriksen of Henriksen Design Ltd, who have worked on 5-star hotel projects such as Mandarin Oriental, Hyatt Hotels, Ritz Carlton, Siam Paragon Bangkok, Huvafen Fushi Maldives (2008 Worlds Best Beach Resort, Harpers Bazaar Travel), Hard Rock Hotel – Universal Studios, Florida, and many more prestigious resorts.

Set over 88 rais of landscaped gardens, man-made beaches, and water lagoons, The Beaches private community will have four grand 5-star hotels, stunning water villas and Private Residences. The Beaches Resort has the best of everything – International Waterpark and Surf Park, The Beaches Longevity & Wellness Spa, state-of-the-art fitness club, a Grande Promenade with an international village with over 20 restaurants and retail, tennis academy and a Watersport centre. It is also centrally located in the heart of Thailand in Bang Saray Bay, a tropical oasis – 10 minutes from Pattaya and only 90 minutes from Bangkok

Chairman and CEO of Pacific Shore Developments, Liakat Sultan Dhanji, has been responsible for making the brand a success. According to him, Thailand needs something distinctive if it is going to stand out against the stiff competition developing in the region.

Our sister company, V9 Design & Build, were invited to build the resort’s website and, from initial discussions with Mr Dhanji, ideas were centred on creating an architecture that would concentrate on eMarketing by employing Web 2.0 technologies.

Living in Bangkok, you see glitzy front-page supplements that dominate Thailand’s English dailies, full-page magazine and newspaper colour ads that abound large project launches, and the billboards that predominate the city and Skytrain. We can only imagine the cost of such publicity and its significant impact on a project’s bottom line.

That is not to say that elegantly-produced brochures and local media advertising doesn’t have merit, but it has always seemed to us that it is a sort of marketing overkill — a gunshot rather than rifle approach to project exposure.

For two years or more we have become acutely aware of the benefits of professional blogging: it increases company revenue over time through the marketing and relationship building power. The ability to write effective, interesting, and informative blog posts has proved itself be a highly cost effective option.

It is even more effective when added as a seamless addition to a resort’s website for several reasons. First, Google and the other major search engines like content and change which adds value to a site’s PageRank™; it extends keyword range; it is disseminated to the world’s largest blog directories; and it is accompanied by RSS. Article writing and press releases can be submitted to the world’s largest websites, especially two that are associated with Google and Yahoo.

Over the last few years, search engines have made it increasingly difficult to reach a targeted audience. Gone are the days of mailers, link exchanges and non-industry-related links. Even with ezines, there’s no guarantee you will be read. A great alternative to this is RSS (Really Simple Syndication). It is not a well-known method for companies to publish and distribute content in this format (e.g. publicity releases, news, newsletters and articles). Syndication means you don’t have to visit each site individually to see what’s new — you simply scan headline summaries in a reader and click to read the full text.

We have seen that most real estate projects use Flash technology that presents brilliantly-animated images but fail with their eMarketing efforts because of it. Search engines cannot see beyond the front page. There are two large property developers in Thailand, both of which have projects that have only their home pages listed. Both are poor examples of internet marketing and are therefore spending fortunes on print advertising. In contrast, The Beaches will bypass outdated marketing methods by creating a wealth of exposure, both in Thailand and internationally.

The Beaches, to our knowledge, will be the first large-scale real estate development project in Asia to employ Web 2.0 as its online publicity vehicle.

You can view the project at The Beaches Thailand.

The Beaches Resort & Residences – Thailand’s first integrated resort in Bang Saray Bay, Thailand

Banyan Tree wooing foreigners with offerings of apartments for investment at some of its chic properties in Asia.

The view from the top of the Banyan Tree Bangkok is impressive, reflecting the pricing of the units available, starting close to 25 million baht.

Foreigners sidelined by the condo mania sweeping Bangkok because of lack of financing now have a new option, with Banyan Tree Bangkok offering to lend them 70% of the value of 24 apartments the hotel is now selling.

However, the catch is whether one can afford it _ the cheapest 128-square-metre two-bedroom fully furnished hotel-condo unit costs US$740,000 (approximately 24.8 million baht).

Those with smaller budgets need not lose heart because Richard Skene, Banyan Tree Residences’ assistant vice-president for property, said the company was considering launching fractional ownership of some units. Also possible in future is the sale of studio and one-bedroom units.

The terms of the 24 condo-hotel-apartments for sale are interesting with the 120-year leasehold offered broken down to 30 years allowed by the Thai law plus another three contractual extensions. Buyers are also given a choice of 6% guaranteed return for six years and a share of the revenue thereafter, or the latter option right away. Mr Skene advises that the first choice is probably better because it is risk-free and in a lot of cases higher than the Singapore-listed company’s estimates for returns, which are expected to be 4-5% initially.

However, he stresses that this is a rough guide because Banyan Tree is currently selling properties in five other locations: in Phuket, Lijiang in China, Bintan in Indonesia and the Seychelles.

”We got all the estimates and generally in the beginning it may be 5% but after six year we project it to be 7% roughly. … We have projects in five locations and several different property types.”

Mr Skene also pointed to capital appreciation over time but this is valid for all types of property. On the risk that the hotel might channel more guests to its own units rather than those owned by others, he explained that this does not matter the first six years but after that, in order to avoid conflict of interest, Banyan Tree is offering a fair rotation policy with co-owners allowed to see all the figures.

These details about buying a condo-hotel unit are interesting because investing in this type of property is a relatively new phenomenon, even in the UK where there are only very few such properties for sale. ”It’s a growing trend and we have seen it more in resort property destinations, such as the Caribbean and Asia particularly Phuket,” says Mr Skene. ”There is a company in UK called Guest Invest (www.guestinvest.com) and it’s selling hotel rooms _ and that is quite novel even in the UK.”

However, in the United States where the condo-hotel wave started Mr Skene estimates that up to 20% of all hotel rooms there are now condo properties.

”You are buying a brand so you are getting the guarantee of quality and service and trust and also other benefits.”

At Banyan Tree these lifestyle benefits include 60-day complimentary use, membership in the Banyan Tree Residence Club, access to hotel facilities and discount privileges. ”We offer an exchange programme so if you are in Bangkok you can exchange with the owner of Seychelles.”

Despite this, there are rules that limit co-owners, one being that they are not allowed to rent out their hotel-condo on their own, so Banyan Tree is the only source of revenue. These conditions mean that any buyer of a hotel-condo needs to thoroughly study the contract to make sure of what the price includes, what the obligations are, what benefits accrue and, most importantly, the financing terms.

”You have to be careful because sometimes they may just be managing the building and you have to compare like with like,” says Mr Skene. ”I mean, are you actually buying an apartment within a hotel and is it fully furnished and equipped, what important benefits are you getting?

”You may have a building that is basically managed by a hotel group … and there is no brand to it, so you have to be careful here that you are actually buying a property within a hotel that is used by the hotel.”

Interestingly, the units for sale in Bangkok, with six a floor from the 15th to the 18th floors and now being furnished and decorated, are attracting the interest of Thai buyers, says Mr Skene.

Also noteworthy is that Banyan Tree Lijiang is almost exclusively a Chinese market. He explained that the issue in China is that buyers of these residences and townhouses have to pay in the Chinese currency and foreigners are allowed to import only a certain amount each year. ”It’s a deliberately strict investment in that market. If you have business interests or you live in China or you have Chinese passport you obviously don’t have problem. But most foreigners would find it difficult to get that much money into the country”

It is hardly surprising that Banyan Tree Phuket villas are the most successful and popular, given the resort island’s global fame, but also because sales started in 2002. Properties in Bintan, Indonesia, have gone down well with Singaporean buyers because it is quite close to the island republic. Banyan Tree Seychelles’ key advantage lies in the fact that it is the only one of the five destinations where freehold is offered.

As condo-hotel properties seem to be more successful in resorts, in order to make the Bangkok units appealing, Banyan Tree is offering buyers the right to live there full-time if they wish.

”It’s a city-centre hotel, it’s more corporate and it’s business demand and we recognise that and let people live here,” says Mr Skene. ”They can … use it for client entertainment, use it as a home office and take advantage of all the hotel facilities.”

Another pertinent reason could be that the hotel is competing head-on with its neighbour The Sukhothai, which has announced plans for a high-end condominium attached to the hotel. Aside from this, Rajadamri Residence, a subsidiary of Minor International Plc, too has announced the construction of St Regis Hotel and Residence on Rajadamri Road near the Minor-owned Four Seasons Hotel.

Another entrant is T.C.C. Capital Land, which has plans for a resort-style condotel, North Park Place, located at the Rajapruek Golf Course on Vibhavadi Rangsit Road.

Banyan Tree – A hotel to call home

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By Property Report Staff

Over the past 30 years South East Asian countries have been competing against each other to attract more tourists. Tourism plays an important role in the economy in Asian cities and Thailand has been at the forefront for over 10 years now. However, today the focus is not just on quantity but quality, as other Asian cities- Cambodia and Vietnam join the race. Part of this strategy is to attract investors who are retired or wanting to purchase a second home, according to CB Richard Ellis Thailand.

Retirement and second home investors have become a major component in the tourism and property markets in Europe, Florida and Australia’s gold coast.  These types of models are now being used as a catalyst in South East Asia and competition is intensifying.  However, it is not without obstacles- particularly when it comes to foreign ownership of property, availability of property loans for foreigners and work permits and visas.

Whereas tourism injects the economy with a significant amount of revenue each year, the retirement and second home investors can guarantee multiple visits per year.  The key difference between tourists and second home buyers is their length of stay is significantly longer, which in turn leads to more money being spent on local goods and services.

Thailand in particularly has a wide range of geographical locations for second home and retirement investors.  With attractions areas of developments such as, Phuket, Chiang Mai, Hua Hin, Cha Am, Koh Sumi and Pattaya, more and more people have their sights set on Thailand.  However, Thailand by no means has the monopoly on the market, as competition grows from Malaysia, Indonesia and Vietnam.

Malaysia- Thailand’s biggest competitor has led an aggressive approach in attracting more foreign investors over the past year.  With the launch of their ‘Malaysia My Second Home Programme’ this has provided an attractive outlook for foreigners, in property ownership, property financing schemes and visa structure plans.  In 2006, 8,700 people have successfully applied for the “Malaysia My Second Home Programme’.

James Pitchon, Executive Director of CBRE told property-report “Thailand has strong brand awareness, its quality of living, good transport connections, new products and value money is still attracting even more investors from abroad now.” With countries like Singapore now offering foreign investors 99 year leases and Vietnam allowing foreigners 50-year leases, Thailand is going to have to re-evaluate its land ownership and visa regulations.

The second home and retirement market is destined to continue to expand and flourish in the near future, driven not only by expatriates working in Asia, but also by Asian buyers.

Asia’s second home market

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Source: International Herald Tribune

BANGKOK: The one remaining three-bedroom apartment at The Park, a luxury condominium complex under construction in the heart of Bangkok, goes for $1 million. How about a discount, given the concerns about political stability in Thailand?

“We have no discounts – the price is fixed,” said Kanokrak Rerksopist, a saleswoman, as she showed a visitor around the display unit.

Kanokrak doesn’t need to haggle – Thais, Europeans and other foreigners have bought up all but a handful of units in the 28- and 35-story towers, which are scheduled to open later this year.

This week, foreigners have helped push Thailand’s stock exchange to its highest level since the financial crisis that began here a decade ago, with net foreign buying on Monday and Tuesday of $300 million, according to Keith Neruda, head of Thailand research at UBS Securities in Bangkok.

“I don’t think it was coming in on any specific news,” Neruda said of the sudden cash infusion. “I think it was out there and looking for a home.”

Part of the reason Thailand has continued to attract foreign investment, say analysts, is that fund managers are so preoccupied with finding decent returns on the trillions of dollars they manage that events that once scared them away – bombings, military coups and general political instability – are discounted or glazed over.

Partly because of the foreign money flowing in, the baht has continued its upward march against the dollar, advancing 0.2 percent to 34.19 Wednesday, a level last seen in September 1997.

“Investors have become increasingly insensitive to political risk,” said Frederic Neumann, the chief Thailand economist for HSBC in Hong Kong. “The moment political risk eased a little bit in Thailand, money was just pouring in the door.”

Neumann says a similar thing is happening in Pakistan, where clashes Tuesday between police and supporters of a radical mosque in Islamabad left at least 10 people dead.

“This Taliban-style gang takes control of a mosque and the currency is soaring ahead and the stock market is booming,” Neumann said. The Karachi Stock Exchange index has risen about 38 percent since the beginning of the year.

In Thailand, the political situation is still unsettled. The general who led the September coup, Sonthi Boonyaratglin, has suggested that elections that were promised for this year could be pushed back to 2008. A group appointed by the generals has drafted a new constitution, but the timing and success of a nationwide referendum to ratify it remain in question.

What seems to have cheered investors is the generals’ moves against the man they ousted from power, Thaksin Shinawatra.

In recent weeks, Thaksin’s assets were frozen, he was charged with corruption and he and 110 of his allies were banned from politics for five years.

“It looks like the junta is getting its act together,” said Neumann. “People are starting to look beyond the elections of November or December or whenever.”

Yet the country’s economic outlook is mixed. Thailand’s exports of cars, electronics and agricultural products continue to surge – one reason for the continued appreciation of the baht. But the banking system now has one of the highest levels of non-performing loans in Asia, 8.7 percent, according to Neruda at UBS. By contrast, bad loans account for 2.9 percent of lending in Singapore and 0.6 percent in Hong Kong.

With domestic consumption low, the government hopes to prime the pump with a larger budget deficit planned for next year. Yet much of the increase is in military spending, which may not trickle down into the general economy.

Despite these doubts, foreigners continue to show considerable confidence in Thailand.

From January to May this year, Thailand’s Board of Investment received applications for 123 billion baht, or $3.9 billion, worth of foreign investment, up 35 percent from the same period last year.

Thailand’s main stock market index, largely driven by foreign buying, has risen about 21 percent since the beginning of the year. Foreign investors have bought $3 billion more than they have sold on the Thai stock exchange since January. Thai investors have been net sellers of the same amount.

Foreign tourists continue to arrive in record numbers. From January to April, 5 percent more foreign tourists arrived at Bangkok’s international airport than in the same period last year. In Phuket, the increase was 21 percent and in Chiang Mai, 9 percent. Overall, about 14 million tourists visited Thailand in 2006.

Foreigners continue to buy property in Thailand, despite the prospect that the government will tighten foreign ownership laws.

“There is sustained real foreign interest both in Bangkok and the resort markets,” said David Simister, chairman of the property consultants CB Richard Ellis in Thailand. “If we see an improved political situation, things could jump.”

Buyers, both Thai and foreign, are willing to pay the equivalent of about $5,700 per square meter, or $530 per square foot, at the top end of the market, such as condominiums in the center of Bangkok or facing the Chao Phraya River, he said.

Prices remained relatively stable after the coup, but some developers have added better furnishings to keep sales going. And interest seems to have heightened in recent weeks, he said. “We can report over the last two weeks quite a significant rise in viewing and bookings for units for sale,” Simister said.

Foreign investors unfazed by Thailand’s problems

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Pacific Star International (Thailand) Ltd, a regional real-estate investment firm, and its Thai partners are negotiating a possible six-billion-baht investment in two Bangkok properties, according to assistant vice-president Daniel Ross.

Two properties in the central business district (CBD), an office building and a residential project, are under discussion. However, Mr Ross said, it was still too early to indicate whether both sides could conclude the deals.

Pacific Star, with headquarters in Singapore, manages several property funds, including the 500-million Asia Real Estate Income Fund (AREIF) and the US$600-million Baitak Asia Real Estate Fund along with Kuwait Finance House.

Besides Bangkok, the group has offices in Kuala Lumpur, Singapore and Shanghai. It plans to open more sites in Beijing, Sydney, Seoul, Tokyo and Mumbai.

Each office sends investment proposals to the parent company, which then allocates funds from a pool of regional resources. In Thailand, the company wants any CBD properties to earn an internal return rate of 15-20% and a yield of 8-9% per year.

Urasate Navanugraha, an asset manager for Pacific Star International (Thailand), said investments in Thailand must be more selective due to the country’s economic and political uncertainties.

He said the group still saw Thailand as an attractive place with more investment opportunities than Singapore, where local developers already have a strong foothold.

The group has already invested five billion baht in two projects in Thailand through the ARIEF. It will soon launch sales of 350 units in the Sathorn Garden condominium on Sathorn Road near the Malaysian Embassy, at prices between 90,000 and 100,000 baht per square metre.

Its other project, RS Tower Thong Lo, will be developed into retail space. The total sales value of the two projects is about seven billion baht.

Mr Urasate said Pacific Star had no set minium investment size, as it depended on whether the company was buying empty land, distressed buildings or company shares.

”If it is an investment in a residential project, the size should be about two to three billion baht because the company focuses on high-quality projects in prime locations in the CBD,” he said.

Pacific Star in talks to invest in Bangkok

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