THE EASTERN Economic Corridor (EEC) has become a new destination for property developers in anticipation of the flows of manufacturing investment and workforce into the area, according to a survey by The Nation.
The EEC covers three provinces:Chon Buri, Rayong, and Chachoengsao.
A slew of property companies and hospitality firms will invest more than Bt110 billion till 2021 in the development of residential, office and hospitality projects to meet growing demand.
Furthermore, the EEC Act will give foreign property investors the rights to full ownership of a condominium project under a 50-year lease, extendable for another 49 years as well as land-holding in the area.
“We are keen on expanding our investment to the EEC after the government's decision on the mega-project,” said Thongma Vijitpongpun,president and chief executive officer of Pruksa Holding Plc.
The company is one of the developers launching a total of eight residential projects, offering 2,482 units worth a combined Bt5,52 billion, in the area this year.
“Chon Buri is a welcome challenge. The province is home to many industrial estates and a tourist spot. The growth in workforce will lead to strong demand for residential units priced at no more than Bt3 million each,” said Piya Prayong, Pruksa Real Estate’s chief executive officer/value-added products.
LPN Development, Sansiri, Property Perfect, CP Land and other listed property companies are also expanding their investments in residential projects in provinces to the east of Bangkok.
“We’re developing single-detached houses, townhouses and condominiums in the EEC area, catering to future demand for both residential and industrial properties,” said Sansiri president Srettha Thavisin.
“Land prices will be driven up in the region next year when the EEC law comes into effect and the government kicks off its investment programme,” he added.
Charn Issara Development plans to develop 9.6 hectares of land in Sri Racha district, Chon Buri, for residential projects this year and next, said the company’s chief executive officer Songkran Issara.
Sena Development will develop residential projects on 16 hectares of land in Sri Racha this year, said Kessara Thanyalakpark, a director of the company.
According to a survey by the Government Housing Bank’s Real Estate Information Centre, Chon Buri leads the way with 400 project launches, comprising 53,000 units worth a total of Bt157 billion. Sri Racha district is a particularly popular area in the province, accounting for 105 projects comprising 18,300 units worth up to Bt50 billion, followed by Pattaya.
Close to 94 per cent of Chon Buri’s new projects are developed by property companies based in the province, with companies from Bangkok making up the balance. Rayong province saw the launches of condominium, detached-house and townhouse projects at a combined cost of Bt50 billion by both local and Bangkok-based developers.
In Chachoengsao, residential projects of condominiums, detached houses and townhouses worth a total of Bt20 billion have been launched with unit prices ranging from Bt2 million to Bt4 million, according to a survey by Marui Real Estate. Marui has launched a project valued at around Bt2 billion in the province.
Property agency Collier International Thailand Co Ltd’s general manager Ratchaphum Jongpakdee said foreign investors from China and Japan are interested in developing condominiums, office buildings and hotels in the EEC area.
“Currently, we are seeking land ranging from 100 rais to 500 rais in the EEC location on behalf of seven Chinese companies. Mixed-use and condominium projects worth over Bt30 billion will be built on the acquired plots for investors and workers from China," he said.
The company is also negotiating land acquisitions for residential projects on behalf of two Japanese investors ahead of the expansion of manufacturing activities in the area, Ratchaphum added.
JLL’s managing director Suphin Mechuchep said five landlords, owning a total of 1,500 rais in the EEC area, have contracted the company for the negotiations with Thai and Chinese property companies on setting up a joint venture firm to develop residential projects.
“Residential projects in the east of Thailand have started to expand following the government’s policy decision to develop the Eastern Economic Corridor, which will entail an expansion of infrastructure to link the Eastern Seaboard with other provinces, and will also promote new industrial investment across the area. This is the main driver boosting the demand for homes as newcomers will have to move to a location close to their place of work,” said Suphin.
Meanwhile, Chinese conglomerate HNA Group is teaming up with CT Bright, an investment unit of Charoen Pokphand Group (CP Group), to set up a fund for investment in the EEC.
HNA Group, based in Hainan province and founded in 2000, is involved in aviation, real estate,
financial services, tourism, logistics, and other industries. It is a partial owner of Grand China Air, and the Hilton Hotels group.
According to the Hong Kong-based South China Morning Post, HNA Innovation Finance and CT Bright will contribute 20 per cent each to the fund – which may reach US$5 billion (Bt 157.3 billion) over the next three to five years – to invest in the $43 billion EEC project.
The Federation of Thai Industries (FTI) has signed an Bt3-billion agreement with the Industrial Estate Authority of Thailand for the development of an industrial estate in support of the government’s pursuit of innovative technologies for Thai industries. According to a study by the EEC committee, Bt500 billion is needed till 2021 for a major upgrade of infrasturcture in the area, including a new international airport, high-speed and double-rail networks. The EEC is expected to draw more than 700 local and foreign investors with a workforce of 50,000.
Kanit Sangsubhan, secretarygeneral of the Eastern Economic Corridor Office (EECO), said the Eastern Economic Corridor will serve as a national gateway enabling 10 target industries to realise the Thailand 4.0 vision. The targeted industries are next-generation cars, smart electronics, affluent medical and wellness tourism, agriculture and biotechnology, food, robotics for industry, logistics and aviation, biofuels and biochemicals, digital, and medical services.
He added that the EECO has set a target to triple the 20 million foreign and Thai tourists visiting the three provinces annually over the next eight years. 18 areas occupaying 26 billion rai (4.16 billion hectares) will be turned into industrial promotional zones for the targeted industries. Another 3,000 rai plot is earmarked for high-tech industries of Chinese investors.
The EEC is now coordinating with the private sector to link up foreign and Thai investors planning to establish their manufacturing bases in the EEC, he said.
According to the Commerce Ministry, many local and foreign firms have registered for businesses in the EEC as of the end of last year. Investors from Japan, China, Taiwan, and Hong Kong dominate the list of overseas companies interested in manufacturing, property, industrial construction, logistics and supply of services. These companies have a combined registered capital of Bt1.7 trillion, with property developers accounting for Bt72.6 billion.
Surging land price
Land prices in Rayong, Chon Buri and Chachoengsao have risen by more than 50 per cent amid strong demand from residential and industrial developers, said Wattana Rattanawong, chairman of Chachoengsao Chamber of Commerce.
Citing an example, he said a 1.6-hectare plot located close to the Bang Pra Kong-Chachoengsao Road was sold for Bt15 million per rai last year, up from Bt10 million.
Meesak Chunharuckchot, chief executive of Chonburi Real Estate Association, said land prices in Chon Buri saw double-digit increases during the last two yeras, surging from Bt3 million to Bt5 million per rai.
“For land located close to the beach, prices have now reached an average of Bt250,000 per square wah from Bt100,000," he said.