Following its planned public-private partnership project on a long-term investment in its 70-rai plot near Thailand’s Cultural Centre, worth more than Bt7 billion, and another 60-rai plot of land in Bang Pai District, the company will proceed with the PPP model in the second quarter of this year which is expected to be completed in 2 years, said president Kematat Paladesh.

He added that the company’s board of directors has approved the urgent implementation of its long-term strategies for the non-broadcast business development to eliminate risks and create new revenue sources. It will conduct a market sounding exercise to gauge interest of potential foreign and domestic investors in the two plots in Bangkok.

In addition, the company possesses a 40-rai plot of land in Nong Khaem District, housing transmission equipment and production studios of Bangkok Entertainment CoLtd. These assets will be transferred to MCOT Plc after the joint venture agreement between the two companies expires in 2020. There is also a 20-rai plot of land in the possession of MCOT on Pecthkasem road in Chumphon, with convenient access to Nakon Si Thammarat and Krabi, he said.

Earlier this year, the company invested Bt11.07 billion in a takeover of the Outrigger Hotels Hawaii chain of six hotels in four countries – Thailand, Fiji, Mauritius and Maldives.

The company is aiming for double-digit revenue growth from its 2017 total revenue of Bt6.22 billion and net profit of Bt571 million.

It also aims to boost revenues by 15 per cent this year, chairman Swechak Lochaya said on Monday.

As of the end of 2017, the company had total revenue of Bt725.44 million against a net loss for the year of Bt278.91 million.

Though Myanmar’s real estate sector last year faced many challenges, the government is planning to meet the housing needs of low-income people by working with development partners and private companies, according to speakers at the Myanmar Infrastructure Summit 2018 held March 20 to 22.

Win Naing, deputy director at the Department of Urban and Housing Development (DUHD), said in address on the second day of the event that housing needs would follow the population growth over the next two decades.

He estimated that an additional 4.8 million units would be needed for an estimated population of over 70 million people in Myanmar by 2040, over 22 per cent or 1.07 million units would be Yangon residents.

To fulfill the housing needs of Myanmar citizens, the DUHD has calculated supply projections for future demand and is planning to produce 20 per cent of the targeted units. Among them, 90 per cent of the housing units built by the DUHD will go to low income people while the remaining 10 per cent will be for middle income people.

The remaining 80 per cent of projected needs for affordable new housing will be met by private companies, he said, creating a huge opportunity for local and foreign investors. Myanmar has allowed private sector participation in the construction industry since 1990.

“Here in Myanmar, due to poor infrastructure and municipal services, most of the housing projects have to invest a lot. Housing is a long-term investment, takes a long time to develop, and is cyclical by nature,” he said.

The official stressed the importance of location when developing affordable housing projects.

“The value of a house largely depends on its location. Low income families prefer to live closer to places of employment, education and services,” he said.

Win Naing said the Union government has provided a revolving fund of 100 million kyat (Bt2.34 million) for housing development. Other sources of funding include 15 billion yen (Bt4.47 billion) of Japan’s official development assistance loan and a US$4 million (Bt124.69 million) grant for low-income focused community basic infrastructure development from the Asian Development Bank.

Myanmar’s Construction and Housing Development Bank was established in 2014 as a semi-government bank to provide housing finance mechanisms, including housing mortgage for the people and construction loans for developers. It has offered a “Saving to Home Ownership” product, which allows low income people to purchase a 1-million-kyat family unit on a 10-year instalment plan after they have saved at least 20 per cent of the home price at the bank.

“Midterm growth forecasts remain positive because the government has been active in the implementation of affordable housing projects in recent years,” said Win Naing.

“A surge in new infrastructure projects and upgrading of urban and national transport networks will drive the real estate sector growth here.”

The official said the construction industry would become a major driver of Myanmar’s growth over the next few years, thanks to four new megaprojects to be implemented using public-private partnership (PPP) schemes.

They are the New Mandalay resort city project on MandalayPyin Oo Lwin Road, eco “green city” and KoreaMyanmar industrial complex projects on YangonMandalay highway, and the Smart District project that includes Ayeyarwun and Yadanar highrise housing in Yangon.

Investment opportunities

Many more investment opportunities are waiting for developers as the government develops the PPP model. They include projects in land development, infrastructure development, high-rise apartments and mixed-used development, said Win Naing.

He believes the Myanmar Condominium Law enacted in 2016 will attract foreign companies to develop housing projects in the country, as it allows foreigners to own property for the first time in history. Under the law, foreigners can purchase residential apartments, and foreign investors are permitted to be engaged in condominium projects as co-developers. Less than 40 per cent of the total rooms in a condominium project are allowed to be sold to forฌ-eigners.

Ye Linn, a member of Myanmar Construction Entrepreneurs Association’s executive commitฌtee, said his group would implement a $200-million three-year project this year in an aim to supply 20,000 housing units by 2020.

He considered an unclear regulatory environment, land acquisition, tax relaxation, and labour issues to be major challenges for construction companies in Myanmar, along with a lack of technology, experience, infrastructure and access to finance.

Ye Linn said good financial planning, a clear plan, a good funding model and land consolidation are critical to successful implementation of housing projects. He urged creation of a favourable environment for investors coupled with drawing up a masterplan for affordable housing implementation.

“While project funding traditionally comes from the government’s budget, it is important to explore private funding that could be secured through PPP projects,” he said.

Robert Marshall, global director of planฌning and landscape and principal at B+H Architects, said master planning was the key to solving infrastructure problems at every scale – regional, city, community, neighbourhood and onsite.

Research in 2017 by Lian C, Ma Y and Wang C found that low interest rates lead to significantly higher allocations to risky assets even when the difference between risky and risk-free assets is held constant. The effect is more prominent when the rates are below the historical norm.

Does the Thai financial market encounter this type of behaviour?

Of course it does. The growth of risky asset investments – such as savings cooperatives and foreign investment funds – are significantly higher during a period of low market interest rates than when the market rate is high.

For example, during periods that the policy rate hovered around 1.251.5 per cent – the historically lowest – deposits at savings cooperatives grew by more than 19 per cent year on year each month compared to 9 per cent during periods with higher interest rates. Additionally, investment in foreign investment funds (FIFs) has also increased tremendously since the beginning of the downward trend in the policy rate in 2012. There has been an increase in net asset value from more than Bt353 billion to over Bt1.1 trillion in February 2018.

However, this kind of behaviour should not threaten Thailand’s financial stability unless investors are unaware of the risks regarding these high-yield investments, which could lead to inefficient investment decisions, such as over-investing in risky assets. Then, the important questions should be, “Are Thai investors fully cautious of the risks they have to take to earn those high returns?” and “Are there any risks relating to high-yield investment that investors may not be aware of?”

Let’s take a look at savings cooperatives whose combined assets were worth more than Bt2.2 trillion in 2016 – larger than the total assets of every medium-size bank in Thailand. First, considering the fundamental investment risk, credit default risk, saving cooperatives seem to have low nonperforming loans or NPL of about Bt1.2 billion compared to total lending to members of Bt1.8 trillion. This is because they receive loan repayments directly from their members’ payrolls. Yet, because savings cooperatives tend not to be members of credit bureaus, many of them can not holistically assess the debt burden of their members. In addition, many saving cooperatives allow their members to roll over their debts by taking out a new loan to pay off a maturing one. Therefore, low NPL figures may not reflect their default risk.

Another important risk factor can be analysed from comparing funding from members, in term of deposits and equity, and lending to members. For instance, one of the largest Thai saving cooperatives has funding from members of about Bt108 billion – much larger than members’ loan demands of Bt21 billion.

In order to generate hefty returns to pay the members their promising generous dividends and interest, these cooperatives have to invest excess funds into a variety of assets such as local equities and corporate debts.

FIFs, which have been gaining popularity with Thai investors, are also important risky assets, with a value of roughly 7 per cent of Thai nominal GDP. Most FIFs seem to be “quite” safe investments since the majority of them invest in fixed incomes. You have to know your risk to correctly estimate the compensation you would like to get and efficiently diversify your portfolio.

Contributed by Duangrat Prajaksilpthai and Poon Panichpibool. Views expressed in this article are those of the authors and not necessarily of TMB Bank or its executives.

The convenient location provides 1,260 square metres of sleek and inspiring office space, including 334 desks and three meeting rooms, said Noelle Coak, Country Head for Thailand, Taiwan and Korea of Spaces.

It offers an inspiring workplace that’s further strengthened by one of Bangkok’s best-known cafes. Spaces has teamed up with Rocket X for its first cafe within the workspace, helping to kick-start the day and add fuel to the creativity of the users. The cafe will also cater for meetings and events. Furthermore, Spaces’ second Bangkok location, at Chamchuri Square, is expected to be completed by May 2018, she added.

    The project will be officially launched on March 24-25, 2018, managing director Phakthana Preedawiphat said at press conference yesterday.

He said this year would see four projects worth Bt2 billion commenced, with total revenue for 2018 targeted at Bt1.2 billion.

The changing lifestyle of city folk is making them buy residential property close to their place of work, which has inspired property developers to invest more in mixeduse projects in Bangkok’s central business district (CBD).

Developers are investing more than Bt581.5 billion from this year until 2025.

Mixeduse projects combine residential, hospitality, office and retail space in the same area.

According to a survey by The Nation, the TCC Group owned by tycoon Charoen Sirivadhanabhakdi is investing Bt153.5 billion over the next seven years in developing three mixeduse projects in Bangkok’s CBD area.

The first project is One Bangkok, located on Rama IVWireless Road over 104 rai of land. The project will have an office block with combined office space of 500,000 square metres, 1,000 rooms in a luxury hotel, retail space and three ultraluxury condominium buildings. Planners expect 60,000 people to use the entire complex.

The next project is PARQ, worth Bt20 billion and located on 24 rai, close to the Queen Sirikit National Convention Centre on Rama IV Ratchadaphisek Road, opposite the FYI Centre, which is also owned by TCC Group. This project will have office, retail and hotel buildings in a total development of 320,000 square metres.

The third TCC project is the Samyan Mitrtown complex, worth Bt8.5 billion, which is being developed by its subsidiary Golden Land Property Development Plc.

This project is located on 13 rai on Phya Thai Rama IV Road. The project will have office, serviced apartments, and condominiums in a total area of 220,000 square metres.

Magnolia Quality Development Corporation (MQDC), in which the Chearavanot family that owns CP Group, are major stakeholders, is another property firm going for mixed-use projects in Bangkok – on its own and as a joint venture. Its three projects are worth a combined Bt170 million.

The first project is Forestias, over 300 rai at Bang NaTrad Road KM7.

The Bt90billion project will have residential, retail, office, health centre, innovative building centre and a green area.

Another project is IconSiam over 50 rai on Charoen Nakhon Road. This project, being develฌoped as a joint venture with Siam Piwat and CP Group, has retail, office, residential, and hotel buildings.

MQDC is also coming up with Whizdom 101, worth Bt30 billion, located on Sukhumvit Soi 101. The project over 43 rai combines a condominium, community mall, offices and a sports club.

Other property developers have also announced plans to develop mixeduse projects on land near the CBD in keeping with changing customer preferences.

For instance, Supalai Plc plans to develop on land where the Australian Embassy was previousฌly situated on Sathon Road, a mixeduse project. The Supalai Icon, worth Bt20 billion, will combine condominium, office, and retail complex.

Origin Property Plc also plans to develop three mixeduse projects worth a combined Bt70 billion at three locations –Phya Thai, Thonglor, and Phrom Phong.

“When you drive a car on Rama IV towards Sathon Road, you will see more construction of mixed-use projects, with more than half of them being owned by beverage tycoon Charoen Sirivadhanabhakdi.

This change in business model over the next decade in Bangkok’s CBD for mixed-use projects is due to change in customer behaviour change and the rising price of land, which makes it difficult for develฌopers to only build condominium projects,” said Thai Condominium Association president Prasert Taedullayasatit. Prasert is also chief executive officer of Pruksa Real Estate Plc.

He added that a number of mixed-use projects would be developed in Bangkok until 2025, worth more than Bt700 billion. Their location close to the CBD area will result in people moving from outer areas to live close to their place of work. Property developers are developing smallsize residential units close to the mass transit system.

Origin Property Plc’s chief executive officer Peerapong Jaroon-Ek said the company had decided to develop three mixed-use projects from this year until 2025 to cater to the needs of customers, who are seeking one space for all their activities. The mixed-use concept will answer all their lifestyle needs, he said.

However, he said the location most suited for mixed-use projects are located in the CBD, challenging the customers to buy them, he said.

BTS Group Holdings Plc is also interested in developing a mixed-use project over 7 rai on Phya Thai Road, located close to BTS Phya Thai station.

The office and hotel project worth Bt10 billion will be announced this year. The project will be developed by its subsidiary U City Plc, the company’s chairman Keeree Kanjanapas said recently.

U City also plans to develop the Roi chak Sam building over 5 rai on Charoen Krung Road, a mixeduse project which includes a hotel, food court, and retail. Details will be finalised in 2019, he said.

“When all mixed-use projects in Bangkok are completed in 2025, it will change Bangkok’s CBD landscape into a work and lifestyle destination,” Prasert said.