by wilbersuen | Sep 9, 2024 | News
Hotel operators are expressing concerns over proposed changes to foreign ownership rules in real estate, fearing it could result in a rise in illegal hotels in Thailand.
The government’s proposal includes extending the leasehold period for foreigners to 99 years and increasing the foreign ownership quota in condominiums from 49% to 75%.
These measures could negatively impact the competitiveness of Thai hotels by encouraging foreign buyers to exploit the tourism industry, according to Udom Srimahachota, vice-president of the Thai Hotels Association (THA).
Mr. Udom warned that with increased ownership, more foreign buyers might convert condo units into short-term rentals for tourists. Past incidents have shown agents from countries like China purchasing entire floors in condominiums and renting them exclusively to tourists from their home country in key tourism areas.
He highlighted that licensed Thai hotels face higher costs, including land and corporate taxes, while illegal accommodations operate without the same financial burden. Currently, there are around 16,000 licensed hotels in Thailand and approximately 15,000 unregistered ones.
In one instance, Russian agents bought out a condo project in Hua Hin, using the units solely for renting to Russian tourists, directly competing with licensed hotels, Mr. Udom added. He also raised concerns that with increasing flights from China to cities like Hua Hin, Chinese buyers may be drawn to invest in properties and illegally rent them to tourists.
He further questioned the proposal to lengthen leasehold terms for foreign land buyers, pointing out the existing trend of Chinese nominees developing housing, condo projects, and hotels. These investors often import both labor and construction materials from China, limiting the benefits to the local economy.
The THA has voiced these concerns to the Interior Ministry, calling on the government to focus on enhancing the competitiveness of Thai hotels. Mr. Udom also urged the administration to ease financial restrictions, allowing small and medium-sized hotel operators better access to loans for renovations. He emphasized the importance of regulating non-hotel properties rented out to tourists, ensuring they are properly registered within the system.
Source: Bangkok Post
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The editorial team at Invest Bangkok Property
by wilbersuen | Sep 4, 2024 | News
Higher debt leverage resulting from double financing is making it more difficult for property companies to secure bank loans, forcing some developers to rely on short-term loans from major shareholders.
Apinant Klewpatinond, chief executive of Kiatnakin Phatra Financial Group, a holding company of Kiatnakin Bank, said the bank continues to apply its existing loan assessment criteria for the property sector.
However, based on economic conditions and a higher debt-to-equity (D/E) ratio, credit risk in the sector has risen, making it challenging for some residential projects to obtain bank financing, he said.
During the recent era of low interest rates, many property companies increased their debt leverage through both bank loans and bond issuances. This double financing further elevated the D/E ratios of some companies.
According to Mr Apinant, the economic slowdown has presented significant challenges for several bond issuers. When approving new loans for the business sector, the bank also takes into account the potential for bond rollovers.
“For cyclical businesses, the bank will evaluate the broader business environment before approving new loans. Given the cyclical nature of the property sector, we are exercising caution in loan offerings amid the heightened risks in the mortgage market,” he said.
In response to these challenges, some residential developers are taking steps to conserve and raise cash.
These measures include avoiding new costs, borrowing short-term loans from major shareholders and selling assets to manage risks in a difficult financial market and limited mortgage loan approvals.
The property business constitutes a significant portion of KKP’s loan portfolio, accounting for 27.7 billion baht out of the bank’s total business loan outstanding of 60.1 billion baht as of June.
Additionally, KKP collaborates with the Bank of Thailand to support sustainable finance under the Financing the Transition programme, with a key focus on the property sector.
Separately, Amporn Supjindavong, UOB Thailand’s head of commercial banking, said the bank continues to offer financial facilities to property clients under a selective strategy.
For new residential investment projects, the bank primarily focuses on homes priced at a minimum of 5 million baht per unit, due to the lower risk associated with post-finance.
“Most large developers do not struggle with residential sales. Instead, they face challenges related to the increasing rejection rates of mortgage loans, stemming from homebuyers’ weakened debt repayment capabilities. As a result, the transfer of home ownership has become a more significant issue for developers than sales,” she said.
Ms Amporn said when approving loans for new residential projects, the bank considers several factors, including house prices, location, project sales and the financial status at both the project and company levels.
The D/E ratio and the company’s ability to manage bond rollovers are also key considerations.
The bank anticipates that mid-sized property companies, in particular, may resort to borrowing short-term loans from shareholders to support cash flow for investment projects. Large developers still report positive financial conditions, she said.
Source: Bangkok Post
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The editorial team at Invest Bangkok Property
by wilbersuen | Sep 3, 2024 | News
New condo launches in Greater Bangkok are anticipated to fall below expectations this year, largely due to sluggish demand amidst economic challenges, according to Colliers Thailand.
Phattarachai Taweewong, Director of Research at Colliers Thailand, explained that the Greater Bangkok condo market experienced a slowdown in the second quarter, driven by modest domestic economic growth and global economic headwinds.
“The Bangkok condo market overall has slowed, primarily due to a lack of strong demand drivers,” he said. “In the mid- to lower-end segments, buyers are facing high levels of household debt, rising interest rates, and a significant rate of mortgage rejections by banks.”
Colliers’ market data revealed that 5,386 new condo units across 15 projects, valued at a total of 35.6 billion baht, were launched in Greater Bangkok during the second quarter. Of these, approximately 1,000 units from four projects in inner-city, high-end segments achieved a sales rate of 65%, while units outside the city center had a sales rate of just 30%.
In the first half of 2024, 8,674 new condo units, with a total value of 49.3 billion baht, were launched in Greater Bangkok—almost a 50% drop compared to the 15,413 units launched during the same period last year. Despite this significant decline in unit numbers, sales value for the first half of 2024 slightly increased from 48.6 billion baht in 2023, due to a higher concentration of lower-priced units in last year’s launches.
Mr. Phattarachai projected that new condo launches in Greater Bangkok this year will not surpass 25,000 units, falling short of the initial forecast of 30,000-35,000 units made earlier in the year.
“Developers have found that sales in the second quarter were weaker than expected,” he said. “Despite property tax incentives, transfers of residential units are expected to decrease this year compared to last year, mainly due to the continued challenge of mortgage rejections by banks.”
The government has introduced incentives, such as reducing transfer and mortgage fees to 0.01%—down from 2% and 1%, respectively—for residential units priced under 7 million baht. These incentives are set to remain in place until the end of the year.
By the end of the first half of 2024, the inventory of unsold condos in Greater Bangkok stood at around 56,800 units. Given the current demand, it is estimated that it would take approximately 84 months to clear this inventory, compared to 60 months under more favorable economic conditions, Mr. Phattarachai added.
Source: Bangkok Post
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The editorial team at Invest Bangkok Property
by wilbersuen | Sep 2, 2024 | News
The vision of a continuous train journey from Bangkok to Beijing is closer to becoming a reality, thanks to the recent completion of a critical railway bridge over the Mekong River, connecting Thailand and Laos. This milestone significantly advances cross-border rail transport between the two countries, with only a few kilometers of track left to extend the route into China.
The newly operational Thai-Lao railway allows passengers to travel on a 12-hour journey from Bangkok’s Krung Thep Aphiwat Station to Khamsavath Station, just outside Vientiane, Laos. Khamsavath Station, situated approximately 9.6 kilometers from Vientiane, now serves as the final stop for this cross-border connection.
Final Stretch to China Despite the progress, a gap in the rail network still hinders a direct connection to China. Currently, passengers and cargo arriving in Vientiane must use taxis, vans, or other vehicles to cover the distance between Khamsavath Station and Vientiane Railway Station, which serves as the gateway to China. Officials remain optimistic that the remaining tracks will be completed by 2028, finalizing the direct rail link from Bangkok to Beijing.
Vientiane Railway Station, a modern facility built by China and located 16 kilometers northeast of the Lao capital, serves as the hub for high-speed trains connecting Laos to southern China. These sleek trains, part of China’s Belt and Road Initiative, have been in operation since 2021, linking Laos to major Chinese cities such as Kunming, Beijing, and Shanghai.
Boosting Trade and Tourism The Bangkok-Vientiane rail route is expected to greatly enhance trade between Thailand and Laos while also driving international tourism to Laos. As the once-isolated, single-party nation continues to welcome more foreign visitors, this rail connection is seen as a vital step in fostering greater cross-border exchange.
Ticket prices for the Bangkok-Vientiane journey are affordable, with third-class seats starting at $7.80, air-conditioned second-class seats at $16, and sleeper options available for $22 to $25.30.
Previously, trains from Bangkok only reached Nong Khai, with a highway crossing over the Friendship Bridge as the sole route into Laos. The recent extension of the rail line by approximately five miles into Laos, coupled with the construction of the new railway bridge, has now enabled direct rail travel between the two countries.
Collaboration between the State Railway of Thailand (SRT) and the Lao National Railway State Enterprise has ensured smooth operations, from scheduling and station management to ticket sales. As the train crosses the Mekong, Lao drivers take control, ensuring Thai drivers are not exposed to international liability when operating on Lao soil.
Gateway to China and Beyond For travelers seeking to continue their journey beyond Laos, the Chinese-built train service from Vientiane to Boten Station in southern Yunnan province provides a direct route into China. The service passes through key northern Lao cities, including Vang Vieng, Luang Prabang, Muang Xay, and Luang Namtha, before reaching the border. The Vientiane-Boten trains navigate through 75 tunnels, cutting across the rugged terrain and lush landscapes of northern Laos, an area still marked by unexploded ordnance from the Vietnam War.
Source: TravelDailyNews Asia-Pacific
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The editorial team at Invest Bangkok Property
by wilbersuen | Aug 28, 2024 | News
In July, exports posted their highest growth in 28 months, surging by 15.2%, as easing inflation and improved purchasing power among key trading partners fueled demand.
Poonpong Naiyanapakorn, director-general of the Trade Policy and Strategy Office (TPSO), reported that exports reached US$25.7 billion (938 billion baht) in July, largely driven by declining global inflation, which bolstered consumer spending capacity. Excluding gold, oil-related products, and weaponry, real sector exports increased by 9.3%.
Key factors contributing to this growth included rising employment and wage adjustments among major trading partners, particularly in Europe, which led to stronger consumer demand, boosting exports. Major markets showing strong recoveries included the US, China, Southeast Asia, and the European Union.
This trend aligns with the International Monetary Fund’s economic outlook, which points to a lift from China’s export-driven recovery and Europe’s rebound from earlier challenges.
Imports in July rose by 13.1% to $27.1 billion, resulting in a trade deficit of $1.37 billion. Over the first seven months of 2024, exports grew by 3.8% to $171 billion, while imports increased by 4.4% to $178 billion, creating a cumulative trade deficit of $6.62 billion.
Agricultural and agro-industrial product exports rebounded in July, rising 8.7% year-on-year to $4.36 billion, led by strong performance in rubber, rice, poultry, seafood, pet food, and edible oils. However, declines were noted in certain categories, including fruit, tapioca, sugar, and beverages.
Industrial product exports saw a significant year-on-year increase of 15.6% to $20.3 billion, recovering from previous declines. Key export drivers included oil-related products, electronics, and air conditioning equipment, while sectors like automobiles and semiconductors experienced decreases.
Mr. Poonpong expects exports to rise by 1-2% in 2024, supported by global economic recovery, industrial production improvements, and growth in the digital economy. However, risks such as geopolitical tensions and uncertainties in economic and trade policies following elections in key countries could weigh on future export performance. The Ministry of Commerce will continue to monitor these risks closely.
Meanwhile, Chaichan Chareonsuk, chairman of the Thai National Shippers’ Council, noted that although sea freight costs have eased, potential baht appreciation in the fourth quarter could pose challenges for exports.
Source: Bangkok Post
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The editorial team at Invest Bangkok Property
by wilbersuen | Aug 21, 2024 | News
The State Railway of Thailand (SRT) has announced that a new train service from Bangkok’s Bang Sue Grand Terminal to Penang, Malaysia, will commence within two to three months.
On August 20, Mr. Ekkarat Sri-arayangpong, Chief of the Office of the Governor of SRT, confirmed this development. It was endorsed by Mr. Awirut Thongnet, Deputy Governor of SRT, during the 42nd KTMB – SRT Joint Conference held in Kota Kinabalu, Sabah, Malaysia, from August 13-16.
The initiative aims to strengthen bilateral rail cooperation, improve passenger travel, and enhance cross-border goods transportation between Thailand and Malaysia. It aligns with the broader policy of Mr. Surapong Piyachot, Deputy Minister of Transport, to stimulate economic growth and boost tourism for both nations.
The conference approved the Bangkok Grand Station – Padang Besar – Butterworth, Penang, route in principle, which is expected to enhance travel connectivity and promote tourism and trade between Thailand and Malaysia.
The agreement also includes extending the MySawasdee tourist train service from Hat Yai Junction in Thailand to Surat Thani Station, following positive feedback and full occupancy rates on all trips.
This extension is anticipated to further stimulate tourism and generate increased revenue for both nations. Further discussions will focus on finalizing operational details and implementation timelines.
A joint working group will be formed to advance the launch of the extended Bangkok-Padang Besar-Butterworth service, expected to commence within the next 2-3 months, with an initial 6-month trial period.
Mr. Ekkarat also highlighted that the meeting explored further freight transport cooperation, with the SRT expressing readiness to support cross-border goods transportation through routes such as Padang Besar – Hat Yai Junction, Hat Yai Junction – Bang Klam/Ban Thung Pho Junction/Kantang, and Padang Besar – Bangkok/Sapli/Na Pradu.
In addition, the success of the ASEAN Express train service connecting Malaysia, Thailand, Laos, and China was recognized, and plans to increase its frequency from once a week to twice a week were discussed.
This collaboration marks a significant expansion in Thailand-Malaysia rail connectivity, promoting seamless travel, trade, and tourism while reinforcing Thailand’s ambition to become a regional hub for tourism and logistics.
Source: Khaosod English
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The editorial team at Invest Bangkok Property
