Bright Outlook for Thai Properties - Tourist Destinations

The momentum of hotel investment in Thailand is likely to continue, supported by new buying opportunities, especially in tourist destinations, according to the property service consultant John Lang LaSalle.

Activity in Thailand is projected to increase as some counter-cyclical buying opportunities emerge, said Mike Batchelor, managing director for Asia's investment sales of Jones Lang LaSalle Hotels.

The political environment is more stable and trading is expected to rebound over the next 12 to 18 months, notwithstanding the impact of the recent flooding disaster in Bangkok.

Similar to Hong Kong and Singapore, some offshore and long-term Thai owners are looking to exit to redeploy elsewhere capital offshore.

Earlier in January, two Courtyard by Marriott hotel properties with a combined value of 3.8 billion baht in Phuket's Patong and Phetchaburi's Cha-am were up for sale.

In the past two years, JLL Hotels have successfully completed several high-profile transactions in Thailand including the Laguna Beach Resort Phuket, Dusit Thani Laguna Phuket, Baan Taling Ngam Samui and the Sofitel Silom Bangkok.

Mr Batchelor said so far the dislocation in the financial markets has not impacted underlying trading fundamentals in Thailand. This has reassured investors to a certain degree and underscored the attractiveness of high-quality, income-producing hotel real estate as an asset class.

"We expect single asset sales across the gateway markets of Bangkok, Phuket, Pattaya to be the main centres of activity following a similar pattern in 2011," he said.

On the global trend, JLL Hotels forecasts that the global hotel transaction volume will hold steady in 2012, with value exceeding US$31 billion, despite the continuing economic uncertainty.

The sentiment is especially bullish in the Asia-Pacific, where the hotel transaction volume is projected to reach $5 billion this year, similar to last year. Of this, Asia is projected to reach $3.5 billion as long-term owners continue to make strategic dispositions in Southeast Asia and bank-motivated sales gain traction in Japan.

http://www.bangkokpost.com/property/news/277742/jll-bright-outlook-for-continued-hotel-investment

Thailand Property Market Heats up!

MahaNakhon a hit abroad

Because of better sentiment among foreigners toward the elected government, the luxury developer Pace Development Co Ltd plans another roadshow in Hong Kong to pick up additional sales of at least 200 million baht for units at its high-end MahaNakhon project.

CEO Sorapoj Techakraisri said foreign property buyers' confidence in Thailand's economy and political situation had improved after the general election and formation of the new government, showing the country's political stability.

"They [foreign buyers] didn't care which party would become the new government, who would be the new prime minister or what the new policies would be," he said. "They just learned that we had a government from an election, a good sign for the country."

The company will have its second roadshow in Hong Kong next month to follow up new sales and expects to have at least 200 million baht after receiving many inquiries. The previous roadshow in Hong Kong last month recorded sales of 420 million baht for 10 units.

"Chinese buyers are interesting for us to tap, and we plan to talk with our sales agent about this segment," said Mr Sorapoj. "But they prefer one-on-one or private meetings to a roadshow because many of them are richer and want to stay unknown."

The company had 330 million baht in sales from eight units sold at another roadshow in Singapore. Total sales at both destinations of 750 million baht exceeded a target of 600 million baht, said Mr Sorapoj, a son of the major shareholders of the condominium leader L.P.N. Development.

With an investment of 14 billion baht, MahaNakhon will have 194 units worth 19 billion baht. It is 40% sold and sales are expected to reach 45% by the end of the year. Unit prices are 220,000 to 340,000 baht per square metre. Construction is to be completed in 2014.

"Better sales are helping us to make easier deals and to bargain better with banks that fund the project finance," said Mr Sorapoj. "By year-end we will complete a deal with the banks and hope to get the best terms amid rising interest rates."

In the year to date, the company had sales of 4.9 billion baht, up 60% from 2010. It has 20 units remaining for sale at Saladaeng Residences.

http://www.bangkokpost.com/property/news/253177/mahanakhon-a-hit-abroad

Rise in air passenger traffic - first half of 2011

Thailand's six major airports including Suvarnabhumi posted an 18.2% rise in passenger traffic in the first half of this year to 33.5 million, underscoring the country's position as one of the busiest in the region for civil aviation.

High double-digit growth will likely continue through the second half thanks largely to the expected absence of further domestic political turmoil that chased away foreign tourists over the past two-and-a-half years.

Industry analysts say travel demand in the high season, which begins in late October, will also likely expedite growth in passenger traffic.

Figures from Airports of Thailand Plc show international passenger throughput from January to June rose 20.5% year-on-year to 21.3 million, while domestic traffic increased by 14.4% to 12.2 million.

Rising in tandem with the increase in passenger numbers were flight frequencies. Combined takeoffs and landings rose 15.4% year-on-year in the first half to 223,381 _ 125,344 for international (up 16.4%) and 98,037 domestic (up 14.2%).

Cargo volume through the airports in the first half grew more slowly due to the weak global economy, by 3.18% to 706,438 tonnes _ 649,328 tonnes for international (up 2.74%) shipments and 57,110 tonnes domestic (up 8.45%).

Most traffic went through Bangkok's gateway Suvarnabhumi airport, which handled 15.6% more passengers in the first half to hit a record 23.99 million.

International passenger traffic rose 18.95% to 18.8 million while domestic traffic increased 4.9% to 5.2 million.

Suvarnabhumi handled 11.7% more takeoffs and landings year-on-year in the first half to a record 145,100 _ 106,798 international (up 14.3%) and 38,302 domestic (up 4.9%).

The airport handled 669,763 tonnes of freight, up 3.14% year-on-year, with international volume rising 2.82% to 643,478 tonnes and domestic shipments up 11.5% to 26,285 tonnes.

http://www.bangkokpost.com/business/aviation/250809/h1-traffic-growth-healthy

Public graft body steps into resort row

The Public Sector Anti-Corruption Commission is preparing to sue resort developers suspected of encroaching on protected land in the Khao Yai national park as well as any state officials found to have assisted them.

PACC secretary-general Ampon Wongsiri yesterday said the National Park, Wildlife and Plant Conservation Department had asked him to examine 22 land plots covering 250 rai near Tharn Thip waterfall in the Khao Yai National Park in Prachin Buri's Prachantakham district where officials have found evidence of encroachment.

Mr Ampon said influential individuals had used land rights documents to claim ownership of the plots.

Issuing land rights documents for forest reserve areas is prohibited by law. PACC will ask the Land Department and the Royal Forest Department to investigate.

Any land title deeds issued for areas in the Khao Yai national park will be revoked and authorities found to have been involved in issuing of the land documents will face legal action.

Meanwhile, Suthep Pawareswitthayalarn, chief of Nakhon Ratchasima's forest management bureau, said forestry officials yesterday finished searching 22 resorts suspected of encroaching on the Khao Phu Luang forest reserve in Wang Nam Khieo. Next week, authorities will begin to search a further 17 resorts suspected to have been built in protected areas of the Khao Phu Luang forest reserve.

http://www.bangkokpost.com/news/local/251460/public-graft-body-steps-into-resort-row

Wage Hike to add to Housing Cost, Thailand

Unit prices of self-built homes could increase by at least 8.2% if the minimum wage is increased to 300 baht a day as the new government has pledged, builders say.

Vibul: Builders to factor in new rates

A higher minimum wage would have twin impacts on the cost of constructing a house, said Vibul Chantradilokrat, president of the Home Builder Association (HBA). One would be an increase in labour costs, which account for 30% of the total, and the other on construction materials, the major cost at 70%.

Raising the minimum wage from 215 baht to 300 baht a day, or by 39.5%, would lift home prices in a range of 8.2% to 10.6%.

"We cannot estimate how much construction materials prices will rise, but they will definitely increase as the wages for production of construction materials will be revised up in line with the new government's policy," said Mr Vibul.

He said the higher unit prices were, the higher the increase in prices would be. Finished materials are used more to build smaller units than larger ones. Higher-priced units are mostly built by skilled labour.

"Homebuilders should carefully set unit prices as the new wage, if passed, will start on Jan 1 next year," said Mr Vibul. "Unit prices introduced today should factor in new rates, as a unit sold today will start construction no later than November and finish next year."

In labour costs for a self-built home, wages ranged from 215 baht to more than 300 baht a day for non-skilled and skilled labour. An increase in the minimum wage of 215 baht would cause a step-up increase in other wage rates. For example, from 215 to 300 baht, 250 to 320 baht and 275 to 325 baht.

From Aug 25-28, the HBA will hold its Home Builder 2011 event at the Queen Sirikit National Convention Center, where more than 40 builders will join with a sales target of 2.5 billion baht, up from 2.3 billion last year.

Highlights will include the 4G Home concept of good design, good consultation with architects and engineers, good content from landscape and interior architects, and good land profile.

Financial partners Siam Commercial Bank, Kasikornbank, the Government Housing Bank and Bangkok Asset Management Corporation will offer more than 1,000 plots of land with titles for building houses.

http://www.bangkokpost.com/property/news/250188/builders-say-wage-hike-would-add-to-housing-cost

Dow to build (PE) Rayong plant - Polyolefin Encapsulant Films

US-based Dow Chemical is planning a new petrochemical plant in Map Ta Phut, Rayong, to more than triple its production capacity of specialty films.

The new facility, for which the investment cost was not disclosed, will begin construction next year for the production of polyolefin (PE) encapsulant films, which are used in photovoltaic modules for solar power installations.

Another similar plant will be built in Schkopau, Germany, also in 2012, Dow said yesterday.

Together, these sites will significantly expand the company's ability to supply encapsulant films worldwide.

Jirasak Singmaneechai, Dow's country manager, said the new Map Ta Phut factory would support the company's strategy to enhance and expand its presence in Thailand. The factory will be Dow's largest manufacturing facility in Asia-Pacific and comes with access to a seaport, he added.

Dow Enlight PE films help improve the reliability and performance of finished photovoltaic (PV) modules and allow fast processing speeds to help module manufacturers lower their conversion costs.

Demand for PV modules has been growing at about 30% a year, said Brij Sinha, global market manager for photovoltaics and performance plastics.

Investments in renewable energies have continued to skyrocket, growing nearly a third to US$211 billion globally in 2010.

Solar pricing is now becoming competitive with other sources of electricity.

http://www.bangkokpost.com/business/economics/250568/dow-to-build-rayong-plant

Sansiri looking to build in luxury market - lack of supply

As new low-rise supply in the mid- to high-priced market is very limited, the listed developer Sansiri Plc (SIRI) will launch three-storey single houses priced over 10 million baht and four-storey townhouses priced 19 million baht this quarter.

An artist’s rendering of Sansiri’s 19-million-baht fourstorey townhouse, which will be the developer’s most expensive undertaking.

Manu Trakulwattanakit, the developer's executive vice-president for project management & product development, said the single houses would be developed under the Narasiri brand, which hasn't had a launch in three years.

The project is on a 15-rai site on Soi Yothin Pattana in Bung Kum district, 300 metres from presumed new prime minister Yingluck Shinawatra's house. It will comprise 60 units with plot sizes starting from 60 square wah and usable area starting at 270 sq metres, with a launch in September.

"Though three storeys may make the house look bulky, our design team made the units look bright and airy with a resort theme exterior," said Mr Manu.

Property consultant Agency for Real Estate Affairs (AREA) said the number of new single house units priced above 10 million baht launched in the first six months of 2011 accounted for 4.4% or 505 units of the total of 11,413 units.

New townhouse units priced higher than 10 million baht accounted for 1.9% of the total new townhouse supply in the period, making up 257 units from a total of 13,845. All were priced between 5-10 million baht.

This weekend it will launch 10 units of Residence Sukhumvit 65, a luxury four-storey townhouse project worth 170 million baht. The Sukhumvit Soi 65 project will be SIRI's first luxury townhouse offering.

During the first seven months of the year, SIRI had sales of 2.63 billion baht from seven townhouse projects, up from 1.74 billion baht in the same period last year.

SIRI plans to launch 23 new projects worth a combined 30 billion baht, comprising eight single house projects worth 10 billion baht, four townhouse projects worth 3 billion baht and 11 condo projects worth 17 billion baht.

In the first seven months of the year, it started seven projects: three single house projects, two townhouse projects and two condominium projects. The company recorded total sales of 12 billion baht in the first six months of 2011, up from 9 billion in the same period last year.

SIRI shares closed yesterday on the Stock Exchange of Thailand at 5.50 baht, up 10 satang, in total sale of 69.5 million baht.

http://www.bangkokpost.com/property/news/249866/sansiri-looking-to-build-in-luxury-market