Bangkok condo project offers first buy-back guarantee scheme in region

Source : Channel NewsAsia - 25 Mar 2009

Two Singapore-listed developers are offering a buyback scheme for a new condominium project in Bangkok.

Under the deal, buyers who are not satisfied with their units at The Surawong can sell them back to the developers at 95 per cent of the purchase price.

Developers Tee International and Hup Soon Global are launching the project in Singapore on Friday.

The Surawong comprises 52 freehold units, ranging from 40 to 80 square metres in size. Prices start from S$195,000.

The construction of the condominium is now underway, with occupancy scheduled for early 2010.

The buyback scheme is believed to be a first for the Singapore property industry.

Property consultant Savills said more may be in the pipeline.

Bangkok home prices may fall 10%

Source : Business Times - 21 Feb 2009

Resort area and luxury sector transactions grind to a halt as foreign buyers continue to disappear

BANGKOK’S residential property prices will fall by 10 per cent this year, while resort area transactions have ground to a halt, but domestic political turmoil may have prevented a market crash, experts say. Foreign buyers, who account for around 30 per cent of Bangkok’s condominium market, continue to evaporate, leading developers to cut prices as luxury sector transactions stall. But prices will not implode by the same extent as in Singapore and Hong Kong.

‘In the past couple of years we viewed Singapore’s booming a market with some jealousy as local politics here dampened prices,’ said David Simister, chairman for CBRE Thailand, Cambodia and Vietnam. ‘But we’re now thankful that we’ve avoided the subsequent spike and crash.’

CBRE has seen a significant slowdown in transactions in the 17 off-plan projects it represents in Bangkok.

Robert Collins, managing director, Savills Thailand, said that there will be a ‘flight to quality completed projects’, and that preventing oversupply is crucial in preventing a price crash.

‘A lot of what’s being marketed is off-plan,’ he said. ‘It would be very healthy for the market for these developers to postpone or shelve their plans until existing projects have reduced their inventory. This would prevent a huge surge in the current oversupply, which would inevitably lead to a market depreciation if it took place.’

However, Bangkok prices will still drop by 10 per cent this year, said Thaninee Satirareungchai, property analyst, KGI Securities (Thailand). Early sales by investors and speculators, who account for about 20 per cent of Bangkok’s condominium market, are taking place, but there is little evidence of distress selling, she said.

‘The current situation is simply mute transactions, there’s no real distress selling as in the previous 1997 crisis.’

Bangkok-based property broker Harrisons said its condominium sales in Bangkok had recovered slightly from an exceptionally low base last quarter, which was down 70-80 per cent on the first nine months of 2008. While condominium developer Grand Unity Development slashed prices at a Bangkok project by 20 per cent to boost sales before completion this July.

Luxury property prices will be the hardest hit, but cheaper projects will continue to sell, said Ms Thaninee.

‘Pacific Star, a Singapore-based property company, still works hand-in-hand with Asian Property Development for mid-to-high-end condo developments in central Bangkok.’

‘Overall, the condo market in Bangkok would be fine as most projects are not high-end segment and, therefore, not dependant on foreign investors,’ she said.

Experts said sales in resort areas like Phuket have ground to a halt.

CBRE saw its Phuket residential transactions slump by more than 60 per cent year on year from January to four, despite making record sales in the first 10 months of 2008.

‘Phuket missed its high season last year which has led to very disappointing sales,’ said Mr Simister, ‘but we still maintain our view that the residential villa and property market remains strong in terms of long-term demand.’ Mortgage approvals continue to decline but housing loans will still grow by 6.8 per cent this year to 1.69 billion baht (S$72.7 million), down from 7.8 per cent growth in 2008, said Kasikorn Research Centre. More cautious lending could benefit lower-risk borrowers as intense competition in the loan market will see some banks build market share through refinancing by offering aggressively favourable interest rates to existing borrowers, it said.

Weakness seen in Bangkok luxe condo market

THE luxury condominium market will dive next year as the global economic downturn continues to dry up the much-needed pool of cash-rich foreign investors, local property analysts said.

They predict that luxury condominium prices would drop by 10-20 per cent in the first half of 2009. Current high prices will stifle local demand, as the domestic political turmoil undermines investor sentiment, they said.

Despite Bangkok’s luxury condominiums being relatively cheap - at around 100,000-150,000 baht (S$4,300-6,500) per square metre (psm), 8-12 times less than a similar property in Singapore or Hong Kong, according to Jones Lang LaSalle Research - demand has dropped off, analysts said.

‘Luxury condos depend on foreign buyers. With the global downturn, there are no buyers left,’ said Thaninee Satirareungchai, property analyst, KGI Securities (Thailand).

‘The price of the physical property should be corrected down by at least 15-20 per cent next year.’

UOB Kay Hian (Thailand) expects sector prices to drop by 10-15 per cent to stimulate demand from Thai buyers, who tend to opt for luxury single-detached houses rather than condominiums.

Thai law prevents foreigners from buying land, but they are allowed to purchase up to 49 per cent of the saleable space in a condominium, hence the sector’s dependence on overseas investors.

A fall will provide investment opportunities for bargain hunters, said Veena Naidu, head of research, UOB Kay Hian (Thailand).

‘I think the prices will bottom out before Q2 next year,’ she said. ‘Projects that were launched 18-24 months ago are being completed and coming onto the market now, so investors still have time to survey the market.’

CB Richard Ellis (Thailand), a leading realtor, said that predictions of an across-the-board sector drop were inaccurate, and that it had seen no evidence of falling prices in existing luxury properties.

It said that current resale values at projects such as the TCC Capital Land Athenee Residence remained at 125,000-150,000 baht psm.

Projects being sold off-plan will be affected by the decreasing pool of foreign investors and are likely to lower their prices, said James Pitchon, executive director, CB Richard Ellis (Thailand).

‘Some luxury projects increased their notional prices after units at the Sukhothai Residences sold at an average of more than 200,000 baht psm. But a number of those developers were not able to sell at the recalibrated prices.

‘We expect a return to the pre-Sukhothai prices, where developers that upwardly adjusted their prices revert to what they were six months ago.’

The biggest factors in Bangkok’s surging luxury property prices were rising land and commodity costs, he said. While the price of crude has dropped, said Mr Pitchon, the value of Bangkok’s CBD land was not contracting, adding that plunging commodity prices were unlikely to affect the sector in the next two years.

‘Commodity prices have fallen, so in theory new construction costs will also fall. There will be very few, if any, new projects launched in the next 24 months, so we are not going to have competing products with the new lower construction costs.’

Source : Business Times - 9 Dec 2008

Hup Soon Global in Thai property venture

Source : Business Times - 25 Sep 2008

Catalist-listed Hup Soon Global Corporation Ltd, a seller of automotive aftermarket products, agriculture equipment, industrial supplies and material handling equipment in South East Asia, said on Thursday it was teaming up with a local partner to redevelop its Thai property in Bangkok.

Its Thai-based associate United Motor Works (Siam) Public Company Limited (UMWS) has entered into a joint venture agreement with Chewathai Limited (CWT) for the redevelopment of UMWS’s property on Surawongse Road in downtown Bangkok.

The joint venture company Chewathai Hup Soon Ltd (CHS) will be funded initially with THB 1 million equally shared between the partners.

UMWS and CWT will both own CHS equally.

As part of the terms of the joint venture, UMWS will inject the land into CHS while CWT will invest THB 84million cash - this will go towards funding construction costs with any shortfalls to be funded by bank borrowings.

The debt/equity ratio of CHS will be kept low, and this will allow it to ride out any uncertainties in the Thai property market.

The building to be redeveloped was acquired in 1955 and was used originally for the UMWS operations before moving its operations to its current premises in Rangsit, in North Bangkok, in 1994.

Since then, the building has been rented to third party tenants for office space with all tenancies expiring last year in preparation for a redevelopment. The building, which is currently vacant, sits on a 961.2 square meter freehold site, and is free from encumbrances.

The building will be redeveloped into a fully-furnished, luxury condominium block consisting of about 52 units ranging from 43 to 72 sqm called The Surawongse by Chewathai Hup Soon. Amenities include a swimming pool, fitness centre and multi-purpose room.

Hup Soon Global in Thai property venture

Source : Business Times - 25 Sep 2008

Catalist-listed Hup Soon Global Corporation Ltd, a seller of automotive aftermarket products, agriculture equipment, industrial supplies and material handling equipment in South East Asia, said on Thursday it was teaming up with a local partner to redevelop its Thai property in Bangkok.

Its Thai-based associate United Motor Works (Siam) Public Company Limited (UMWS) has entered into a joint venture agreement with Chewathai Limited (CWT) for the redevelopment of UMWS’s property on Surawongse Road in downtown Bangkok.

The joint venture company Chewathai Hup Soon Ltd (CHS) will be funded initially with THB 1 million equally shared between the partners.

UMWS and CWT will both own CHS equally.

As part of the terms of the joint venture, UMWS will inject the land into CHS while CWT will invest THB 84million cash - this will go towards funding construction costs with any shortfalls to be funded by bank borrowings.

The debt/equity ratio of CHS will be kept low, and this will allow it to ride out any uncertainties in the Thai property market.

The building to be redeveloped was acquired in 1955 and was used originally for the UMWS operations before moving its operations to its current premises in Rangsit, in North Bangkok, in 1994.

Since then, the building has been rented to third party tenants for office space with all tenancies expiring last year in preparation for a redevelopment. The building, which is currently vacant, sits on a 961.2 square meter freehold site, and is free from encumbrances.

The building will be redeveloped into a fully-furnished, luxury condominium block consisting of about 52 units ranging from 43 to 72 sqm called The Surawongse by Chewathai Hup Soon. Amenities include a swimming pool, fitness centre and multi-purpose room.

Bangkok to see ‘Lehman effect’, but no fire sale

Source : Business Times - 25 Sep 2008

AMERICA’S financial crisis and the Lehman Brothers bankruptcy will dampen Bangkok property prices, a leading economist said yesterday.

Lehman’s went bankrupt on Sept 15 with 50 billion baht (S$2.1 billion) of assets in Thailand, 80 per cent of which was in property.

Any related sell-off of its assets is likely to devalue the market, which - combined with the drying up of global credit and foreign capital - will cause prices to drop, economists say.

‘Lehman has invested a lot of money in the property sector and it will now have to sell those assets, indirectly causing a decline in prices here,’ said Chulalongkorn University development economist Sompop Manarungsan. ‘Prices may drop 20-30 per cent in Bangkok.’

International investment funds active in Bangkok property have driven prices out of the reach of most Thais, he said, but prices will drop as developers are forced to sell locally as foreign investment dries up.

‘Luxury developments will be the first to be affected because so much of their investment comes from outside the country,’ said Dr Sompop. ‘If they are overpriced, they will have to be adjusted.’

While delays in selling Lehman’s local assets could drive down property prices, any negative effect is likely to be temporary, said Thailand Development and Research Institute research director Somchai Jitsuchon.

‘If these (Lehman’s investment) projects need to slow down, or their values are suppressed as a consequence of a ‘fire sale’, the general property prices might also be affected,’ he said.

‘These things depend on whether there will be new buyers, and when the buyout is complete. If Nomura really takes over all of Lehman’s assets in Asia, that might prevent serious negative consequences.’

Thai property prices are also exposed to a potential ’second round’ effect of the global liquidity dry-up, which could restrict foreign capital inflows into the market, he said.

However, KGI Securities (Thailand) property analyst Thaninee Satirareungchai said a fire sale is unlikely as Lehman Brothers invested in high-quality projects.

‘It won’t affect prices here that much,’ she said. ‘If there is a sell-off, it won’t be a fire sale. Most developers that have enough cash (to buy the assets) are interested in taking over the property themselves.’

While super-luxury developments are more exposed to the crisis due to the strong reliance on foreign investment, the impact will not be significant, she added.

One property developer, which Lehman is directly invested in, said it faced no exposure to the crisis.

‘Lehman Brothers did have a 25 per cent stake in The River development but it has already been fully paid up,’ said Raimon Land CEO Nigel Cornick.

4 Ascott projects opened this month

Source : Business Times - 17 Jun 2008

THE Ascott Group said yesterday that it opened four new serviced residence projects - one each in Australia, Vietnam, Thailand and Qatar - in the first two weeks of June.

The properties are Somerset St Georges Terrace in Perth, Somerset Hoa Binh in Hanoi, Citadines Sukhumvit 8 in Bangkok, and Somerset West Bay in Doha.

The projects are on top of two properties Ascott opened earlier this year: Ascott Guangzhou and Somerset Emerald City, Suzhou.

Ascott president and chief executive officer Jennie Chua said the group has five other properties scheduled to open this year in Bangkok, Chennai and Singapore.

The new properties will consolidate Ascott’s position as the world’s largest international serviced residence owner-operator, she said.

Somerset St Georges Terrace in Perth has 84 units and is in the heart of the business district. It is within walking distance of many restaurants, cafes and boutiques, and is just one street away from the Perth Convention Exhibition Centre.

The 206-unit Somerset Hoa Binh, Hanoi is part of a mixed development comprising an office tower and a retail podium. The property is in Hoang Quoc Viet Street, Cau Giay District - a 10-minute drive from key commercial and civic districts. It is also close to the Hoa Lac high-technology development zone and Thang Long Industrial Park.

In Bangkok, the 130-unit Citadines Sukhumvit 8 is five minutes from the Nana Skytrain station.

The 200-unit Somerset West Bay project in Qatar is in the heart of Doha’s diplomatic area where ministry headquarters, embassies and consulates are located. The property is next to the Qatar Financial Centre and adjacent to the City Centre Shopping Mall, one of Qatar’s best-known shopping destinations.