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News Release

Bangkok

Robust Investment Activity in Bangkok Real Estate Market

Jones Lang LaSalle concludes THB 3.5 billion of capital investment transactions in the first half of 2010


Despite the political turbulence, investment activity in the Bangkok real estate market remained robust over the first half of 2010. While the low interest environment encouraged more investors to seek alternative investment opportunities in real estate, property development firms continued to aggressively acquire land for new development, according to Jones Lang LaSalle, a professional services firm specializing in real estate.
 
Umpon Thepnumsommanus, Director of Investment at Jones Lang LaSalle, said, “For the past six months, investment activity in the Bangkok property market was buoyant. Investment transactions concluded by Jones Lang LaSalle alone on behalf of clients represent a combined value of THB 3.5 billion for the period. These include the sale of a portfolio of strata-titled office condominium units at Serm-Mit Tower for THB 1.5 billion in early 2010 and dispositions of a number of prime land plots.”
 
There were a number of factors that drove investment activity in the first half of the year, according to Mr. Umpon. On the supply side, many corporations continued to restructure their asset portfolio by disposing their non-core assets. On the demand side, while property developers bought more land for future developments, some investors remained keen to invest in income-generating assets such as office buildings, given the current low-interest environment.
 
Another factor that contributed to the robust sales and acquisition activities was the narrower gap between the buyers' and the sellers’ price expectations. “As the political unrests that intensified between April and May softened investor sentiment, sellers adopted a more compromising approach with their asking prices, allowing faster sales transactions,” Mr. Umpon said.
 
In addition, several sales in the second quarter were accelerated due to the expiration of the government’s property stimulus package. Many sellers became more flexible during the negotiation process in order to complete the sale and have the property transferred in time prior to the expiry of the property stimulus package on June 30.
 
Property developers competing for prime land
 
Many of the real estate investment activities recorded in Bangkok over the past six months were acquisitions of land or sites for redevelopment purposes by property companies. Land plots located no farther than 200 meters from a BTS, MRT, or Airport Link station received exceptionally high interest.
 
Mr. Umpon explained, “Mid-priced condominiums with convenient access to mass transit systems have remained very popular as reflected by the fast sales rates achieved by many off-plan or newly launched projects in close proximity to mass transit systems. This has encouraged demand from property development companies for land with potential for condominium development.”
 
Over the past six months, Jones Lang LaSalle acted on behalf of its clients to dispose a number of land plots, with a combined value of approximately THB 2 billion. Located in close proximity to the mass transit systems, most of these land plots were acquired by property development companies planning to develop residential condominium buildings on these sites.
 
“The trend of property development companies securing prime land for condominium development will continue. The recent issuances of debentures by a number of major listed residential property developers such as Preuksa Real Estate, Supalai and Asian Property Development show that these companies have been well prepared for new investments,” said Mr. Umpon.
 
Investment activity in holiday home markets remains quiet
 
Unlike Bangkok, the property markets in coastal holiday destinations such as Pattaya, Phuket, and Samui have remained subdued. Dominated by foreign investors, investment activity has witnessed a marked slowdown since the global financial crisis escalated in the final quarter of 2008.
 
However, as many parts of the world have seen signs of economic recovery, a number of international investors are regaining their financial strength and are expected to come back into Thailand’s holiday property markets in the near future.
 
In addition, there are several good resort properties and land offered for sale in these markets. Selling prices are generally very attractive with some properties being offered for sale at a price discounted by 20–30% from the peak levels seen 3–4 years ago.
 
“Smart investors understand the cyclical nature of property markets. Sooner or later, these investors will come back,” concluded Mr. Umpon.