Thai tycoons and property developers are consolidating property holdings, taking over real estate companies and entering into joint ventures with investors from Japan, China and Hong Kong. All this to enhance their competitiveness in the real estate space, with an eye on the forthcoming inauguration of ASEAN Economic Community (AEC).
Almost all the big corporate players including the ones not specifically in the property market are preparing to take advantage of the Thai real estate boom that is expected to follow AEC inauguration in 2015.
Charoen Sirivadhanabhakdi, Chairman of TCC Group and Thai Beverage PLC, Land and Houses Public Company,Property Perfect, the Chearavanont family who own Magnolia Quality Development and Magnolia Finest, Charn Issara group, and the Bhirombhakdi family are all getting very active in the real estate space. Here is a look at some of the more aggressive players and their recent activities in Thai real estate market:
Charoen Sirivadhanabhakdi, Chairman of TCC Group and Thai Beverage PLC, is negotiating to acquire 22.22% shares in K Land from Property Perfect PLC. If the deal goes through, he will hold 66.66% in K Land. This will help him expand into the business of high- end luxury housing.
Over the past decade, Charoen has been investing in the real estate sector. In 2007, he spent 1.135 billion baht ($35.4 million) on acquiring real estate company Univenture’s shares and then invested more than 5.7 billion baht ($178 million) to acquire Golden Land Company, ( which owns Sathorn Square Building close to BTS Chongnonsi). These deals have enlarged his holdings on the Sathorn Road, which is the main business area in the heart of Bangkok.
He also acquired 40% shares in Grand Unity Development from the previous holder.
Land and Houses
Meanwhile, the Land and Houses Public Company is in advance talks with one of the bigger investment funds from Japan to develop property projects in neighbouring countries. “We have to adapt ourselves and take advantage of the AEC. Myanmar is interesting but the land price remains expensive,” said company president Naporn Sunthornchitcharoen adding that AEC will bring additional demand for developed real estate properties in the entire region.
The Japanese JV being considered by the Land and Houses public company is one of the emerging trends in Thai real estate sector. In fact, over the past one year, several Japanese property developers and investors have been seeking alliance with their Thai real estate counterparts to develop residential (condominium) projects in the region.
Apart from joining hands with forgien investors, Thai players are looking at newer regions and sectors to expand their activities to. For example, Property Perfect, one of the bigger real estate developers in Thailand, is considering a joint venture with one of the leading industrial estate developers in the country to build houses in upcoming industrial areas of Chonburi and Rayong. The deal is expected to be finalised by next month.
After the AEC is launched next year, more investment is expected to flow into Thailand. This will result in a higher demand for accommodations in the industrial estates. The company plans to sell these houses in the price range of 2 million-5 million baht per unit ($62,500-$156,000 per unit).
On June 16, Property Perfect also spent 4.776 billion baht ($150 million) on acquiring Thai Property PLC and Grand Asset Hotel and Property PLC to enhance its competitiveness.
Thailand’s richest tycoon Dhanin Chearavanont and his daughter Tipaporn Chearavanont ( incharge of Magnolia Quality Development and Magnolia Finest) are planning a joint venture with Siampiwat Group to develop a 50-billion-baht ($1.56 billion) Icon Siam Project on Charoen Nakhon Road.
This ambitious project includes a riverside luxurious condominium project, Magnolia Waterfront, containing 379 units, of which 70% is booked, says the company. In addition to this venture, the Chearavanont family is also planning investments with Greenland, one of top five property developers from China.
Charn Issara Group
Charn Issara Development Public Company Limited is talking to a property investor from Hong Kong to initiate the Bababeach Club project in the Phang-nga province.
The project includes a 100-unit condominium and 50 units of pool villas with total value of 3 billion baht ($93 million).
Singha Beer tycoon Santi Bhirombhakdi has taken over Rasa Property Development PLC with total value of 7.783 billion baht ($243 million) and rebranded it as Singha Estate.
This move is expected to help the Bhirombhakdi family to add value to their other land holdings. The company might use backdoor listing strategy as a shortcut to prepare itself for AEC.
The group might consider merging this real estate company with Santiburi Group, operator of golf courses, and S Bright Future Company, real estate development service provider.
Singha Estate is enlarging its investment in hotels and rental offices. It plans to turn land parcel near the intersection of Asok-Petchburi into Singha Complex, which will provide 144,000 square meters of space for retailers. It also has the plan to develop 16 units of luxury houses on Praditmanudham Road, which is a new area for accommodation development in Bangkok.
AEC stands for ASEAN Economic Community, which aims at regional economic integration by 2015. This integration will give the ASEAN countries additional bargaining power and make them an attractive market compared to other countries or regions.
With Thailand as the strategic center of the region, additional investments are expected to flow in once AEC comes to force.
According to the research by Colliers International, Bangkok and surrounding provinces would continue to grow, as the area is an investment and operational hub for most businesses invested in Thailand. High-density residential areas in outer Bangkok have already become the new locations for retail development.
Meanwhile, many provinces along the border of Thailand are becoming new investment destinations for both Thai and foreign investors. These areas are not too far from the special economic zones of neighbouring countries. As the supporting facilities of those countries do not meet international standards, many foreigners working in the locations that border Thailand are expected to live in Thailand and cross the border to reach their factory or company.