Potential partners for the real estate business asked to bring “expertise and exciting ideas”

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Apichart Chutrakul SansiriThailand’s real estate market is thriving due to high domestic demand and generous government incentives. One of Thailand’s largest property developers, Sansiri Group, is confident that there is still a remarkable upside potential.

The Thai property market has made a significant recovery since it slumped to lows around the turn of the millennium. Since then, relaxed ownership rules, a rising standard of living after the economy improved significantly over the last years, better availability of loans, and an improved investors’ sentiment have led to an upswing in the market that is yet to continue.
One of the largest property and real estate developers in Thailand, Sansiri Group, says that sales of townhouses, condominiums and single houses are very satisfactory, which led to an increase in 2011 revenue between 5 and 10 per cent over previous estimates. Sansiri ‘s Chief Executive Officer Apichart Chutrakul said despite the whole market “is not growing to that extent”, consolidation among property developers has given those with a good brand position and high quality products a chance to bite into the market share of others. Sansiri is now among the top three players on the Thailand property market, with a portfolio of mostly residential properties in a price range from under a million to 60-70 million baht, focused on the greater Bangkok area, Hua Hin and Phuket. “It is true that average property is cheaper in Bangkok than in other capitals around the world, but prices are on the rise. You can now find top properties in Bangkok that are as expensive as in London,” Chutrakul said.

Meanwhile, demand for housing comes from every income bracket, spanning over a price range from little more than 1 million baht for small studios to high-end luxury apartments and houses that sell for up to 70 million baht, says Chutrakul. In an improving economic environment the disposable income even of the not-so-wealthy clientele is growing, and this is why developers like Sansiri have widened their portfolio to the lower income segments to address a broader audience.

Property ownership isn’t that widespread in Thailand as it is in western countries because for most it is difficult to arrange the necessary financing. This is where the new government incentives are kicking in. Recently, the government has introduced a 25 billion baht program to help first time buyers get on the property ladder. The scheme offers low or zero rates of interest with special repayment terms and conditions.“In Thailand, everybody aspires to buy a house but not everybody can afford it,” says Chutrakul. “The [government] stimulus package will certainly have a positive effect on the market.” Foreign investors can be rest assured that the better availability of loans for low-income customers does not necessarily mean that banks are playing a dangerous game with subprime credits. Buyers have to pay a significant deposit for a property purchase, and banks and property developers are “very diligent” when it comes to assess the liquidity of the buyers, Chutrakul said: “We are looking at the customers.”

 

There is a potential for foreign buyers as the market conditions are clearly pointing at an upside direction. Furthermore, peripheral sectors such as construction, home financing and property management are fields investors should look at. However, investors will have to do their own due diligence and first of all look for the right domestic partner to gain an insight into the market and establish and maintain good relations to locals.
“We are generally open for partners,” Chutrakul said. “But we have to select the right one, because we want to feel comfortable in a partnership.” He added that a potential partner does “not only have to bring money” (Sansiri currently sits on a three billion baht cash pile out of running operations), but they have to “bring expertise we can use and an exciting idea”.

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Reading Time: 3 minutes

 

Reading Time: 3 minutes

 

Apichart Chutrakul SansiriThailand’s real estate market is thriving due to high domestic demand and generous government incentives. One of Thailand’s largest property developers, Sansiri Group, is confident that there is still a remarkable upside potential.

The Thai property market has made a significant recovery since it slumped to lows around the turn of the millennium. Since then, relaxed ownership rules, a rising standard of living after the economy improved significantly over the last years, better availability of loans, and an improved investors’ sentiment have led to an upswing in the market that is yet to continue.
One of the largest property and real estate developers in Thailand, Sansiri Group, says that sales of townhouses, condominiums and single houses are very satisfactory, which led to an increase in 2011 revenue between 5 and 10 per cent over previous estimates. Sansiri ‘s Chief Executive Officer Apichart Chutrakul said despite the whole market “is not growing to that extent”, consolidation among property developers has given those with a good brand position and high quality products a chance to bite into the market share of others. Sansiri is now among the top three players on the Thailand property market, with a portfolio of mostly residential properties in a price range from under a million to 60-70 million baht, focused on the greater Bangkok area, Hua Hin and Phuket. “It is true that average property is cheaper in Bangkok than in other capitals around the world, but prices are on the rise. You can now find top properties in Bangkok that are as expensive as in London,” Chutrakul said.

Meanwhile, demand for housing comes from every income bracket, spanning over a price range from little more than 1 million baht for small studios to high-end luxury apartments and houses that sell for up to 70 million baht, says Chutrakul. In an improving economic environment the disposable income even of the not-so-wealthy clientele is growing, and this is why developers like Sansiri have widened their portfolio to the lower income segments to address a broader audience.

Property ownership isn’t that widespread in Thailand as it is in western countries because for most it is difficult to arrange the necessary financing. This is where the new government incentives are kicking in. Recently, the government has introduced a 25 billion baht program to help first time buyers get on the property ladder. The scheme offers low or zero rates of interest with special repayment terms and conditions.“In Thailand, everybody aspires to buy a house but not everybody can afford it,” says Chutrakul. “The [government] stimulus package will certainly have a positive effect on the market.” Foreign investors can be rest assured that the better availability of loans for low-income customers does not necessarily mean that banks are playing a dangerous game with subprime credits. Buyers have to pay a significant deposit for a property purchase, and banks and property developers are “very diligent” when it comes to assess the liquidity of the buyers, Chutrakul said: “We are looking at the customers.”

 

There is a potential for foreign buyers as the market conditions are clearly pointing at an upside direction. Furthermore, peripheral sectors such as construction, home financing and property management are fields investors should look at. However, investors will have to do their own due diligence and first of all look for the right domestic partner to gain an insight into the market and establish and maintain good relations to locals.
“We are generally open for partners,” Chutrakul said. “But we have to select the right one, because we want to feel comfortable in a partnership.” He added that a potential partner does “not only have to bring money” (Sansiri currently sits on a three billion baht cash pile out of running operations), but they have to “bring expertise we can use and an exciting idea”.

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