AIA Thailand's investment in real estate by developing Grade A office buildings will help assure a healthy long-term return and balance risk at the insurer, Anucha Laokwansatit, general manager and chief investment officer, said yesterday.
AIA Thailand has injected Bt5.5 billion into developing the 34-storey AIA Capital Centre – its first Grade A office building – on Rachadaphisek Road. It is also the company’s first direct investment.
It already has indirect investment in the stock and bond markets, as well as in property funds.
AIA Capital Centre, which officially opened yesterday, is the second office building in Thailand to have received Gold pre-certification under LEED (Leadership in Energy and Environmental Design).
“We want to have a stable return on investment and balance the risk from our indirect investment in capital and stock markets. Furthermore, office-building investment reinforces confidence among policyholders that AIA is a strong financial insurer,” Anucha said.
The Thai unit’s move into real estate is not the first time that Hong Kong-based AIA Group has undertaken such a venture, as it has invested in many properties in Hong Kong, Singapore and mainland China.
AIA Group recognises the greater opportunity offered by office buildings in Thailand, driven by the upcoming Asean Economic Community, which is attracting foreign companies both here and in neighbouring countries, Anucha said.
He added that AIA considered most existing office buildings to be lacking in sufficient quality to supply them to corporate and multinational tenants.
Local corporates and multinational firms now require high-quality offices and eco-friendly buildings, which increases demand at this end of the market, he explained.
AIA Capital Centre opened for business with an office occupancy rate of 30 per cent and a 90-per-cent rate for retailers.
AIA is building a second grade-A office building – the Bt4-billion AIA Sathorn Tower, which has also received LEED Gold pre-certification.
AIA Sathorn Tower is expected to be completed next year, and its two office buildings will have a total lettable area of 100,000 square metres.
“We estimate that our two office buildings [AIA Capital Centre and AIA Sathorn Tower] will have full occupancy in the next three years,” he said. AIA Thailand expects its return on investment from office building will be double the 3-per-cent return received from investment in 10-year government bonds, he added.
Anucha also said the company aimed gradually to increase the proportion of its overall investment that goes into office buildings in the near future by looking to buy land for the development of more Grade A property.
However, the company has no plans to use the direct assets to raise funds via a real-estate investment trust, as it has strong cash flow, he said.
As to indirect investment, the chief investment officer said AIA Thailand would expand its portfolio overseas by investing in corporate bonds in developed markets.