Siri Ventures, a capital venture focusing on full-scale research and development of Property Technology (PropTech), a partnership with Sansiri and Siam Commercial Bank, has set aside a three-year investment budget of THB 1.5 billion to develop innovations for integration into everyday life in the digital age.
Uthai Uthaisangsuk, Chief Operating Officer of Sansiri Plc, said the investment plan includes the development of technology, co-investment with business partners and leading local and international startups.
Meanwhile, Jirapat Janjerdsak, Chief Technology Officer, Siri Ventures, said the current rapid technology disruption and consumer behaviour post a big challenge for businesses, pushing them to learn and adjust to stay relevant in the changing environment. The success of Siri Venture’s technology advance in 2017 has paved way for the connection between Sansiri’s residents and innovative service providers. Its next step is to enhance business capability and introduce new customer experience through three approaches: startup investment, ecosystem partnership, as well as lab and development.
Some THB 7 billion of the investment budget will be spent on acquiring sites for the development of residential projects in 2019, with the remaining THB 6 billion spent on developing commercial buildings, which will generate recurring income to the company, the company’s chairman of the board of directors, Naporn Sunthornchitcharoen, said at a press conference yesterday. He cited a planned hotel and retail project on a 30-rai plot in Pattaya and a mix-used project that combines a hotel, offices and retail space on Sukhumvit Soi 10.
Naporn said that up to 80 percent of the investment would be spent on developing the Pattaya project, with the rest being spent on the project in Sukhumvit Soi 10.
“The mixed-use project on Sukhumvit Soi 10 is worth more than THB 6 billion, but we need to spend funds to pay the rental for the landowners and for the design of the project. Most of the investment will be spent in 2019-20,” he said.
The company’s managing director, Adisorn Thananun-Narapool, said that with the aggressive investment programme, the company planned to issue a three-year debenture worth THB 14 billion this year, with an interest rate of not over 2.4 percent.
After the issuance, the company’s debt-to-equity ratio will be 0.87:1 with its interest rate costs maintained at 2.35 percent a year, Adisorn said.
The company plans to launch 18 residential projects worth THB 36.3 billion this year, with 16 of them in Bangkok and its suburban areas. The other two projects are in Chiang Mai and Ayudhya provinces.
The launches are expected to boost the company’s total presales to THB 31 billion this year, up 19 percent from its presales target of THB 26 billion last year, Naporn said.
The company estimates its rental income this year will climb to THB 3.7 billion, up 19 percent from last year, thanks to its initial success in buying new apartments in the US in November last year.
“We estimate our business will see strong growth this year, thanks to the country’s economic growth likely to come in no lower than 4 percent this year,” Naporn said.
“This follows a strong performance by the export sector and strong growth in tourism. The government is also expanding its investments to develop the country’s infrastructure projects and the private sector has also been expanding its investments since the last quarter of last year.
“This will drive property market growth of up to 10 percent this year, improving from last year, when the market dropped about 14 percent in terms of units compared with 2016.”
In the first nine months of 2017, the company reported total revenue of THB 33.05 billion and a net profit of THB 8.5 billion, up 27.4 percent and 28.78 percent, respectively, from the same period of 2016.
The company has five apartment buildings in Silicon Valley in the US, with a combined 1,000 units. They have an occupancy rate of over 90 percent. The rental price has increased 7 percent this year. This boost its rental income would contribute to strong growth this year, Adisorn said.
“We start our investment in the five years ago with an outlay USD 12 million, but our investments have since increased to up to USD 550 million there,” Adisorn said.
“They are generating high returns each year on our investment. For example, last year we sold one apartment building priced at USD 18 million from our cost of USD 12 million. This generated a return of up to 50 percent within the five years that we bought the building.”
The overall Bangkok property market in 2017 was very interesting, especially in terms of new condominiums launched, with the total of 56,000 units the highest in several years. As well, joint ventures between Thai and foreign developers, particularly Japanese, are shaking up the market, as is the growing number of large mixed-use projects being announced.
Many mixed-use projects are worth watching closely, as they could bring about major changes in the communities surrounding them. Many people are also concerned about the environmental impact of such large-scale projects once they are completed.
The many factors that directly affected the property market will not change much in 2018, although some positive trends are expected to have a positive impact. Economic conditions in 2018 are expected to be better than in the past few years, as key drivers including exports and tourism are showing continuing improvement from 2017. In addition, investment from both the government and private sector is on the uptrend.
While government and private-sector economists are bullish on the prospects for GDP growth of around 4%, consumer confidence and spending may not be as strong as they could be. The chief constraints are high household debt and confidence about the long-term political situation as the country heads towards an election expected late this year.
In any case, activity in the Bangkok condominium market in 2018 should continue to increase from the second half of 2017. Many developers, especially listed companies, still have expansion plans. Total new condominium launches should be similar to last year’s level of 56,000 units, depending on purchasing power and the transfer rate. Bank lending policies will be the key to transfers of many projects scheduled for completion in 2018. If buyers cancel bookings because they cannot secure mortgages, this will directly affect developers and the overall market.
Nevertheless, the overall trend in the condominium market remains the same, with most of the activity concentrated in areas near planned and under-construction mass-transit lines. All developers are looking for promising land plots for new condo projects, particularly those with unit prices between 3 million and 4 million baht each. In addition, some developers are planning to launch high-end and luxury projects in inner Bangkok because they need to diversify their revenue streams.
While developers are also looking at single detached housing projects, activity in this segment could decrease in the future because of the steady rise in land prices. Meanwhile, developers will carefully monitor the condominium market because they don’t want to rely on too high a level of investors or speculators as in some periods in the past.
The average take-up rate for new condominium units launched in 2018 is expected to be 65-70% — or 7-8 points higher than in 2017 when a lot of new projects came on the market — but much still depends on economic conditions and buyer confidence.
Among the other property sectors expected to show growth, the most interesting is office buildings, for which demand has strengthened in the past one or two years. Demand will continue to rise in 2018, but with some 750,000 square meters of space expected to come on the market between now and 2021, demand and take-up could start to ebb if the economy does not perform as expected or politics takes an unexpected turn.
The retail property market may be facing a tough year compared with other sectors, as many tenants have been affected directly by weak consumer spending amid concerns about the economy and politics in recent years. In addition, online shopping is affecting the fortunes of brick-and-mortar retailers, but to a much lesser extent than we are seeing in some other countries.
The number of new retail projects is on a declining trend, particularly community malls, many of which are not as popular or successful as in their heyday a decade ago.
More joint ventures between Thai and foreign companies are in the pipeline, and some significant deals may be announced in 2018, with a rising proportion of Chinese companies involved. The residential market will be the main market for all developers, but they are also looking for opportunities in other sectors, especially those that can generate recurring income.
SET-listed developer AP Thailand Plc and its Japanese partner, Mitsubishi Estate Group, are committed to jointly investing in four new condominium projects worth 23 billion baht this year, mainly to tap the middle- to high-end segment.
The company said Life Sukhumvit 62 will be the first project launched through AP’s “i-booking” online system, scheduled for March.
Over the five years of partnership, cumulative joint venture projects have been valued at 74.4 billion baht, AP said.
AP chief executive Anuphong Assavabhokhin said Mitsubishi Estate remains optimistic about the potential of Thailand.
Their past partnership and consumer acceptance of six existing condominiums have led to success in presales at new projects, raising Mitsubishi Estate’s confidence in working together into the future, Mr. Anuphong said.
“This year, Mitsubishi Estate has more of its specialized team from Japan stationed in Thailand to work with AP’s team to make project approval and execution faster,” he said. “Our business plans with Mitsubishi Estate will go ahead uninterrupted to ensure we can grow by leaps and bounds.
“Last year, AP worked on a larger scale in our joint condominium development projects. Life One Wireless, Life Ladprao and Life Asoke-Rama 9, all three of them contributed to 180% growth in condominium presales from the previous year, which is a cause for great satisfaction for Mitsubishi Estate.”
Shojiro Kojima, managing director of Mitsubishi Estate Asia, also expressed confidence in the potential of the economy of Thailand and the success of the project development with AP Thailand.
“The budget for overseas investment by [Mitsubishi Estate] over a three-year period (2018-20) is ¥400,000 million (11.7 billion baht),” he said. “We have investment plans for the US, the UK, Europe, China, Oceania, and Asean.
“Thailand is one of our main investment targets because Thailand has strong economic growth, which is expected to remain so in the long term, especially in Bangkok. We see an opportunity for income per household in Bangkok, which is increasing every year due to an expansion of the population from immigration. The transport system, which has improved a lot, has also contributed to an emergence of new urban centres. It has made Thai people more mobile with a smaller family size.”
According to Mr. Kojima, Mitsubishi Estate has had a satisfying outcome from its partnership, both in sales and ownership transfers.
As for sales of condominiums under the joint venture during 2014-17, there were 11 projects worth more than 51.43 billion with average total sales of 90%.
Six projects have been completed and are ready for move-in. They are Rhythm Sukhumvit 36-38, Aspire Ratchada-Wongsawang, Aspire Sathorn-Thapra, Rhythm Asoke 2 and two projects for which transfers began in the fourth quarter of 2017: Life Pinklao and Rhythm Rangnam.
Customers have continually accepted ownership of the condominiums, making ownership transfers exceed original projections as a result of collaboration in the development and application of AP Check List, one of the essential tools for controlling product quality, from the design process to intensive improvement of the quality control process.
“We intend to work together with AP to further develop quality condominiums in Thailand for good quality of life in the future,” Mr. Kojima said. “We are looking to develop at least 20,000 million baht worth of further projects with AP.”
The biggest draw of Kawa HAUS is the fact that it is located in T77 Sansiri Town. T77 is a master-planned township developed by Sansiri. Within T77, you have the Habito Community Mall and Bangkok Prep International School.
Once you step into T77, you will see lush greenery, well-planned roads, and serene surroundings. Such living environment within Bangkok is very rare. Thus, this has become a highly desirable place of living for the local Thais and you do find an increasingly large expat community in there as well.
The commute is convenient since the Ram Inthra-At Narong Expressway and the On Nut BTS station are just minutes away.
T77 will have a shuttle bus every 20 minutes from Habito Mall to BTS On Nut.
There are also Big C and Tesco Lotus on the way to BTS On Nut. The On Nut market is also opposite Big C.
Century Movie Plaza located right next to On Nut BTS station will consist of a shopping mall and hotel. The mall will apparently offer local residents a cinema, shops, and eateries. It is still under construction.
Summer Hill is an upcoming new mall located right next to Phra Khanong BTS. It mainly provides brand new and well-known restaurants, cafe’ & dessert shops, convenience store, fitness, educational facilities, wellness shops, specialty store, and services.
If that is not enough, from On Nut, you are, 3 BTS stops to Thonglor and 5 BTS stops to Asoke. Terminal 21, Gateway Ekamai and EmQuatier are all well within your reach.
The Project
Waterfront Relaxing Area. The waterfront relaxation space stretches 150m and features seating and sunbathing areas. It is a refreshing space that allows you to forget about the chaotic world outside.
Kawa Bridge and Bamboo Cabana. Inspired by the body of water nearby, the Kawa Bridge twists and turn. Like natural springs, hot and cold jacuzzi pools help you feel relaxed and freshened up. The kid’s pool is specially designed with the children in mind. You can also lounge and unwind underneath the Bamboo Cabanas, where the wireless mobile charging is available.
Panoramic Double Volume Lounge. The elegance of the lobby lounge owes much to its double volume ceiling. It is perfectly decked out with droplet-like furniture pieces and soothing hues of nature.
Co-Creation Space. Nestled in the midst of a luxuriant bamboo garden is the Co-Creation Space where creativity flows.
Co-Pantry. The co-pantry is next to the co-creation space. It enables you to create new dishes under the farm-to-table concept by making the most of daily fresh organic produce from the farmshelves, which are equipped with the latest shelf-gardening technology.
Actual Show Gallery
Sansiri has got a sales gallery with mock-up of 1 bedroom and 2 bedrooms. For international investors, the units will come fully furnished. Once the property is completed, you can simply bring your luggage and stay!
Here are some photos that were taken.
Is Kawa Haus A Good Investment?
The urbanization of Bangkok is expanding towards the east and On Nut is benefitting from this growth. As the city gets overtly congested and prices in Thonglor-Ekamai continues to rise, people are seeking alternatives that are not too far away.
As a rare gated and guarded community, T77 has already developed a reputation as one of the best place to live.
At the moment, about 50% of the resident population are local Thais, with the rest a mixture of expatriates from various countries.
Hasu HAUS, the first HAUS development that is just a few blocks away from Kawa HAUS was completed in 2016. Till date, Hasu HAUS has seen a capital appreciation of approximately 44% since it was launched in 2014. (Hasu HAUS is fully sold)
Hasu HAUS (completed)
How Much Can I Rent It For?
Nobody will be able to guarantee what the rental market will be like in 3 years time. But for discussion sake, Hasu HAUS is currently commanding an average of THB600- THB650 / per square meter.
Over at T77, the existing developments have witnessed a steady growth in the rental rate of 6%-13% annually over the years.
I feel that this growth trend will continue as there are no comparables in the vicinity. All things being equal, people do tend to prefer renting newer properties.
Conclusion
At an attractive entry price of 3.59MB, you gain access to one of the nicest living environment in Bangkok city fringe. This property should see no lack of rental demand. Or it can also be an ideal holiday home for yourself.
I would not expect spectacular capital appreciation on this property but it is in my opinion that the value will hold and achieve moderate growth in the years to come.
