Thailand was one of the largest beneficiaries of both individual and corporate investment from China.

According to Siam Commercial Bank IEC research, Chinese investors expand their property market investments outside of Mainland China to over Bt1 trillion in the year 2015, up 82 per cent from 2012 in which Bt170 billion of investment was recorded.

The top three countries benefiting from Chinese property investors were the US, Australia and the UK, according to Knight Frank Research.

In Thailand that first year, Chinese invested only 0.2 per cent of their total their overseas investment. Over the years, their top five locations for investing in Thai property projects became Bangkok, Chonburi, Chiang Mai, Phuket and Surat Thani province.

The latest survey by Juwai.com, a website for trade property in China, said that Thailand ranks fourth among property bought by Chinese investors. In 2018, their investment value in the Kingdom’s property market was recorded at US$2.3 billion (about Bt73.6 billion) for about 15,000 condominium units.

The US is the first-choice country for Chinese property market investors looking to expand their holdings, at a value of $30.4 billion (about Bt974.8 billion), followed by Hong Kong at $16.2 billion (Bt518.4 billion), and Australia at $14.1 billion (Bt451.2 billion).

Meanwhile, Malaysia ranks fifth, attracting Chinese investment in the property worth $2 billion (about Bt64 billion) in the year 2018.

Their investment in Thailand has shown a return averaging 6 to 10 per cent when condominium units are opened for rental, according to CBRE reports.

Most Chinese purchases invest in condo units for rental, rather than moving in themselves, preferring the business opportunity to generate rental income from their investment, says a property expert.

The market trend is for property management for rental, which provides entry to the Thailand property market by supporting the demand from investors who need to generate income from their asset.

Seeing a business opportunity, startup firm Hostmaker, an award-winning home rentals management company from Europe, set up shop in Thailand in November 2018.

“We established our business in Thailand three months ago, and have grown to managing 120 condominium units in Bangkok, such as along Sukhumvit, Phayathai, Ratchathevee, and Mochit. They are opening for a rental start within 30 days through six months, depending on the customer’s demand,” Hostmaker Thailand’s assistant general manager Paruethai Panjaboon said in a recent interview with The Nation.

The company has had success in already providing a return of investment for its customers of up to 20 per cent, more than the market average income, within their 3-month launch in Thailand. The key factors include the increasing numbers of expats looking for mid-term rent accommodations (1-3 months) as well as the change in travel lifestyles that demand more flexibility, convenience, and the one-stop service that can be found within Hostmaker’s core services.

The demand for rental averages between one and three months, mainly comes from people doing business in Thailand or other Asean countries. They need residential for a mid-term rental rather than staying in a hotel. Most of them are from European countries, she said.

“Our business matches the demand between condominium owners and renters. They need a high return and a reasonable price to do business, respectively. Now, the number of condominium for rent is rising as the demand for mid-term rental is also rising,” she said.

With the demand for rent experiencing strong market growth, the company plans to increase the number of rooms under their management from the current 120 to reach 400 units this year by focusing on Bangkok locations, she said.

The key to success in renting residential properties is not just about the location, but also the optimal unit size, maximising the utility of the space and providing a high standard of finishing, furnishing, facilities and appliances, Paruethai said.

For the Thai real-estate industry today, though, there is an oversupply of properties that does not balance with the demand, especially in Bangkok. However, as today’s sharing economy trends continue to grow, this will provide the industry with opportunities – as will growing numbers of visitors to Thailand.

Thus, Hostmaker is confident they have a future supporting hosts in Thailand while also fulfilling the needs of guests, Paruethai added.

SC’s total sales revenue for the whole year will come from 58 projects worth a combined Bt62.7 billion, consisting of 46 ongoing projects worth Bt40 billion and 12 new projects worth Bt22.7 billion, the CEO said.

New projects consist of eight low-rise projects totalling Bt6.5 billion and four high-rise projects – worth Bt16.2 billion – in central Bangkok, including two SC projects and two SCOPE projects, he said.

The new home loan, offered on the unique proposition of getting approved more easily, paying lower monthly instalments and receiving monthly retirement income, has been developed to capture the real needs of smart consumers who wish to plan for financial security throughout their lives, Sansiri chief financial officer Wanchak Buranasiri said after signing an agreement with the GSB on Monday.

The company expects the new product to result in 50 per cent more Sansiri customers applying for a loan from the state-owned bank, he added.

Sansiri realises the growing trend of financial planning for long-term security among consumers, Wanchak said.

In Thailand, long-term financial planning has been a growing consumer trend during recent years.

According to the Foundation of Thai Gerontology Research and Development Institute, up to 55 per cent of Thais aged 25 to 55 are increasingly taking serious steps in retirement financing plan.

GSB’s president and chief executive officer Chatchai Payuhanaveechai said HomeForLife represented a new financial innovation jointly developed for the first time by a real-estate developer and a financial institution based on insight into smart consumers who are keen about financial planning.

“We believe that this financial innovation will become a new alternative and important tool to help today’s working people make long-term financial planning efficiently. GSB can also approve loans more easily with secure equity, as well as promote reverse mortgages and other loan products to wider target consumers,” the bank’s chief added.

“Our debenture issue will reduce our financial cost from the average 4 per cent over the last year to 3.5 per cent this year, to help us keep financial costs healthy so as to allow for business expansion this year,” he said

Following the debenture issue, the company will spend to acquire land worth up to Bt4 billion this year, in order to launch 16 new residential projects worth a total of Bt20 billion in 2019.

Ten projects, worth Bt12 billion, will be condominiums and office buildings for sale, with the next Bt8 billion for developing single detached and townhouse projects.

“Our business strategy this year is to expand to all market segments to serve customer demand and to reduce the impact from our business risk, including interest rates rising, the Bank of Thailand [BOT] measure to restrict mortgage loans for second and third homes, and the drop in purchasing power to buy residential from both domestic and foreign investors,” he said.

This is a hard year for property firms to develop residential projects, Opas added. The demand to buy residential property will be limited following the BOT restriction on second and third homes. As well, there has been a drop in purchasing power for the lower-income market.

Given the hard period it faces, the company’s policy this year will be to control its management costs and to keep staffing levels to below 2,000, Opas said.

“We will not lay off our staff, but if a staff resigns we have no plan to recruit a replacement. However, we will expand our investment to develop our Big Data and digital systems to support our business, and to create business performance to compete with other property developers,” he added.

Following the market trend, LPN Development Plc has increased the sales for the middle market, with units priced between Bt2 million and Bt5 million accounting for 70 per cent of its portfolio. The next 20 per cent will target the premium market at prices above Bt5 million, and the remaining 10 per cent will be aimed at the lower-income market with prices under Bt2 million per unit.

The company also increased its income from recurring income from last year’s 2 per cent, to 15 per cent of total revenue this year, by focusing on rental residential and its service business, Opas said.

With that market strategy, the company expects to achieve Bt16 billion presales this year, up 6 per cent from presales of Bt15 billion last year.

The company also targets total revenue of Bt13.5 billion this year. Of this year’s revenue target, Bt12 billion will come from residential sales, and the remaining Bt1.5 billion from recurring income including residential for rental and its service business, he said.

Currently, the company has a total backlog worth Bt9 billion, with condominiums accounting for Bt6 billion, and the next Bt3 billion from single detached houses and townhouses.

The company also has a Bt7-billion inventory for sale. They will boost total revenues to achieve the target by the end of this year, he said.

They will this year develop their first condominium project in Thailand, Ren Sukhumvit 39, worth Bt2.5 billion.

“Thailand was the second country in Asean where we have invested in a condominium project after our expansion to Vietnam last year,” Pressance Corporation Co Ltd’s manager of business development, Tatsuya Nakae, said in a recent interview with The Nation.

He sees great potential in developing condo projects in Thailand, due to the country’s heavy investment in infrastructure. The rapid expansion of mass-transit rail projects in the country’s major cities, is a particular inducement for residential developments close to the routes.

“We entered Thailand by setting up a joint venture with our Japanese partner, Shinwa Group, which had expanded their presence to Thailand in 2017.This boosted our confidence with our investment in the country,” he said.

Since their first project, Ren Sukhumvit 39, Nakae said the company has continued its interest in further investment in Thailand with its partner, Shinwa Group. Decisions will be based on market demand.

Tomoyasu Yamabe, director of Shinwa Group and managing director of Shinwa Real Estate (Thailand) Co Ltd, says the company is following a business plan to invest Bt8 billion in Thailand in 2019 and 2020, and may ask Pressance Corporation to become a partner.

Pressance Corporation Co Ltd developed 5,200 condominium units in Japan last year and has recorded total sales above Bt30 billion yearly.

Pressance is the latest property firm from Japan to have expanded its investment into Thailand.

According to a recent survey by The Nation, 10 listed and non-listed property firms had set up joint ventures with Japanese property firms to develop residential projects in Bangkok. The latest joint venture has SC Asset Corporation Plc shaking hands with Nitshitetsu Group from Japan, to create SCNNR1 Co Ltd with a registered capital of Bt1.2 billion. They are planning their first condominium project, The Crest at Lat Phrao district.

“We decided to team up with the Japanese firm to improve our residential project design and construction process to the Japanese standard,” SC Asset Corporation Plc’s chief executive, Nattapong Kunakornwong, said recently.

The Nation survey found Ananda Development Plc the first Thai property firm to have entered into a joint venture with a Japanese developer, Mitsui Fudosan, in 2013. Since then, they have developed 26 residential projects together with a total project value of Bt120 billion. Most have achieved success with sales averaging 60 per cent and more, and one development, ideo Q Chula-Samyan, has already sold out and will this year transfer units to its customers.

The second co-venture unites AP (Thailand) Plc and Mitsubishi Estate Group, which have since 2014 built 14 condominium projects worth Bt65.42 billion (for other co-ventures, see graphic).

“We learned how to design space and improve the construction process from our Japanese partner, boosting our know-how in creating differentiated products to serve our customers’ demand,” AP (Thailand) Plc’s chief executive, Anuphong Asavabhokhin, said recently.

Meanwhile, Japanese firms who have expanded their investment to Thailand see it as an opportunity to expand to Asean countries. However, they are particularily interested in Thailand, which is aggressively investing in the development of its infrastructure, including the rail system.

Tomoyasu Yamabe, managing director at Shinwa Real Estate (Thailand) Co Ltd, a joint venture firm between Japan-based Shinwa Group and its Thai partner, said the company began expanding to Thailand three years ago.

A joint venture with Woraluk Property Co Ltd in 2017 led to their first condominium project, Runesu Thonglor 5, worth Bt1.2 billion. All units in the project will be transferred to buyers this year.

Yamabe, who is also a director of Shinwa Group, says the company is now planning to sell its construction technology in the Philippines, Vietnam, Malaysia, Indonesia, Taiwan, Hong Kong and Singapore.

“We see strong demand for residential unit in the region. Asean countries are expanding their investments in infrastructure projects, especially the rail systems, which will change people’s lifestyles as they move to locations close to mass transit routes.

“This creates a new market and opportunity to expand our investment in this region, where we plan to develop residential projects located close to the rail systems,” he said.

“Although Thailand will hold a national election this year, it will not impact on our business expansion in the local market. We still see strong demand and the potential to expand our business in this country,” he said.

Japan-based Tokyu Corporation’s director and senior managing executive officer, Toshiyuki Hoshino, says the group’s joint venture with Sansiri Plc will see spending of as much as US$100 million yearly between 2018 and 2020.

The firms shook hands last year, enabling expansion through Thailand and on to Asean neighbours with a focus on the residential property sector. Half of the three-year budget will be invested in Thailand with the rest in Vietnam, said Hoshino adding that the company’s focus would later expand to other countries in the region.

“We will expand our investment in Asean, especially Thailand, when we see business opportunity as countries expand their investment in infrastructure development, especially rail systems. A mass-transit network creates strong demand for residential units along the routes,” Hoshino affirmed.

Thailand is clearly seen by the Japanese investors as the gateway for entry into the Asean property market. Japan-based Sumitomo Forestry Co Ltd’s president, Akira Ichikawa, said Thailand’s central location in the region encouraged his company to kick off its first regional project in the kingdom.

It set up a joint venture firm with Grande Asset Hotels and Property Plc and Property Perfect Plc last year. The company will later expand its investment to other Asean countries, focusing on developing residential projects, Akira said.

The company invested in a packaging manufacturing plant in Thailand two years ago, and was attracted to the residential property market by the Thai government’s programme for infrastructure development.

Demand for residences in Thailand remain strong among both locals and foreigners, he said.

The projects would boost its revenue Bt13.5 billion in this year by 15 per cent  over last year, up to Bt12 billion from residential projects sale as the next Bt1.5 billion from recurring income, he said.

In the first nine months of 2018, the company recorded total revenue of Bt7.1 billion and net profit of Bt839.38 million.

Six of the 16 new residential projects to be launched this year will be condominiums, with a Bt12 billion worth, while the remaining 10 will be single detached house and townhouse worth Bt8 billion, he said.

The expansion strategy will be pursued by its investment arm for the region, Shinwa Real Estate (Thailand) Co Ltd, with expectations for sales of its building technology, known as Runesu, to reach Bt100 million a year, Shinwa Real Estate (Thailand) managing director Tomoyasu Yamabe said yesterday.

Alongside the promotion of the Runesu technology, the company plans to make investments in Thailand of up to Bt8 billion to cover this year and the next, Yamabe said at a press conference.

Speaking in Shinwa Group’s headquarters in Osaka, he said the company had an investment budget of up to Bt500 million for mergers and acquisitions targeting construction firms in Thailand in a bid to drive its construction business in the country and the wider Asean region.

“Thailand will be our production base to sell our construction technology, Runesu, to customers in Asean countries. This will drive our construction business in Asean,” Yamabe said.

Within Asean, the company expects to secure the first deals for the sale of the Runesu technology, which creates basement space in condominium units, in Malaysia and Singapore this year. In 2020, the company will expand to Indonesia, the Philippines, Hong Kong and Taiwan.

Under the company’s Bt8 billion investment budget for Thailand, some Bt3 billion will be spent this year on the development of condominium projects. These include Ren Sukhumvit 39 worth Bt2.5 billion, under a joint venture between Shinwa Real Estate Co Ltd, Prebuilt Plc and Pressance Corporation, and a low-rise project in Srinakarin Road near the Yellow Line rail route, worth about Bt200 million. The company is also planning another low-rise condominium project near a mass transit route, the company’s executive director Wichai Chula-Orankun said.

The remaining Bt5 billion will be invested in 2020 for the development of condominium, townhomes and apartments, he said.

The company’s investment budget will be drawn from the company’s initial cashflow, which will be boosted by revenue of about Bt600 million to be booked from the company’s first condominium project in Thailand, Runesu Thonglor 5. The units will be transferred to its customers in August. The funds for the rest of the investment budget will come from the parent company, Wichai said.

“We expect sales of up to 40 per cent from low-rise condominium projects, followed by 30 per cent from high-rise condominium projects, 20 per cent from townhomes, and the rest from premium serviced apartments in 2020,” he said.

Under its business model, the company expects 80 per cent of its total revenue will come from sales at residential projects and the rest from rental and fee income, he said.

Yamabe said the company believes that the property market in Thailand will continue to see strong growth, in spite of the uncertainties surrounding the prospect of a national election this year.

“We believe that the new election will create stability for the country’s economy growth for long term,” Yamabe said.

In line with the company’s business expansion in Thailand over this year and the next, the company expects its total revenue will reach Bt1.5 billion and net profit Bt500 million in its 2020 fiscal year (August 2020-July 2021), he said.

Shinwa Group entered Thailand in 2017, marking its first overseas expansion beyond Japan. It did so by setting up a joint-venture firm to develop Runesu Thonglor Soi 5, worth Bt1.2 billion, with Woraluk Property Co Ltd. The group then established Shinwa Real Estate (Thailand) Co Ltd with registered capital of Bt4 million. Shinwa Group holds 49 per cent of the joint venture and its Thai partners the rest.

Shinwa Group recorded total revenue of Bt9.91 billion and net profit of Bt856 million in its 2018 fiscal year and expects total revenue to reach Bt10.4 billion and net profit Bt920 million in fiscal 2019.

The Thai-based real estate company has 70 active projects, 42 of which are in Bangkok and surrounding areas and 28 in the rest of the country.

This year, the company plans to start a further 16 projects with a total value of Bt26.96 billion, with 14 projects in and around Bangkok and two elsewhere in the country, the chairman of the board of directors of Land and Houses, Naporn Sunthornchitcharoen, said yesterday at a press conference.

Adisorn Thananan-narapool, managing director of Land and Houses, said that this year the company expects to earn Bt33 billion from sales reservations, Bt32 billion from project development businesses and Bt5 billion from rentals.

Naporn said: “An increasingly promising business will be rentals, both from apartments and hotels, which have seen significant growth in the past five to six years. Last year, our rental businesses saw an approximately 35 per cent year on year growth.”

Of the total sales for this year, 72 per cent is expected to come from twin-houses, 8 per cent from townhouses, and 20 per cent from condominiums, he said.

With regards to the Bank of Thailand’s (BOT) new measures to tighten credit underwriting standards for mortgages, Land and Houses has adopted a wait and see approach, he said.

“The BOT’s new measures are sure to have an impact on the real estate market. We will have to keep a close eye on the market direction throughout the year and respond accordingly,” Naporn told reporters.

The central bank on October 4 announced measures to tighten credit underwriting standards for home loans. Under the new rules, the maximum loan-to-value (LTV) ratio will be restricted to 80 per cent on new mortgages for homes worth more than Bt10 million. The same LTV restrictions will apply for the purchase of a second home, irrespective of the property’s value. Banks will also be prohibited from providing advances that exceed the value of a property.

In 2018, Land and House had a net loan debt of Bt43 billion, a debt to equity ratio of 86 per cent and an average funding cost of 2.46 per cent. The company’s investment expenditure stood at Bt10 billion, with Bt6 billion going to land purchases to develop homes and Bt4 billion going to rental businesses, according to Adisorn.

Last year, the company sold The Domain Residence in the United States, California, for US$140 million or Bt4.48 billion, with a profit before tax of $41.17 million, or Bt1.317 billion, he said.

“In 2019, the company expects the net debt ratio to remain at the same level as last year,” Adisorn said

From January to November 2018, the company’s market share for single-houses stood at 10.6 per cent, twin-houses at 13.7 per cent, townhouses at 3.5 per cent, and condominiums 1.2 per cent, he said.