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Upward trend toward diversification among property companies

The trend is not new but it is growing

​While many property companies tend to specialise in a single sector, others have developed or invested in a diverse range of property types and sectors. Diversifying into more than one property sectors is not a new thing, but the trend is growing, according to international property services firm JLL.

Suphin Mechuchep, Managing Director at JLL, says: “Real estate is cyclical by nature, and different stages of the market cycle present different levels of opportunities and risk. While real estate comprises different markets, each of these markets has its own cycle. For this reason, more property investors and developers are spreading their investment in different markets to have access to more business opportunities and spread risk by reducing their reliance on a single market.”

Following are some examples of property companies that have diversified into a wide range of real estate markets in Thailand:

TCC Land is Thailand’s most diverse property company with its comprehensive portfolio spanning retail centres, residential developments, hotels, office buildings, golf courses, and exhibition/conference facilities. Some of these properties are the company’s own developments, while the others have come from either direct asset purchases or acquired companies. 

Central Pattana (CPN), although primarily known as a leading retail developer and operator, has established a strong presence in the hospitality sector. The firm also has a number of office buildings in its portfolio. Recently, CPN is developing condominiums near shopping centres in major provinces such as Chiang Mai, Khon Kaen and Rayong.

Singha Estate, the property arm of Singha Corporation, is developing a condominium project and a mixed-use complex with office and retail components in Asoke. Singha Estate has also acquired a majority stake in Rasa Property Development with a portfolio of residential projects, and in Nirvana Development, which specialises in landed housing development.  In the most recent case, the firm purchased Suntowers, an office development on Vibhavadi Rangsit Road.

Property Perfect, predominantly known as a residential development company, also has business in the retail sector through their subsidiary, WeRetail. The firm has also entered the hotel business through the acquisition of Grande Asset Hotels and Property.

“Diversification does not necessarily mean jumping to a totally different property sector. For example, while LPN continues to focus on condominium development, the firm has recently diversified into the upper-end market with The Lumpini 24,” says Mrs. Suphin. 

“In some cases, diversification also ensures a higher potential for a property project to be successful.  Mixed-use developments with different components that complement one another exemplify those cases,” she adds.

Grand Canal Land (G Land) is developing the Grand Rama 9, a mega property development complex which comprises 1.2 million square metres of office buildings, condominiums, hotels, and shopping centres. Completed developments within the project include The 9th Towers (office), U Place (Unilever’s head office), Central Plaza Grand Rama 9, and Belle Grand Rama 9 (condominium). Additionally, construction of an iconic building G Tower is slated for completion by the end-2016. Another landmark project, Super Tower, is set to become the tallest building in Southeast Asia upon completion. Construction of the skyscraper has not yet started.

“In whichever case, the trend of diversification in the real estate industry is becoming more apparent,” Mrs. Suphin concludes.