Magnate eyes Kingdom's potential

Real Estate April 26, 2013 00:00

By Somluck Srimalee
The Nation

3,867 Viewed

UAE-based Indian tycoon plans to spend Bt480m on a Bangkok luxury condo project


Asgar S Patel, group chairman of India-based multinational House of Patels and one of the wealthiest people in India and the United Arab Emirates, says that when he invests in property he takes into account a country’s economic prospects and the project’s location, design and environmental features in order to reap the maximum benefit.
Patel, who lives in the UAE, decided to invest Bt480 million early this year in the luxury Bangkok condominium project, the Ritz-Carlton Residence at MahaNakhon, after seeing the potential return given Thailand’s stable economic growth and the fact that the Kingdom will be at the centre of the Asean Economic Community, which comes into effect in 2015.
Patel, whose firm has interests in real estate, financial services, transport and logistics, said that when he expanded his investment in the property sector, he had first examined the state of Thailand’s economy, and then considered the location and project design.
“Besides, Thailand has a large middle-class population who are gaining wealth that will support future development. Again, Singapore and Hong Kong are both saturated and out-priced, and have hardly any land mass left. 
“A road is proposed from Kolkata through Myanmar into Thailand and, when the Asean Economic Community is implemented, Thailand will be the heart of Asia. China, India and Japan are investing in Thailand. So, it is logical to invest in this growing economy,” said Patel.
Following his own investment in the Ritz-Carton Residence at MahaNakhon, the House of Patels Group has acquired the luxury project’s marketing and sales rights for India and the Gulf Cooperation Council area, confirming his belief in the Thai property market.
“We are interested in investing in the Thai property sector not only in Bangkok, but also in other locations such as Hua Hin and Phuket. If they have the best location and design, we will expand our investment in both destinations,” he said.
Patel has also invested in property in other countries in whose economic potential he has faith, including the United States, India and Dubai.
High returns achievable
However, it is not only the very wealthy that take into account Thailand’s economic growth, project location and design before deciding to purchase a residence, as many other home-buyers and investors also consider these factors before taking the plunge.
Many of them are currently persuaded to buy amid a period of economic expansion and the government’s plan to invest in mega-infrastructure projects worth Bt2 trillion within the next seven years.
A recent survey by The Nationshowed that more people are locating close to some of these infrastructure projects, especially the mass-transit system and expressways. 
Property prices in these areas have risen every year, even though the market still has new supply. 
The survey found that resale demand was still growing, due to homes in new condominium projects being priced higher than those in the resale market. Resale market prices have risen by between 10 and 20 per cent from the presale level.
It also found that condominium projects launched between Thong Lo Skytrain station and LaSalle, near Bearing station, totalled 50 - either recently completed or at some stage of construction along the route.
However, demand for resale condos in the area has also increased, by 20 to 30 per cent. Prices have risen between 10 and 20 per cent from the presale level.
“Although this area has seen more new condominium projects launched, demand for resale condominiums continues to grow because some home-buyers need to purchase a ready-to-stay property and resale prices are still lower than buying in new projects open for presales at this time,” said Pumipat Sinacharoen, managing director of Bangkok CitiSmart, a broker and agent for resale homes.
While accepting that some of the demand in the area could be from speculators, he said there was still real demand because condo projects were still being transferred to customers without any barriers facing property developers.
“For most home-buyers who had bought on Sukhumvit over the last five years, if they sold their units this year they would get a return on investment of more than 10 per cent a year.
“This is the reason that property is still the choice for investors during a period of interest rates still below 3 per cent, and commodity products such as gold still facing risk from the global economic slowdown,” he said.
Foreign buyers in majority
Pace Development Corp chief executive Sorapoj Techakraisri, whose company developed the luxury mixed-use MahaNakhon project, said that up to 60 per cent of its customers were foreign buyers working in Singapore, Hong Kong and Dubai. 
They are interested in buying one of the luxury condos as the project is located at the heart of the capital and its Bangkok-design theme differentiates it from other projects in the Kingdom, he said.
“We also support our customers by offering to manage their residence if they want to open it up for rent in the expectation of getting a return on investment averaging between 4 and 7 per cent a year, which is better than depositing money in the banks,” he added.
Since the MahaNakhon project’s launch in 2009, unit prices have been increased by an average of 5 per cent a year from the original presales price of Bt220,000 per square metre.
That represents a cumulative rise of 18 per cent to a starting price of Bt260,000 per square metre, even though the project is still in the construction phase. 
This proves that demand for luxury condominiums still exists as long as a project has a selling point that matches demand, and despite the fact that the MahaNakhon project is being built on land leased for just 99 years, said the CEO.
Property is an asset that keeps its value, despite inflation eroding prices generally and the ever-present risk of financial and other crises, he added.