Singapore-listed property entities are engaging in property transactions abroad with an associated firm of TEE Land acquiring a Bangkok land parcel. In addition, the manager of HPH Trust has rejected an acquisition offer for 50 per cent stake in a China-based property project.
Associated firm of TEE Land’s acquires Bangkok land parcel for $3.64 million
TEE Land associate, Chewathai Plc, has entered into a sale and purchase agreement (SPA) with vendor Yuree Sethawan to acquire freehold land plot measuring 24,704 square metres at Rangsit Klong 1, Patumthani Province, Bangkok, Thailand, for THB92.6 million (S$3.64 million).
Chewathai intends to develop the new plot into a landed housing project, with the proposed acquisition expected to be completed in early December 2015. The acquisition is part of of a strategy to establish a portfolio of development properties as part of a previously announced listing plan on the Stock Exchange of Thailand’s Market for Alternative Investment.
According to a release, Chewathai will finance the acquisition through a mix of internal funds and bank borrowings. However, this comes amid concerns regarding oversupply and the emergence of a bubble in Bangkok’s housing market.
2015 is expected to close with new projects totalling $13 billion throughout the year. New housing projects in Bangkok have risen in value by 64 per cent year-on-year (YOY) as of first half 2015, according to Reuters.
The deadly Erawan Shrine bombing is expected to weaken already soft demand in the property market.
The bleak prospects have prompted many residential developers to rethink and even scale down their plans for the next four months, normally considered the sector’s high season.
In a Bangkok Post report, it was observed that in the wake of the Erawan Shrine bombing on August 17, 2015, several property developers listed on the Stock Exchange of Thailand have postponed the launch of several projects which were scheduled for this year.
Several developers have reportedly shifted their focus to single-house and townhouse projects due to the low-rise housing segment being less risky than the condominium market. This reflects a shifting of focus towards smaller projects that can have sales closed and construction completed in a shorter interval.
In a statement to the Bangkok Post, Atip Bijanonda, president of the Housing Business Association, said “Developers should be more cautious of new investment, particularly in large projects that take a few years to develop. Maintaining financial liquidity with cash on hand enough for one year amid an uncertain situation is a must, as this year’s fourth quarter may not be a hot time for the sector to boost new residential sales.”
HPH Trust manager rejects offer to acquire 50% stake in Gaolan Phase 2
The trustee-manager of Hutchison Port Holdings (HPH) Trust has declined an acquisition offer from parent firm Hutchison Port Holdings for a 50 per cent equity interest in Zhuhai International Container Terminals (Gaolan Phase 2), also termed the Gaolan joint venture (JV).
The offer was made due to a proposed disposal by HPH of its 50 per cent interest in Gaolan JV, in compliance with the right of first refusal agreement signed on February 28, 2011 between Hutchison Port Holdings Management, the trustee-manager, and HPH. The Gaolan joint venture (JV) was established to undertake a greenfield development in Gaolan Port Phase II, expected to start operation upon completion of its first berth.
According to HPH, while Gaolan Port is a deepwater port, the investment opportunity is not aligned with the criteria of HPHT in several areas, including the volume trend of foreign cargoes, competition within the Pearl River Delta area and the potential impact of an investment in Gaolan JV on the DPU of HPHT, when accounting for the on-going capital commitment required.
“Accordingly, the Trustee-Manager is of the view that it would not be in the best interests of HPHT and its unitholders to accept the Offer and acquire from HPH its interest in Gaolan JV,” said HPH Management in a release. Notwithstanding this rejection, HPH Trust is still exploring opportunities aligned with their investment criteria.
With inter-port complementarity accounting for a significant share of changes to shipping capacity in the Pearl River Delta and benefiting the supply chain of the region, as well as the Pearl River Delta being a major trade and manufacturing zone, there are still significant market opportunities in the port sector, especially in terms of inland waterway transport.
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