Successive Japanese real estate firms are penetrating the Thai property market by joining forces with local partners to cash in on growing demand for residences.
Tokyo Tatemono Co, one of the major developers in the Tokyo metropolitan area, is the latest entrant into Southeast Asia’s second-largest economy as condominium supply swells in Bangkok.
The company recently signed a joint venture agreement with Raimon Land Public Co to implement a 9.1-billion-baht project for the development of two high-rise condo complexes, one in Sathon and the other in Phrom Phong, both in the heart of the capital.
This is the company’s first real estate project in Thailand, following ongoing development projects in Singapore and Myanmar. The project calls for about 400 units in total, each costing more than 10 million baht, with construction set to start later and be completed in 2021.
Katsuhito Ozawa, executive managing officer of the Tokyo-based firm, said his company has good long-term prospects for property investment in Thailand and believes that stable economic growth will continue to create more residential demand.
Raimon Land, which will own a 51% stake in the planned joint venture, has mainly specialized in the middle- and upper-grade residences in the center of the capital, and aims to double its annual revenue to 10-12 billion baht in the next five years in partnership with Tokyo Tatemono, chief executive Adrian Lee said.
Japanese developers have been flocking to the Southeast Asian nation since Mitsui Fudosan Co, a leading real estate firm at home, tapped the Thai market by teaming up with Ananda Development Plc in 2013 for a project with 1,875 residential units.
Major rivals such as the Mitsubishi Estate group, railway-to-property and hotel chain conglomerate Tokyu Corp and Nomura Real Estate Development followed suit, forming partnerships with local counterparts.
The 20 joint projects between Mitsui Fudosan and Ananda total about 16,000 housing units, the largest among Japan-Thai alliances, while Mitsubishi Jisho Residence and AP Thailand Public have developed 11 projects, supplying nearly 12,000 units in total.
Meanwhile, various partnerships have emerged such as Hankyu Hanshin Properties Corp and Sena Development Plc, Osaka-based Shinwa Real Estate and Woraluk Property Public, and Tokyo-based Hoosiers Holdings and All Inspire Development Public.
The property market in Bangkok remained vigorous in the first quarter of this year, said Nalinrat Chareonsuphong, managing director of Nexus Property Marketing. “We have started to see more condo projects that target Japanese people in Thailand and we expect to see at least 4-5 mega projects come from Japanese developers this year.”
A Thai real estate analyst, on condition of anonymity, said that Japanese investors have turned to the real estate and service sectors as “a new opportunity” to expand business abroad on the back of steady growth in the property market, especially the condo segment, although they previously focused on the manufacturing sector.
The Thai government’s investment promotion schemes such as the Eastern Economic Corridor and the expansion of mass rapid transit systems in the capital and suburban areas are providing foreign investors with positive factors to tap into the property market.
Mr Nalinrat said the proportion of medium- to small-sized developers, including foreign competitors, increased significantly in the first quarter of 2018.
Japanese investment is also a chance for Thai developers to benefit from funding and expertise, the analyst said. Kyodo