“Best time to invest in Thailand property”: Pace Development
Pace Development is one of Thailand’s leading luxury property developers. Their properties are in strong demand by domestic and foreign investors, with expected re-sale yields of up to 20 per cent and net rental yields of 4-6 per cent. Arno Maierbrugger spoke to the company’s CEO Sorapoj Techakraisri about his strategy.
Thailand’s property market is currently booming, at least in most urban areas. Could you give a medium-term outlook on the development in the sector and possible investment opportunities?
I cannot speak for the whole market, but as far as the luxury property market is concerned, the outlook is positive. We are currently building the MahaNakhon Tower, a structure that will be the tallest building in Thailand after overall completion in 2014. The square meter price for condominiums and apartments will be above 200,000 baht [$6 450], which makes the tower a super-luxury, highest-end property. In this segment there are currently only three projects in Thailand with less than 500 units, and we see strong demand for it. 30 per cent of the tower has already been sold, although people who can afford such properties are rather rare. However, if you compare these prices, they are still 3 to 4 times cheaper than in Singapore and 5 to 6 times cheaper than in Hong Kong for comparable developments. Adding to this, over the past five years, property prices have been rather flat in Thailand and are poised to rise significantly as the economy picks up. We have sold to domestic customers and foreigner alike.
Regulations for foreigners to buy property in Thailand are rather strict. Would you like to see a change in this policy?
The cheap prices are an advantage for foreigners, but it is correct that they cannot own the land when they buy a condominium. This is still an issue. Moreover, foreigners cannot own more than 49 per cent of the condominiums in a building. One solution for this is the leasehold system currently allowing foreigners to lease land over a period of 30 years. However, I would like the government to consider extending this leasehold period, for example to 99 years. This would give Thais who fear a sell-out of land to foreigners peace of mind, and on the other hand it would give foreigners more investment security.
What are the expected yields in your luxury properties? Do you see many customers buying off-plan and flipping properties in order to speculate?
We think that 20 per cent yield on re-sales are possible. The rental yield should be 4 to 6 per cent net on these properties that cost between $800,000 and $8 million in the MahaNakhon tower. And yes, of course people are buying off-plan and flip their title deeds, and this is something that cannot be avoided. There will always be speculation in the property market. Developers can try to curb it by asking for higher down payments or deposits.
Where do your foreign investors come from?
At present, many are from Singapore and Hong Kong. We are having promotions and road shows in these two cities, but of course we would also like to draw interest from Middle East investors. Regarding domestic buyers, we see that more and more members of the younger generation are interested in investing in such properties, mainly because the want to move to town and life in a high-class condominium instead of investing in a house by the countryside. The process of urbanization is intensifying; more people see the amenities of living in Bangkok instead of outside, from where they have to commute. And especially after the floods, living in high-rises in the city is considered an alternative to being exposed to flooding and property damage. We believe these types of developments we and others do are the future of the property market rather than houses.
Owning a property in Thailand does not qualify an individual foreigner for a resident visa. What is the point in buying a property in Thailand when the owner cannot be sure if he is able to stay and to use it? Should this be changed?
Foreign property owners can apply for an extendable Non-Immigrant B visa if they outline their investment to the immigration authorities, so I don’t think this is a big problem. Retirees over 50 are eligible for long-stay visas anyway.
The Middle East has a strong property construction and developing sector. Are you actively looking for partnerships, know-how, and investors?
Of course. We are considering partnerships with Middle East investors if the opportunities arise.
Where do you see expansion prospects for Pace Development, in the region and beyond?
First, we will have to finish our running projects, but it is possible that we engage in mix-used developments in the future, but so far, not in malls or entertainment complexes. Regarding regional expansion, we have been approached by a few people, namely those from Myanmar, Cambodia, and Vietnam, but no decisions have been made yet.
Do you anticipate that government promotions such as tax incentives for mortgages will boost the property sector further?
I think this can help the property market in the short term, not at our level, but for properties for up to five million baht. It mainly addresses middle class buyers. What the government does is good, however, a consistent policy in this regard is important.
What is your concluding advice for foreign property investors in Thailand?
I believe that now is the best time to invest into Thai property. Buyers have to consider the location, properties along the BTS lines and in the Central Business District are highly likely to gain a lot in value, and also high-end developments.
[caption id="attachment_30330" align="alignleft" width="167"] Sorapoj Techakraisri, CEO Pace Development © Arno Maierbrugger[/caption] Pace Development is one of Thailand’s leading luxury property developers. Their properties are in strong demand by domestic and foreign investors, with expected re-sale yields of up to 20 per cent and net rental yields of 4-6 per cent. Arno Maierbrugger spoke to the company's CEO Sorapoj Techakraisri about his strategy. Thailand’s property market is currently booming, at least in most urban areas. Could you give a medium-term outlook on the development in the sector and possible investment opportunities? I cannot speak for the whole market, but as...
Pace Development is one of Thailand’s leading luxury property developers. Their properties are in strong demand by domestic and foreign investors, with expected re-sale yields of up to 20 per cent and net rental yields of 4-6 per cent. Arno Maierbrugger spoke to the company’s CEO Sorapoj Techakraisri about his strategy.
Thailand’s property market is currently booming, at least in most urban areas. Could you give a medium-term outlook on the development in the sector and possible investment opportunities?
I cannot speak for the whole market, but as far as the luxury property market is concerned, the outlook is positive. We are currently building the MahaNakhon Tower, a structure that will be the tallest building in Thailand after overall completion in 2014. The square meter price for condominiums and apartments will be above 200,000 baht [$6 450], which makes the tower a super-luxury, highest-end property. In this segment there are currently only three projects in Thailand with less than 500 units, and we see strong demand for it. 30 per cent of the tower has already been sold, although people who can afford such properties are rather rare. However, if you compare these prices, they are still 3 to 4 times cheaper than in Singapore and 5 to 6 times cheaper than in Hong Kong for comparable developments. Adding to this, over the past five years, property prices have been rather flat in Thailand and are poised to rise significantly as the economy picks up. We have sold to domestic customers and foreigner alike.
Regulations for foreigners to buy property in Thailand are rather strict. Would you like to see a change in this policy?
The cheap prices are an advantage for foreigners, but it is correct that they cannot own the land when they buy a condominium. This is still an issue. Moreover, foreigners cannot own more than 49 per cent of the condominiums in a building. One solution for this is the leasehold system currently allowing foreigners to lease land over a period of 30 years. However, I would like the government to consider extending this leasehold period, for example to 99 years. This would give Thais who fear a sell-out of land to foreigners peace of mind, and on the other hand it would give foreigners more investment security.
What are the expected yields in your luxury properties? Do you see many customers buying off-plan and flipping properties in order to speculate?
We think that 20 per cent yield on re-sales are possible. The rental yield should be 4 to 6 per cent net on these properties that cost between $800,000 and $8 million in the MahaNakhon tower. And yes, of course people are buying off-plan and flip their title deeds, and this is something that cannot be avoided. There will always be speculation in the property market. Developers can try to curb it by asking for higher down payments or deposits.
Where do your foreign investors come from?
At present, many are from Singapore and Hong Kong. We are having promotions and road shows in these two cities, but of course we would also like to draw interest from Middle East investors. Regarding domestic buyers, we see that more and more members of the younger generation are interested in investing in such properties, mainly because the want to move to town and life in a high-class condominium instead of investing in a house by the countryside. The process of urbanization is intensifying; more people see the amenities of living in Bangkok instead of outside, from where they have to commute. And especially after the floods, living in high-rises in the city is considered an alternative to being exposed to flooding and property damage. We believe these types of developments we and others do are the future of the property market rather than houses.
Owning a property in Thailand does not qualify an individual foreigner for a resident visa. What is the point in buying a property in Thailand when the owner cannot be sure if he is able to stay and to use it? Should this be changed?
Foreign property owners can apply for an extendable Non-Immigrant B visa if they outline their investment to the immigration authorities, so I don’t think this is a big problem. Retirees over 50 are eligible for long-stay visas anyway.
The Middle East has a strong property construction and developing sector. Are you actively looking for partnerships, know-how, and investors?
Of course. We are considering partnerships with Middle East investors if the opportunities arise.
Where do you see expansion prospects for Pace Development, in the region and beyond?
First, we will have to finish our running projects, but it is possible that we engage in mix-used developments in the future, but so far, not in malls or entertainment complexes. Regarding regional expansion, we have been approached by a few people, namely those from Myanmar, Cambodia, and Vietnam, but no decisions have been made yet.
Do you anticipate that government promotions such as tax incentives for mortgages will boost the property sector further?
I think this can help the property market in the short term, not at our level, but for properties for up to five million baht. It mainly addresses middle class buyers. What the government does is good, however, a consistent policy in this regard is important.
What is your concluding advice for foreign property investors in Thailand?
I believe that now is the best time to invest into Thai property. Buyers have to consider the location, properties along the BTS lines and in the Central Business District are highly likely to gain a lot in value, and also high-end developments.
