China becoming a major real estate investment player in Thailand
As the ASEAN Economic Community (AEC) kickoff draws closer, Chinese investors have been engaged in putting together business ventures of various kinds in Thailand, much of it centred on the real estate market.
Over the two years the Chinese have become one of the major foreign property investors in the country. Colliers International Thailand recently released a press statement claiming Chinese investors were the largest single group to pour money into Thailand in 2014. Colliers noted many Chinese are joining with Thai companies in joint ventures, with Bangkok viewed as a potentially lucrative investment destination.
Colliers says it is seeing one or two new Chinese clients almost weekly.
Bangkok’s attraction as an investment centre for the Chinese is its continually expanding mass transit facilities with land prices on the Skytrain and MRT routes increasing at a large pace. For the Chinese, the land values are still very competitive when compared with what’s available in Hong Kong and Singapore. Yet most analysts see Bangkok’s growth potential as similar to those aforementioned centres, so the potential profits are greater in Bangkok.
Among projects developed with Chinese capital are the TC Green Rama 9 Condominium, developed by Tiancheng International, and Miracle Condominium in Hua Hin, a Beijing Construction Engineering Group project.
According to CB Richard Ellis, many of their Chinese clients have invested in luxurious apartments in Thailand for use as second homes or long-term investments, choosing premium property units in prime locations. They consider the investment will give better returns than the ones in neighbouring countries.
Jones Lang LaSalle claims the Chinese business sector sees Thailand as being the AEC’s regional economic and logistic hub with financial institutes from China looking for offices to expand their branches here.
Recently, China’s major real estate developer Junfa Real Estate Company Limited formed a joint venture company with Thailand’s listed property developer Charn Issara Development Plc. The company has been named Issara Junfa Company Limited and plan to develop a real estate project in the south of Thailand, in Phang-Nga province.
Issara Junfa has a registered capital of 420 million baht divided into 4.2 million shares with Charn Issara holding 70 percent of the shares, Junfa Real Estate 25 percent, and the YMC Holding Company has the remaining five percent.
For Charn Issara the joint venture is seen as a way of attracting more Chinese customers as well as giving it greater competitiveness in the property industry.
The project will be one of the premium real estate developments in Phang-Nga and comprise six single houses priced at 120 million baht each, 40 villas with individual pools to be sold at 16 million baht apiece, 100 apartments in a low-rise condominium, and a hotel.
In the meantime, Charn Issara is planning to turn phase two of its Phuket-based upscale resort property Sri Panwa into a one billion baht real estate investment trust (REIT) after the project is completed by the end of September this year.
The proceeds from the REIT will be used to invest in developing other property projects, including two condominium developments in Cha-Am and Bangkok (both with a combined value of 2.4 billion baht).
Charn Issara management says they expect revenue to grow by five to 10 percent this year, up from the 1.7 billion baht the company earned in 2014. Last year the company realized two billion baht in sales and this year it expects to increase this by 10 to 15 percent.