Bali’s Villa Rental Association is the brainchild of six leading agencies which was established back in 2007.

Currently membership stands at 16 organizations operating on the island.

While essentially formed to act as a conduit for its members in promoting the destination, its critical tasks are effectively raising the bar amongst the industry and working with villas owners, government, management companies and agents in institutionalizing the trade.

One key competency has seen the association being able to deliver value through its efforts in consumer advocacy.

As Phuket’s non traditional accommodation providers, management companies and rental agents continue to multiply perhaps now is a call to action for local leadership to form a strategic alliance with similar aims.

Source:thephuketinsider.com

Nationalities of condominium buyers in the Thai city of Pattaya have changed dramatically since 2010 – from the Europeans and Scandinavians working in the Asia Pacific region to local Thais and expatriates who reside in Bangkok, according to the latest Pattaya Market Report published by Knight Frank Thailand.

Nationalities of condominium buyers in the Thai city of Pattaya have changed dramatically since 2010 – from the Europeans and Scandinavians working in the Asia Pacific region to local Thais and expatriates who reside in Bangkok, according to the latest Pattaya Market Report published by Knight Frank Thailand.

since 2010, the make-up of buyers has changed to Thais and local expatriates from Russia, Germany, the Middle East, Australia and India.

The company’s Managing Director Phanom Kanjanathiemthao said that in the past, condominium projects in Pattaya were attracting buyers from the UK, Sweden, Norway, and Finland – many of whom were working in Asian countries such as Hong Kong, Singapore and China. However since 2010, the make-up of buyers has changed to Thais and local expatriates from Russia, Germany, the Middle East, Australia and India. Most of these expatriates live in Bangkok.

“Most Indians buy condominiums for investment, while the Thais tend to buy as a holiday home because Pattaya is quite close to Bangkok. I can say that Thai buyers who buy condos in Pattaya prefer a similar lifestyle as in Bangkok. This is quite different from those who choose to buy condos in Hua Hin,” said Phanom.

According to the research, the number of newly-launched condominiums in Pattaya last year was 2,887 units. The majority of sea-view projects was developed in the Jomtien area.

In terms of unit types, studios and one-bedroom units seemed to be popular, while projects launched before 2009 offered larger units, with two-bedroom units representing 43 per cent of total supply, followed by the one- and three-bedroom units at 30 per cent and 20 per cent respectively.

“The product trends in Pattaya are quite similar to Bangkok; offering a smaller unit size to decrease the selling price,” said Phanom. “From our research, the best selling unit types are one-bedrooms priced between THB3 million (US$97,810) and THB5 million (US$163,020), and two-bedrooms priced between THB6 million (US$195,605) and THB7 million (US$228,205). And of course, people always go for the sea-view units.”

Thailand Property market

Perhaps it is useful to take a step back to remember that Thailand is the only Southeast Asian nation never to have been colonised by European colonialists and that democracy in Thailand only took root in the 1930s. Clearly there will be lessons to be learned as democracy continues to mature in Thailand. The United States itself underwent numerous civil conflicts and social upheaval in its 230 years of democratic history. More recently, Thailand has proved its resiliency throughout various adverse events that run the gamut from economic crises, political uncertainty, natural disasters, and flu pandemics.

Some observers are concerned that the global financial crisis may affect the Thai real estate market. Generally, a real estate bubble occurs when property prices rise quickly in a short period, primarily from speculation – resulting in a supply-and-demand imbalance. When property prices are rising faster than the cost of money and banks continue increasing loan-to-value ratios, funding becomes easier – propelling additional speculation.

Thailand is member of the ASEAN (Association of Southeast Asian Nations) trade bloc and has free trade agreements with India and China, two fast-developing economic powerhouses. Consequently, many multinational companies are using the country as a regional base for its operations or a place to station employees who travel around Asia. Foreign investment in Thailand is constantly expanding, supporting the strong economic growth of the country.

Real estate developers in 2010 are more cautious and many have professionalized their operations

Thailand’s property market was able to rebound from past crises and there is every reason to believe it will be able to absorb the blow of recent political tensions. The taxation situation has actually improved the conditions for purchasing property in Thailand, and if property prices do dip slightly as a result of the current situation it may actually be a good time to buy as there is a very real possibility Thailand property will regain its golden outlook soon. As a result, the financial condition of most major housing developers in Thailand is much more robust than in the past. The development of the local bond markets and increasing domestic savings has the made the industry much less dependent on foreign funds, a significant difference from 1997.

The 2008 global financial crisis has directly and indirectly impacted the Thai Real Estate Market . As Global Financial Crisis a result, it has also adversely affect the real estate market even though the industry has strengthened immensely since the 1997 financial crisis. The crisis – caused disposable – income decreases will result in falling consumer sentiment and confidence and the postponement of any purchasing decisions on the Thai Real Estate Market . Although the overall environment may be negative for many housing developers, those with good reputations, strong balance sheets and operating efficiencies may use the opportunity to gain market share.

Source:thailand-business-news.com

SOMPORN THAPANACHAI

Bangkok House Builder Co has spun off a subsidiary, Small House Builder Co,to build small houses on plots sized as small as 25 square wah at prices between 1 million and 2 million baht a unit.

The company said it found strong demand from small-plot land owners who want homes from professional builders. This customer segment uses smaller contractors so they risk not receiving quality units or contractors leaving jobs unfinished.

Sutee Ketsiri, the company’s managing director, said a 25-square-wah plot, the smallest allowed in the market, should have a minimum width of eight metres,sufficient to build a two-storey unit to accommodate three to five people. The company already offers 15 contemporary designs of two- and three-storey units.

Bangkok House Builder used to focus on building residential units at the lower end of the price spectrum from 1 million baht.

After more than a decade in business,its pricing has moved up to 2-5 million baht.

Bangkok House Builder is a subsidiary of Built to Build Co, which from now on will cater only to customers with budgets of 5-20 million baht a unit.

The group targets total sales this year at 930 million baht: 400 million from Built to Build,350 million from Bangkok House Builder and 180 million from Small House Builder.

Mr Sutee said Small House Builder will use the back office of the parent company for lower overhead costs. The group also has its own prefabrication factory that will help control construction costs and speed up building time, even as prices of construction materials such as cement and steel are rising.

“It’s a challenge to build a two-storey house from 1 million baht, but we believe we can do it and still maintain quality.There is much potential in this segment but building companies don’t want to enter the market to compete with small contractors,” he said.

He expects the overall homebuilding business will grow by 5-10% this year to about 50 billion baht, with units priced at 1-2 million baht taking 40% of the market, followed by 30% for houses at 2-5 million baht,20% for units at 5-10 million baht, with the remainder priced above 10 million.

Local comedians perform at the launch of the Small House Builder Co. It expects to focus on houses priced between 1 million and 2 million baht.

The new company’s designs can be built on lots as small as 25 square wah.

Source:.reic.or.th

he listed firm Univentures Plc (UV), a chemicals producer and property developer, plans to spend 3 billion baht to take over an office building and develop three new condominium projects targeted at the middle- to lower-priced segments.

The budget will be split equally among acquiring an existing office building; buying new plots of land; and developing new condominium projects worth a combined 3.3 billion baht.

The unit prices of the new projects, to be located near mass transit, will range between 45,000 and 70,000 baht a square metre or 1-3 million baht each.

Managing director Thanapol Sirithanachai says the condominium market outlook is highly competitive with more focus on smaller units and the middle-to lower-priced segments where there is real demand.

“The loan-to-value curb will have an impact on speculation but only minimally on the overall market while an uptrend in interest rates will have greater effect on housing demand,” he says.

Meanwhile, rising interest rates will have limited impact on the company. It has enough funds for the planned developments with little need for project loans.

UV last year recorded revenue of 2.26 billion baht, up 71% year-on-year. Of the total, 1.13 billion baht was from the property business. Net profit for the first three quarters of 2010 was 88.6 million baht, compared to a net loss of 21.4 million baht in the same period of 2009.

It expects 2.5 billion baht in sales and 3.53 billion baht in revenue this year, an increase of 56%. This year’s revenue proportion of the property business will increase to 64% from 51% while the contribution from zinc oxide will drop to 34% from 44% in last year.

The company had a sales backlog of 3.8 billion baht, of which 2.1 billion baht will be realised this year.

Next year, UV will have a new stream of income from leasing space at its new office building Park Ventures on Wireless Road worth 5 billion baht, scheduled to open in September. This building will charge monthly rents of between 800 and 850 baht per sq m so it will obtain around 300 million baht a year based on the projected 95% occupancy rate.

UV’s zinc oxide business recorded total sales of 14,546 tonnes, with revenue of around 1 billion baht, up from 13,061 tonnes or 744 million baht in 2009. Currently, the company is building a new plant at the Rojana Industrial Park with an investment of 270 million baht.

The new facility will be able to support market demand with capacity exceeding 18,000 tonnes a year from 15,000 tonnes. After completion by the first quarter 2011, it expects to book sales of 16,000 to 17,000 tonnes, with sales of 1.2 billion baht by the end of 2011.

UV shares closed yesterday on the Stock Exchange of Thailand at 2.68 baht, down two satang, in trade worth 930,000 baht.

Source:metroparksathorn.com

The rapid development of the Bangkok condominium market over the past 10 years has greatly expanded the options for Thais and foreigners considering the purchase of luxury condos. At the same time, the average price of a new condo in central Bangkok has jumped by more than 150% over the decade.

With the high selling prices of units in newly launched projects or brand-new buildings, some buyers may opt to purchase more affordable units in older developments. On a per-square-metre basis, the prices of some of these units could be as low as half of those commanded by units in newly completed buildings or those under construction.

Findings from Jones Lang LaSalle’s recent market study indicate that newly completed or luxury units now being built in central Bangkok are being offered for sale at prices ranging between 160,000 and 350,000 baht per square metre, whereas units in older luxury buildings (aged 10 years or more) in the same area are available at between 90,000 and 120,000 baht per square metre.

Although there are still compelling reasons to buy for investment, buying a used luxury condominium in the centre of the city as a residence is now a sound decision. The strong competition in the leasing market due to the rapid growth of new condominium supply has put downward pressure on rents. Many owners who bought condominiums for investment purposes many years ago may now find it difficult to let their units as most tenants prefer newer buildings. For this reason, certain investors are keen to divest their holdings. As a result, many luxury units are available at attractive prices and offer good value for money to those looking to buy condos to live in.

As mentioned earlier, there are still opportunities to purchase an older condo as an investment. Units in certain buildings, as old as 20 years, that are well designed, well located and well managed, continue to enjoy high demand from tenants. They also have the potential to enjoy capital appreciation over the long term as sites available for new developments are becoming scarce, while development costs continue to rise.

Managed by Jones Lang LaSalle, Langsuan Ville, an eight-year-old building on Langsuan Road, is a prime example. Resold units in this building are currently fetching between 90,000 and 100,000 baht per square metre. The building also sees continued leasing demand, with one-bedroom units achieving an average monthly rental of 40,000 baht.

While the decision to buy a unit as a residence relies mainly on the buyer’s personal preferences and affordability, the purchase of a used unit as an investment is generally a more complicated process as more factors must be taken into consideration.

Tenant preferences count. Location should come first in the selection criteria. Location in the heart of the city does not necessarily guarantee marketability. The unit must also offer proximity to amenities (shopping centres, restaurants, schools and hospitals), access to mass transit and main roads for commutes by private car. Space efficiency and communal facilities are also important. In this regard, most of the older buildings in the luxury segment offer relatively larger common space and full recreational facilities, including large swimming pools, fitness/sauna rooms and tennis courts, which are not typically provided in many new condominiums.

Rental demand from locals is limited, so tenants are most likely to be foreigners living in Thailand. Many nationalities have preferred locations, amenities and furnishings, among other things. The largest group of expats officially working in Thailand is the Japanese.

However, the number of nationalities, particularly from other parts of Asia, have been consistently increasing as evidenced by the numbers of work permits issued. Nevertheless, European and US expats tend to have the highest housing allowances. Consideration should be given to who the target tenant of an investment will be.

The unit must be maintained in a like-new condition. In this respect, an investor may have to make a big cash outlay to refurbish a unit prior to putting it up for rent. Jones Lang LaSalle’s Project and Development Services division estimates that a full refurbishment of a condominium unit, including full Grade A furnishings, costs in the range of 40,000 to 50,000 baht per square metre. After renovation, a 20-25% increase in rent can typically be expected.

The condition of some condominium buildings can deteriorate with age _ as can the asset value. Therefore, the quality of building and property management is another key factor.

Rental strategy must be realistic. Condominium rents can vary greatly, depending on location, quality and age of the development, unit size, fittings and furnishings. Generally, brand-new units achieve rental rates 25% higher than used units of the same quality in older buildings in the same location. An investor in an older unit might be satisfied with a lower rental rate as it may actually reflect a higher yield.

Given the varying needs of each individual, the decision to buy a used condominium in Bangkok should be carefully weighed. As a primary residence, the decision comes down to finding something suitable to one’s lifestyle and simply weighing up the affordability and value of older versus newer units. As an investment, obtaining a high return comes down to identifying the right unit and negotiating a good price.

In the end, consulting a professional agent will help you minimise the uncertainty and help you set realistic expectations at the outset.

Source:metroparksathorn.com

Yuthachai Charanachitta, the third generation of the Ital-Thai Group, aims to rebrand the group by focusing on its five businesses and study into that is expected to be completed this year.

“When you think of the Ital-Thai Group, you think about the contractor business – Ital-Thai Development. However, our group also has many other businesses and we are studying to rebrand the group by classifying our business in a way that will give a clear picture about the group,” Youthachai, who is director of Ital-Thai Development, said.

Currently, the group has five businesses. Ital-Thai Development runs the contractor business, which generates total revenue of more than Bt40 billion a year. It also runs a cement manufacturing plant, and a steel plant. Then there is Ital-Thai Engineering.

The group also has a trading business involved with wineries.
The group’s real-estate business is managed by Amari Estates, while its hospitality business under the Amari brand is managed by ONYX Hospitality Group. The company has a registered capital of Bt700 million with the Charanachitta family holding a majority stake.

For the real-estate business, the group has set up Amari Real Estate Co with a registered capital of Bt400 million. The first project was the Amari Residences Hua Hin, worth Bt2 billion, that was launched last year. It is expected to be completed in 2011 with transfer to customers in the third quarter of this year. Yuthachai, who is also the chief executive officer and president of Amari Estates Co Ltd, said the company will generate total revenue of more than Bt1 billion this year from its Hua Hin project.

The company also plans to launch the latest condominium project in Patong beach in Phuket worth more than Bt2 billion in this year. This project will offer a 30-year lease to buyers with the right to renew after 30 years. The company also offers management for this project by Onyx Hospitality Group.

This project will have 200 units. Of the total, 10 will be villas at a price of more than Bt200 million per unit, and the other 190 units will be low-rise condominiums at a starting price between Bt7 million and Bt8 million per unit, starting at 50 square metres per unit. Pre-sales will start in the second quarter of the year with construction beginning next year. Nearly 55 per cent of its target customers are foreigners. Amari Estate Co also plans to launch three or four projects in 2012-2013 worth more than Bt1 billion per project. They will be located in Phuket, Hua Hin and Pattaya.

“In Phuket, it will be located on Nai Han beach, in Pattaya negotiations are going on for the land, while in Hua Hin the land has already been acquired,” he said.

Meanwhile, its hospitality business, Onyx Hospitality Group plans to manage 51 properties by 2018.

Currently, the company manages 33 properties in Thailand and overseas under four brands -Saffron, Amari, Shama, and Ozo. Thirteen of the properties are managed under the brand name Shama of which 12 are located in China, and one in Bangkok. There are 13 properties under the Amari brand, while seven properties are non-branded as some of them are managed under the customer’s brand, and some properties are still studying which brand will suit them.

Onyx Hospitality Group president and chief executive officer Peter Henley said the company will manage two or three new properties this year, and one of them is the Ozo Koh Samui . This hotel has an investment budget of Bt600 million.

The Oriental Residence Bangkok will be managed under the Saffron brand, while one in Maldives will be called Amari Addu Maldives. This will be the first hotel under the Amari brand outside Thailand. This project will undergo renovation and be opened this year. The company has signed a 20-year management contract for this project. The company also will sign contracts for five properties next year, he said.

Source:nationmultimedia.com

He said inflation was an issue of concern as the central bank’s target for headline inflation was in the range of 35 per cent.
The rate hike might not be able to contain inflation if oil prices surge further, he said.
Government increases in pay for civil servants and politicians and also rises in minimum wages, combined with record low unemployment, could also pull inflation up, Kitti said.
He also expected that the central bank might introduce more measures – such as adjusting loantovalue (LTV) ratios as it did late last year. An LTV ratio of 90 per cent is to be enforced starting this month for condominiums worth less than Bt10 million and will be enforced starting January next year for detached houses, townhouses and other lowrise residential buildings. The LTV means that homebuyers will have to make down payments, as they will not be able to get the full purchase price of a house from a bank.
The LTV ratio in the United States is 80 per cent. It is even lower, at 5060 per cent, in Seoul, he said. So Thailand might need to come closer to the international standard, but it was likely to be a gradual process and not done this year.
Kitti was among the speakers at a seminar on realestate financing at the Queen Sirikit Centre in Bangkok yesterday.
Methee Supapong, director of the Bank of Thailand’s domestic economy department, said interest rates were on a rising trend. He gave an assurance that the central bank would raise its policy rate, currently at 2.25 per cent, gradually to allow consumers to adjust.
As the Thai economy recovery continues it also pulls inflation up, Methee said.
He said the latest LTV measure was only a signal for house developers and bankers to be careful about the realestate market.
“So far we do not detect any realestate bubble,” he said.
Samma Kitsin, directorgeneral of the Real Estate Information Centre, forecasts that new mortgages this year may total about Bt300 billion, down from last year’s estimated Bt330 billion to Bt340 billion. New lending may be close to the amount lent in 2009, which was quite reasonable after the market sharply increased last year.
Issara Boonyung, president of the Housing Business Association, said it would be healthy if residential units sold this year could match last year’s 170,000.

Source:nationmultimedia.com

Phuket Residential MarketView Q3 2010

In the third quarter we saw a continued recovery in tourism arrivals and expect that this trend will continue into the high season in the fourth quarter. The best performing sectors of the property market were in the very best properties that have sea frontage with an established reputation and entry level projects.

Quarterly Highlights – Condominium and Apartment

• The total stock of completed resort standard condominiums was approximate 3,000 units, up 3% Q-o-Q and 31% Y-o-Y.
• We estimate that approximately 84% in completed of condominiums buildings have been sold.
• The average asking price of condominiums by developers was approximately THB 90,000/m2.

Quarterly Highlights – Villa

• There was no new supply in this quarter. The total stock of completed villas in Q3 2010 was 2,787 units. There are a total of 133 villas that are expected to be completed in Q4 2010, with 343 villas expected in 2011.
• Two new projects were launched in this quarter with a total of 7 units.
• Based on our new survey, the sales performance of total existing and future units was 77%. Out of 3,749 villas, 2,897 units have been sold and 852 units are still for sale.
• The sales rate of all existing and future luxury and high-end units was 74%. Out of 880 luxury and high-end units, 653units were sold as of Q3 2010, leaving 227 units remained unsold.

Source:thailandpropertynews.com

Most condominium units in Thailand nowadays are offered on a freehold basis. However, you will occasionally come across projects that are offered on leasehold. The maximum lease term allowed in Thailand is 30 years, and this lease is registered with the Land Department.

There are different leasehold structures offered in the market, and it is important that buyers understand the differences if they are considering buying a condominium on a leasehold basis. The structures mentioned here are common, but do not include all leasehold structures.

The first type is properties located on land that is not available for freehold, such as land that is owned by the Crown Property Bureau, the Privy Purse, church temples and foundations or individual and private entities who do not wish to sell their land. Therefore, projects built on leased land are sold on a leasehold basis, for instance, projects like Hansar Rajdamri, St Regis Residences and Urbana Langsuan.

In essence, the term “leasehold condominium” is not correct. These projects should actually be referred to as “long-term leasehold apartments”, where the rent is paid up front and the building remains under the ownership of the developer. This is unlike freehold condominiums, where buyers have ownership rights to their individual units and all unit owners jointly own the common area. There are cases where there is a contractual obligation to renew the lease after the initial 30 years. Payment for the extended lease is rarely mentioned, but is often based on the open market value at the time of renewal, or sometimes, though very rarely it might be based on an agreed formula.

As a ballpark guideline, the market value of a condominium on a 30-year lease ranges between 30 and 70 per cent of its freehold value in a similar location, depending on how prime the location is. Aside from product quality and branding, the leasehold value is higher in an area where freehold is not available or rarely available. A prime example of this is the Ratchadamri area.

Another category is what I call “leasehold for foreigners”. In projects where most of the target buyers are foreigners, it gets complicated when the foreign freehold quota reaches 49 per cent and developers have to offer a long-term lease for the remaining units. To make the property as close to freehold as possible, developers offer a series of renewable leases with two or three renewing options totalling 90 to 120 years. This sort of leasehold is not based on the willingness of the developer or buyer, but on the law, which prohibits selling freehold above the 49-per-cent foreign quota. The project usually ends up with a mixture of freehold and leasehold ownership in the same building.

On the other hand, some developers might decide to put the entire project under a leasehold structure, though this would not be popular among Thai buyers, who prefer freehold titles.

The downside of this leasehold structure is that although the price has been fully paid up, the unit owners are still required to physically go to the land department in 30, 60 or 90 years to register the lease. This can be risky, as the contracting parties may cease to exist.

The good news is that this government is considering extending the 30-year lease term, though how long is still unclear. The authorities should not just look at practices in other countries, but also understand leasehold ownership in relation to law, see how best it can be implemented and find out how loopholes in relation to foreign leasehold, such as extending the term beyond 50 years, would serve a purpose.

Source:thailandpropertynews.com

Nationalities of condominium buyers in the Thai city of Pattaya have changed dramatically since 2010 – from the Europeans and Scandinavians working in the Asia Pacific region to local Thais and expatriates who reside in Bangkok, according to the latest Pattaya Market Report published by Knight Frank Thailand.

The company’s Managing Director Phanom Kanjanathiemthao said that in the past, condominium projects in Pattaya were attracting buyers from the UK, Sweden, Norway, and Finland – many of whom were working in Asian countries such as Hong Kong, Singapore and China. However since 2010, the make-up of buyers has changed to Thais and local expatriates from Russia, Germany, the Middle East, Australia and India. Most of these expatriates live in Bangkok.

“Most Indians buy condominiums for investment, while the Thais tend to buy as a holiday home because Pattaya is quite close to Bangkok. I can say that Thai buyers who buy condos in Pattaya prefer a similar lifestyle as in Bangkok. This is quite different from those who choose to buy condos in Hua Hin,” said Phanom.

According to the research, the number of newly-launched condominiums in Pattaya last year was 2,887 units. The majority of sea-view projects was developed in the Jomtien area.

In terms of unit types, studios and one-bedroom units seemed to be popular, while projects launched before 2009 offered larger units, with two-bedroom units representing 43 per cent of total supply, followed by the one- and three-bedroom units at 30 per cent and 20 per cent respectively.

“The product trends in Pattaya are quite similar to Bangkok; offering a smaller unit size to decrease the selling price,” said Phanom. “From our research, the best selling unit types are one-bedrooms priced between THB3 million (US$97,810) and THB5 million (US$163,020), and two-bedrooms priced between THB6 million (US$195,605) and THB7 million (US$228,205). And of course, people always go for the sea-view units.”

Source:thailandrealestatemagazine.com