Thailand’s real estate investment transaction volume totals THB 19.2 billion in the first half of 2019

Through the first half of 2019, investment activity across all property sectors in Thailand totaled THB 19.2 billion. Of this, more than half was from two transactions in Bangkok -- the sale of Sun Towers office complex and the sale of an 11-rai development site near BTS Mo Chit station, according to the Thailand Property Intelligence Centre by property consultancy JLL.

JLL’s Thailand Property Intelligence Centre monitors publicly-disclosed real estate investment activities in Thailand by private and public companies and funds.

There were four transactions worth more than THB 1 billion each recorded in the first half of 2019. The largest transaction was Singha Estate PCL’s THB-5.7 billion sale of Sun Towers, an office complex on Vibhavadi-Rangsit Road, to its sponsored REIT, the S Prime Growth Leasehold Real Estate Investment Trust (SPRIME).

Sino-Thai Engineering & Construction PCL (STECON) and its subsidiaries were the second largest investor in the first half with two transactions totaling more than THB 5 billion. In April, STECON purchased an 11-rai development site near BTS Mo Chit station from U City PCL for THB 4.3 billion that will be developed into an office complex.  In June, one of the firm’s subsidiaries, ST Property & Logistics Co., Ltd., acquired the Summer Hill community mall and Summer Hub office building next to BTS Phra Khanong station from Boutique Corporation PCL for THB 957 million.

Mrs. Suphin Mechuchep, Managing Director of JLL, comments “STECON’s investments thus far in 2019 marks the continuance of the re-entry of contractors and construction companies expanding into real estate investment, after nearly two decades of absence following the 1997 Asian Financial Crisis. Other recent construction firms investing in real estate include Saengfah Construction’s joint venture with AIRA Securities PCL and SENA Development PCL for the development of Spring Tower, an office tower near BTS Ratchathewi station, and Thai Obayashi’s 2017 acquisition of a development site next to BTS Nana station for a then-record-setting THB 2.6 million per square wah, where it is now building O-NES Tower, the firm’s first office building investment since the Nantawan Building near BTS Ratchadarmi station in 1991.”

The most expensive land transaction thus far in 2019 on a per square wah basis was Shangri-La Hotel PCL’s February acquisition of a 658 square wah site in Thonglor for THB 1.9 billion, or THB 2.86 million per square wah.

“The price per square wah for the site acquired by Shangri-La Hotel PCL is the highest per square wah price the market has seen for the development of a hotel, but did not break the all-time record high price of THB 3.1 million per square wah achieved by the 880-square-wah plot on Langsuan Road that JLL sold on behalf of the owner in 2018,” according to Mrs. Suphin.

“High land prices and the new land and property tax regulations slated for enforcement in 2020 have motivated and will continue to motivate more owners of underutilised land or land with underperforming buildings in Bangkok’s prime locations to put their sites on the market this year. This will mean more opportunities for well-capitalised investors to acquire prime sites for their new development projects. We believe that visionary investors will still be able to achieve decent returns on investment in their future development projects despite rising land costs,” she adds.

JLL expects most of the upcoming major real investment activities in the remainder of 2019 to be land and commercial property investment transactions in Bangkok. The firm also anticipates investment activities to rise in the industrial/logistics sector, particularly in the Eastern Economic Corridor (EEC), as more manufacturers are relocating their China-based operations to Southeast Asia and the fast growth of e-commerce has fueled demand for logistics real estate in Thailand.