by kevinyeo | Sep 10, 2018 | News
With relatively high down payments and more attractive gains and investment yields than those available in their home countries, foreign buyers are unlikely to shed their Bangkok condo units any time soon, say property analysts, developers, and other experts.
Therdsak Thaveeteeratham, executive vice-president for the research division at Asia Plus Securities Co, said concerns over the transfer of condos sold to foreign customers will be minimal since most off-plan projects ask for a high down payment from these buyers.
“We should rather be worried about Thai speculators, as off-plan condo projects usually collect a down payment of 5-10% of the unit price from Thai buyers,” Mr. Therdsak said. “They collect as much as 30% from foreigners.”
Tritecha Tangmatitham, managing director of SET-listed developer Supalai Plc, said the company collects a higher down payment from foreign buyers who book a condo at an off-plan project than from Thai customers.
“High down payment collection can minimize risks,” Mr. Tritecha said. “Buyers are unlikely to refuse to get a unit transfer when construction of a project is completed, as their payment is quite high.”
Supalai collects a down payment of 25-30% of the unit price for an off-plan condo unit from foreign buyers, compared with 15-20% collected from Thai buyers.
Down payment for Thai buyers is a series of installments, paid monthly for a certain period in line with construction time. For foreigners, down payment is a one-time sum of money on a booking date, as this is more convenient. The rest will be paid in the transfer period.
Supalai began applying these rules to foreign buyers in the past two months after the company was approached by an overseas sales agent earlier in the year about a new condo project near Sukhumvit Soi 117.
Phattarachai Taweewong, senior manager in the research department at property consultant Colliers International Thailand, said foreigners buying condo units in Bangkok are mostly investment buyers.
“Bangkok condos will become more popular among buyers from overseas, particularly those from Hong Kong and Singapore, as they have cooling measures in place on property purchases in their countries,” Mr. Phattarachai said.
This situation will both shift new buyers’ interest from these destinations to Bangkok and retain existing foreign buyers to continue their investment in Bangkok condos, he said.
In popular tourist destinations for foreigners, like Phuket and Pattaya, the foreign quota of 49% of the total saleable area is full at many condo projects. If a foreigner wants to resell, there are always new foreign buyers eager to step in.
“In Phuket and Pattaya, some developers whose condo projects have a full foreign quota offer foreign customers a long-term leasehold for the remaining 51% under the Thai quota that cannot be sold to foreigners,” Mr. Phattarachai said. “Though it may not be worth it to do so when compared with a freehold sale, developers need to do it because the Thai buyer market is weak.”
Since last year, there is growing interest from buyers from mainland China in property in Japan and Southeast Asia, specifically Thailand and Vietnam, according to financial consultant UBS.
Key reasons include recognition of China’s One Belt, One Road programme and the substantial infrastructure investment it entails, together with attractive pricing.
The flagship Eastern Economic Corridor is expected to attract more foreign experts and researchers to Thailand, given the significant tax breaks for companies and individuals — an arrangement that could lead to additional foreign buying of property.
Also, Thailand benefited from 35.4 million tourist arrivals in 2017, with Chinese arrivals up 400% in the last five years, leading to more second-homes bought by foreign buyers, UBS said.
Sansiri had the first-mover advantage, while AP Thailand focused on capitalizing on foreign buyer interest. In conversations with these two developers, UBS said foreign presales continued in an uptrend in 2018.
According to Sansiri, foreign presales totaled 3.1 billion baht in the first four months of 2018, up 11% from the same period a year earlier and on track to meet full-year guidance of 13 billion baht.
Sansiri said 80% of the buyers were from Hong Kong and mainland China. The desirable price point continued to be 160,000-170,000 baht per square meter.
AP painted a similar picture, noting a pickup in foreign interest. The developer’s new condo project in the Asok-Rama IX area launched in the fourth quarter of 2017 and was 30% sold to foreigners, mostly Chinese.
The proportion of sales to foreigners is up significantly from 10% on average in 2016. The average selling price of the AP project was 130,000 baht per sqm or 4 million baht per unit.
Vittakarn Chandavimol, chief of the condo business group at AP, said the company recorded 9.7 billion baht in condo presales last year from foreign customers, up from just 80 million baht in 2015.
“Bangkok condos attract foreign investors because they generate higher capital gains than those available in their home countries,” Mr Vittakarn said. “In Hong Kong, the maximum annual yield from property investment is 2.5%, while a Bangkok condo can generate 5-6% a year.”
According to Bangkok Citismart, a property agency firm owned by AP, the average price of newly launched condo supply in the middle- to the high-end segment in locations attractive to Chinese buyers continues to rise.
In the first quarter of 2018, the average price of a new condo in the Asok-Rama IX-Ratchadaphisek area, the most popular location among Chinese, rose by 46% to 185,000 baht per sqm from 126,915 baht in 2013.
The sales rate of condo supply in this area was also high, with 90% sold out of 14 projects launched during the past five years.
Mr Vittakarn said AP in the first seven months of 2018 posted 4 billion baht in presales from foreign buyers, accounting for 20% of the company’s presales in those periods totaling 20.98 billion baht.
AP expects to have 10 billion baht in presales from foreigners from total presales of 33.5 billion baht that it targets in 2018.
Prasert Taedullayasatit, chief executive for premium business at Pruksa Real Estate Plc, said the company last year posted 6 billion baht in condo presales involving Chinese buyers. This year it will transfer condo units worth 1 billion baht in the Huai Khwang area to Chinese.
“Condos from a developer completed last year and transferred to Chinese buyers were seen as no problem,” Mr Prasert said. “But today there may be a problem about money transfer from China.”
Tiensak Thamcharonkij, chief financial officer and co-founder of Tongthai Group, a provider of Chinese-language property websites and travel magazines in Thailand, said Chinese buyers will not dump condo units in Bangkok after placing a high down payment.
“Earlier there were some Chinese buyers dumping Bangkok condo units they had booked after they were unable to resell the units that were completed and scheduled for transfer,” MR Tiensak said. “This was because down payment collected from them was low at 5-10%, the same rate for Thais.”
He said these buyers were advised by unprofessional agencies telling them to split their investment budget and book multiple units with low down payments.
Phanom Kanchanathiemthao, managing director of property consultant Knight Frank Chartered Thailand, said some mainland Chinese who buy condo units in Thailand may see an impact from China’s tightened capital controls issued last year.
The impact will eventually lessen, however, as these buyers will find an alternative means to transfer their money from the home country anyway.
“Chinese are smart investors,” Mr Phanom said. “They can find one way or another to transfer money to get condo units.”
source: https://property.bangkokpost.com/news/1520686/foreign-buyers-cling-to-city-condos
by kevinyeo | Sep 1, 2018 | News
Office rents across Bangkok continue to hit record highs as landlords take advantage of an increasingly tight supply situation that has seen vacancy rates stabilize in the single digits, sustained levels not seen been since the late 1980s.
Rising rents and falling vacancies are being driven by a flight to quality – tenants relocating and in most cases expanding – from older buildings to new projects.
More than 68% of Bangkok’s current office stock is more than 20 years old and most buildings are rapidly becoming uncompetitive when compared with modern offerings.
Occupiers are increasingly drawn to newer properties such as AIA Capital Center, which offers a wide variety of lifestyle amenities including food and beverage options and an on-site fitness center. Others including Gaysorn Tower and FYI Center offer an abundance of attractive common areas that tenants can utilize.
As a result, rents in the prime grade (Grade A) segment are rising faster than those in secondary office spaces and the gap is widening.
Data from JLL’s Thailand Property Intelligence Center illustrates that the average gross rent for prime office space across Bangkok in July was 824 baht per square meter per month, 20% higher than the market-wide average rent of 668 baht, and 41% higher than the average gross rent of 513 baht for non-prime space.
Occupier flight to quality is also clearly reflected in different vacancy levels in the two market segments. Findings from JLL suggest that the average vacancy rates for prime and non-prime office spaces in July 2018 stood at 6.0% and 9.8% respectively.
Prime grade vacancy rates have held steady under the 7.0% mark since early 2016 while non-prime rates have only recently moved into the single-digit range. Thus, notwithstanding record-high rental levels across Grade A projects in the market, it is clear that many tenants in the market are willing to a pay a premium for Grade A office space, despite the significant difference in price relative to lower quality space.
We are seeing the same pattern play out in Bangkok’s central business areas (CBA), which include Silom, Sathon, Wireless, Childlom, Asok and Phrom Phong. Average prime grade rents in the CBA were up by 10.9% year-on-year to 881 baht per square meter per month in July, well above the 4.5% growth recorded in non-prime CBA average rents during the same period.
So what does this mean for the market in the future?
Through the end of 2019, there are 10 new office projects under construction that are available for lease totaling about 280,000 sq m of space. Approximately one-third of this space has already been pre-leased. Projects scheduled to be completed in the second half of 2018 have strong pre-leasing.
The T-One building near the Thong Lor BTS station and Lad Phrao Hills near the Phahon Yothin MRT station are nearly fully pre-let while Wizdom 101/True Digital Park near the Punnawithi BTS and Singha Complex near the Phetchaburi MRT station are reportedly between 50% and 70% pre-leased.
With tight vacancy and limited availability of space in upcoming projects, we expect rents to continue rising and keeping the market titled in landlords’ favor until at least 2021 when a new wave of supply is expected to come to market.
Andrew Gulbrandson is the Head of Research and Consulting at JLL. For more insights, readers can connect with him on https://www.linkedin.com/in/andrewgulbrandson/or visit www.jll.co.th
source: https://property.bangkokpost.com/news/1532238/prime-office-rents-soaring
by kevinyeo | Aug 26, 2018 | News
THE AREAS of Silom-Sathon, Phahol-Pradipat, Thong Lor-Ekamai, Huai Khwang and Phya Thai are the top locations for condominium projects in the central business district of Bangkok, according to property agencies.
Silom-Sathorn is a popular spot for office premises and residential units. There is also a surge in demand for co-working spaces in the area. The average return from resales and rentals of condominium units in the location stands at 4-5 percent annually, they said.
Thong Lor-Ekamai, Huai Khwang, and Phya Thai are suitable locations for condominium projects offering less than 30 square meters of space per unit and priced between Bt130,000 and Bt300,000 per square meter, said Anukul Ratpitaksanti, managing director of Plus Property Co Ltd.
According to a survey by Collier International Thailand Co Ltd, about 3,000 new condominium units with a combined value of Bt45.5 billion will become available in Thong Lor-Ekamai in the next six months.
Meanwhile, 3,139 units in 14 existing condominiums are currently on sale, of which 2,436 or 78 percent have been taken, the research said.
Condominium unit prices in the area average Bt130,000 and Bt250,000 per square meter while resale prices have increased by up to 30 percent from the previous year, Collier said.
Nalinrat Chareonsuphong, managing director of Nexus Property Marketing Co Ltd, said recently that Phaholyothin-Pradipat is the latest spot for residential developments. Property prices in the area are lower than those on Phaholyotin Road, while there is not much difference in traveling time and the environment, she added.
Other potentials of the area include its nostalgic features of old community, hotels, shops and restaurants operating in the three- to four-story commercial buildings along Pradipat Road, as well as population growth over the years.
Land prices on this road average Bt600,000-Bt800,000 per square wah, comparatively lower than those in nearby areas such as the small alleys in Ari, Phaholyothin Road from Chatuchak to BTS Saphan Khwai, and BTS Saphan Khwai to Victory Monument, which cost around Bt600,000-Bt800,000, Bt900,000-Bt1 million, and Bt1.2 million-Bt1.5 million per square wah respectively.
The average condominium unit price in Phaholyothin-Pradipat area stands at Bt170,000 per square meter, against Bt218,000 per square meter on Phaholyothin Road from BTS Saphan Khwai to the Victory Monument. However, both locations are similar in terms of roads, transportation, and infrastructure.
Source: http://www.nationmultimedia.com/detail/Real_Estate/30351018
by kevinyeo | Aug 22, 2018 | News
International school fees and properties in Bangkok are a fraction of those in China
Chinese parents keen to enroll their children in international schools but reluctant to pay the exorbitant tuition fees in the mainland are turning to Thailand as an option, a trend that has bolstered the local property market.
Peggy Wang, a mother of a 10-year old girl and a six-year-old boy, is one such parent who opted to move to the northern Thai city of Chiang Mai, where annual tuition fees at less than 60,000 yuan (US$8,732) are a quarter of the 240,000 yuan her children’s Beijing bilingual school had charged.
“The teachers in the Beijing school change frequently, but in Thailand, teachers have families there, so the faculty is stable,” Wang said. “In Beijing, my children have to take extra English classes after school in the absence of an English-speaking environment outside class, but not in Thailand.”
She plans to send her children to international schools in Bangkok when they get older, where fees will rise to about 100,000 yuan a year. To prepare for that, she has bought a 31 square meter flat in Bangkok for 650,000 yuan, in addition to the Chiang Mai villa she lives in and a flat in Pattaya.
Wang is among a growing group of Chinese parents disillusioned by the costs of local international schools and the rote-learning in public schools in the mainland, and looking towards Thailand as a destination for education and investment.
According to Chinese international real estate website Juwai.com, the volume of enquiries for Thai properties in the first half of the year exceeded that for all of 2017, with Thailand rising from No 3 last year to become the top destination for Chinese buyers. It said it had received purchase enquiries amounting to US$962.2 million since the beginning of last year.
Monthly tuition fees of US$2,744 at Shanghai international schools are currently the world’s highest, according to the International Schools Database. Beijing is the second most expensive at US$2,519. By comparison, fees in Bangkok and Bahrain are US$1,032 and US$422 respectively.
Education is a common factor driving Chinese overseas property investments. Anxiety over the shrinkage of domestic wealth under a depreciating yuan, high inflation and a shortage of viable investment options are other reasons. Next, to traditional investment destinations like the US, Canada, and Australia, Thailand has its advantages – it is geographically closer to the mainland and less expensive.
Chris Deng, a businessman from eastern China’s Nanjing city who shuttles between China and the US, bought a 35 sqm flat in central Bangkok for 1.3 million yuan this year. He said he planned to send his daughter, now two years old, to a local kindergarten, and possibly a primary school in Thailand.
“I want my kid to grow up in an international environment,” he said.
Deng said he considered his Thai investment as part of a global portfolio that includes property assets in the US and other mainland cities.
“In Thailand, I can get a 5,000-6,000 yuan monthly rent. In Nanjing, I get a similar rent for my 100 sqm home, which is now valued at 5.6 million yuan,” he said.
An annual yield of close to 10 percent was the major draw for Jennifer Wu, a 25-year-old Chongqing native to invest in Bangkok. Wu bought a 28-sqm flat for 566,000 yuan, via Uoolo, an app that helps Chinese buy properties overseas.
“I heard that universities there are good, which could be an option for my future kids,” she said.
Wang said parents who can afford the higher fees for mainland international schools would prefer to pay them as sending their children elsewhere usually require a parent giving up a career to move overseas with the child.
“But living in Thailand hasn’t changed much for my children and me. Each time when we land in Beijing, they kept asking me, when we could get back to Thailand?”
source: https://www.scmp.com/property/hong-kong-china/article/2159400/mainland-chinese-parents-buy-education-and-properties
by kevinyeo | Jul 6, 2018 | News
THAILAND has been ranked 34th in the Global Real Estate Transparency Index (GRETI) 2018 put out by property consultancy firm JLL.
The result in the newly released biannual represents a marked improvement from the 2016 edition of the index when the country was ranked 38th.
Compared with the other six countries from Southeast Asia covered by the index, Thailand is ranked the third most transparent real estate market in the sub-region, followed by Indonesia, the Philippines, Vietnam and Myanmar, which were ranked globally 42nd, 48th, 61st and 73rd, respectively.
JLL said the 10th edition of the GRETI contains the most comprehensive country comparisons of data availability, governance, transaction processes, property rights and the regulatory/legal environment around the world. The 2018 Index covers 100 countries and 158 city markets, and the number of individual factors covered has increased by 36 per cent to 186 factors.
The company’s managing director, Suphin Mechuchep, said that transparency across Thailand’s real estate markets has continuously improved over the last decade thanks largely to the increased availability of and access to market data. While the growth of listed companies and real estate investment vehicles has contributed a lot to improving financial disclosures, greater regulatory enforcement, the planned introduction of a new property tax system and steps to digitise its land registry will underpin the country’s improvement in real estate transparency further, Suphin said.
“The improved level of transparency represents a sign of growing maturity of Thailand’s real estate market. It helps owners, investors and occupiers identify opportunities and anticipate challenges more accurately, and consequently make better real estate decisions,” she said.
Asia Pacific’s mature economies, such as Singapore, Hong Kong and Japan, have a significant opportunity to advance real estate transparency through property technology adoption. These leading investment destinations are on the cusp of the “Highly Transparent” tier and are poised to join the top group, which includes countries such as Australia, New Zealand, the US and the UK.
“The proptech sector is growing fast, especially in Asia, though adoption is still relatively low compared to North America and Europe,” said Jeremy Kelly, director of global research at JLL. “We believe the Singapore government could play a key role in promoting proptech adoption through open-data initiatives and the pioneering of blockchain technology.”
“The potential benefits of proptech are certainly not limited to transparent markets,” he adds. “It could also help improve transparency in semi-transparent markets like China, which has a vibrant proptech sector, and where traditional data sources are lacking.”
Another key area of potential improvement for both Singapore and Hong Kong is in sustainability transparency. Strengthening energy efficiency requirements, carbon reporting and stricter energy consumption disclosure will help them make the step up; and in this regard, they could emulate Japan, which has become a global leader in sustainability transparency.
“Asia Pacific as a whole has made the strongest transparency improvements since 2016 compared to the other four regions covered by the study,” said Megan Walters, head of research, Asia Pacific at JLL. “This is supported by developments in Myanmar, Macau, Thailand, India and South Korea.”
Improvements in transparency in some Asian countries have been accompanied by record-breaking commercial real estate investment volumes. In 2017, real estate transactions in the Asia Pacific region reached a record US$149 billion, JLL said.
source: http://www.nationmultimedia.com/detail/Real_Estate/30348853
by kevinyeo | Jun 14, 2018 | News
CITIES in Thailand have risen in rankings for the cost of living, with Bangkok entering the global top 100 for the first time, according to a survey by ECA International, a provider of knowledge, information and software for the management firms.
Elsewhere in the region, Singapore is now the 20th most expensive location in the world, as Hong Kong drops from second to 11th in the Cost of Living global rankings.
Tokyo is the most expensive Asian city on the global list in seventh place.
Alongside rising trend for Thai cities, Malaysian cities have also moved up the index.
Commenting on Thailand’s and Malaysia’s rise in the rankings, Lee Quane, regional director – Asia, ECA International, said that once again prices increased at a relatively low rate, in both countries. In the case of Malaysia, especially in Kuala Lumpur, this shows that the inflationary impact of the imposition of a goods and services tax seems to have been brought under control. “Rather, it is the relative appreciation of each country’s currency that saw Bangkok and Kuala Lumpur rise in our rankings to 99 and 182 respectively,” Quane said.
Chiang Mai also saw a rise and is up to 169 in the global rankings.
“The price of goods and services included in our basket of goods has only seen a modest increase in Singapore over the past 12 months, in line with other similar economies in Asia,” said Quane.
“However, the rise in the rankings has been due to the relative strength of the Singapore dollar versus the US greenback in the past year.”
ECA International has been conducting research into the cost of living for over 45 years. It carries out two main cost of living surveys per year to help companies calculate the cost of living allowances so that their employees’ spending power is not compromised while on international assignment.
The surveys compare a basket of like-for-like consumer goods and services commonly purchased by assignees in 475 locations worldwide. Certain living costs, such as accommodation rental, utilities, car purchases and school fees are usually covered by separate allowances. Data for these costs are collected separately and are not included in ECA’s cost of the living basket.
Quane said that Hong Kong has seen a significant drop in our cost of living rankings for overseas workers, falling behind locations such as Tokyo, Seoul, and Shanghai. The main reason behind the drop is the fall in the value of the US dollar against which the Hong Kong dollar is pegged, over the last year.
Exchange rates have been the main cause of movements in the rankings in the past 12 months. “Rates of price increases throughout most of the major locations in Asia researched has been quite low,” said Quane. “Currency movements, on the other hand, have been quite volatile with several emerging market currencies strengthening against the US dollar in the last year.”
Every one of the Chinese cities included in the survey has seen a rise in the global rankings from last year. Shanghai was the highest placed Chinese city on the list in 10th place overall.
Tokyo is now the most expensive location in Asia to live in, despite staying in seventh place in the global rankings.
“Tokyo’s global ranking has remained relatively static over the past few years,” Quane said. “It is only the yen’s relative strength against the US dollar that has seen the Japanese capital become the most expensive place in Asia for foreigners to live and work, at Hong Kong’s expense. It has been a similar theme in Seoul, which is also now above Hong Kong in the rankings, despite remaining in eighth place globally.”
In Europe, rankings have largely gone up, with locations such as Rome, Paris, and Dublin rising by over 40 places each.
Quane said that the euro has performed significantly better over the past twelve months compared to the previous year, so we have seen living costs increase in a number of European nations. Cities such as Rome and Brussels have risen by over 50 places.
Swiss cities continue to dominate the top of the rankings – with four locations remaining in the global top 10.
source: http://www.nationmultimedia.com/detail/Economy/30347587
