Firms scour for overseas opportunities
Border provinces in focus in preparation for the Asean Economic Community
Property firms are focused on expanding their investment in the provinces and overseas amid high competition and limited demand in Bangkok and the suburbs.
Among provinces, the focus is on border areas as Udon Thani, Ubon Ratchathani, Kanchanaburi and Chiang Rai. There has been strong demand from local and foreign investors who aim to use Thailand as their gateway to neighbouring countries once the Asean Economic Community (AEC) comes into effect in 2015.
"The AEC offers business opportunities to property firms to expand their investment in the border provinces. There is growth in demand to buy residences from local and foreign investors in those areas," Land & Houses senior executive vice president Naporn Soonthornchitcharoen said.
He added that from this year until 2015, most property firms will expand their investment in the border provinces in both condominiums and low-rise residences, including single detached house and townhouse.
"Thailand will be the hub for the hospitality business and a destination for residences for foreign investors expanding their investment into neighbouring countries such as Laos, Myanmar, Vietnam and Cambodia," he said.
This is the reason Land & Houses launched its new residential projects in two new locations - Udon Thani, and Chiang Rai.
"We also are considering launching a project in Kanchanaburi province," he said.
Sansiri is one of the property firms that is expanding investments in border provinces, including Udon Thani and Kanchanaburi this year.
"We decided to launch new projects at both locations seeing the demand from both local and foreign investors who are interested in expanding investment in an AEC country," Sansiri president Srettha Thavisin said.
According to a survey by The Nation, LPN Development, Supalai, Pruksa Real Estate, Property Perfect, and Quality Houses plan to launch new projects in the border province, with estimated total investment not less than Bt10 billion.
Meanwhile, the top three property firms - Sansiri, Land & Houses, and Pruksa Real Estate - are interested in expanding their investment overseas. But they have different business strategies.
Land & Houses and Sansiri have a strategy to expand their investment in developed countries such as US and UK thanks to the Hamburger crisis in 2007 and Europe's crisis in 2010.
Land & Houses senior executive vice president Adisorn Nanthanarapoon said that after the Hamburger crisis in 2007, property prices in the US dropped but the company believed that property prices in the US were stable and cheap enough to expand investment in that country.
"We started to expand our investment and bought apartments worth US$10 million plus a renovation budget of about $1 million in December last year after setting up a subsidiary in California early last year," he said.
He added that the company had also set aside a budget of Bt1 billion to buy property projects, focusing on 2-3 apartment projects.
"We are targeting average 15 per cent return on investment from overseas investments," he said.
This is the second time Land & Houses will be venturing overseas following the company's move into the Philippines and Indonesia before the 1997 economic crisis. In 1997, the company decided to suspend investment in both countries.
Sansiri had bought condominiums in London three years ago and renovated the residences for sale.
Pruksa Real Estate is focusing on investments in Asian countries such as India, Vietnam, and Indonesia.
Thongma Vijitphongpun, the president and CEO of Pruksa Real Estate, said that the company would continue to focus on Asian countries.
"When we expand investment overseas, we will study whether the demand suits our experience in Thailand. Home-buyers' demand in India, Vietnam and Indonesia suit our experience and also have enough demand to support our business expansion," he said.
The company incurred some loss on its investment in the Maldives from the foreign exchange rate but it was a lesson for the future on doing business overseas, Thongma said.
"We decided to expand investment overseas because we wanted to maintain our growth and balance our risk in the long term," he said.