Posts Tagged ‘foreign investment’

Increasing demand for luxury properties in Thailand, property consultants indicate

Monday, October 11th, 2010

Demand for luxury real estate in popular far east tourist destinations such as Phuket and Koh Samui is increasing and experts are upbeat on the medium and long term outlook for the region.

Property firms are reporting a recovery of purchasing power affecting the luxury residential markets in Bangkok as well as resort destinations and projects that were on hold are now moving forward.
 
For example, the Met at Sathon, which suspended sales two years ago, has seen a resurgence of demand for luxury residences and has opened sales once again for the final 40 units in the 370 unit development.
 
Pace Development, which has two luxury condominiums, Saladaeng Residence and the Maha Nakhon project, said it has seen rising demand for both projects over the past two months, resulting in sales worth Bt600 million.
 
 Foreign real estate investors from Europe, Hong Kong, Singapore and India are driving the new enthusiasm and according to David Simister, chairman of property consultants CR Richard Ellis (Thailand), the medium and long term demand for residential projects in Phuket and Koh Samui has recovered significantly.
 
He said that for two years, residential projects in Phuket and Koh Samui had been affected by a combination of local politics and the global financial crisis. The purchasing power of foreign buyers has been reduced by the strength of the baht against depreciating European currencies and the continuing economic crisis.
 
Looking forward, there is potential for improvement in Thailand’s resort markets in the medium term. But Simister expects the number of foreign buyers to increase as the economies in which they live and work improve and the local political outlook also improves.
   
Thailand’s resort market is well positioned for growth because it has a lot to offer in terms of lifestyle, quality beaches and value for money and it enjoys a high percentage of repeat visits.
 
CB Richard Ellis’s Phuket office has seen an increasing number of inquiries and interest in residential properties, while the company expects property viewings and sales to increase during the high season, Simister added.
 
However, demand is still expected to be well below pre-crisis levels as European markets have not fully recovered because of the weakness of European currencies. Instead, the company is seeing concentrated demand for Phuket properties from within the region. It is also seeing more interest and inquires from the Indian market.
 
Buyers are focusing on re sale properties and completed projects as most are unwilling to take risks. The island’s west coast remains the primary area of interest on the development side, with a limited number of project launches in the upper end of the market. Most new launches are condo minium projects.
 
Simister said he also saw a trend towards more action among Thai developers who already have strategic land holdings in Phuket. Some are already active in the Phuket market, but are looking to expand, while others who acquired prime sites many years ago and are now looking to develop. There are several projects in the pipeline, mainly in the planning and design phase.
 
Although Koh Samui has a smaller volume market than that in Phuket, Simister said he believed there were individual bargains to be had in both land and properties and certain sites could be purchased at prices lower than those of two to three years ago. However, continued growth is seen in the medium to long term. ‘People still enjoy Thailand and there are repeat visitors who are ready to become purchasers,’ he said.

 

source – www.propertywire.com

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Thailand Attracts Foreign Spending

Friday, September 24th, 2010

Thailand will attract increased foreign investment and infrastructure spending, a “more significant driver” of growth that will boost industrial estate developers such as  Amata Corp., according to JPMorgan Chase & Co.

Foreign direct investment that increased to $7.4 billion in the first half of 2010 is poised to accelerate in 2011, Sriyan Pietersz and Adrian Mowat wrote in a report dated yesterday. Japan and China may be “key players” in the spending that may also boost Hemaraj Land & Development Pcl and Rojana Industrial Park Pcl, the analysts wrote.

Ford Motor Co. and Mazda Motor Corp. said in August they plan to spend $350 million to expand a jointly owned pickup truck factory in Thailand, shrugging off the country’s worst riots in almost two decades. Investment commitments from automobile and electronics companies that include Nissan Motor Co. and Toshiba Corp. exceed $2 billion, according to JPMorgan.

“The strength of the Japanese yen could drive another wave of investment into Thailand, historically Japan’s largest investment destination in Southeast Asia,” the analysts said. “We also see scope for increasing investment by Chinese corporates or multinational corporates operating in China as cost pressures accelerate.”

The increased infrastructure and corporate spending may help banks and other companies such as Glow Energy Pcl and Thai Tap Water Supply Co., according to the analysts.

Yen’s Strength

Japan’s yen climbed to a 15-year high against the U.S. dollar, prompting the government this month to sell the currency for the first time since 2004. In China, foreign companies Honda Motor Co. and Foxconn Technology Group have been forced to raise wages following strikes and suicide attempts.

As foreign investment accelerates, domestic capital expenditure is likely to lag behind given the “slack” in overall capacity, with utilization rates at about 67 percent in July, according to JPMorgan.

Still, capacity utilization rates in the petroleum, chemical, pulp and paper, and construction materials industries are at relatively elevated levels, offering “scope for a modest recovery” in capital expenditure, the brokerage said.

“Given the relatively large scale of operations and high capital intensity in these sectors, corporates may seize the opportunity for expansion given Thai baht strength and cheap cost of funds,” the analysts said.

Thailand’s economy may grow as much as 7.5 percent in 2010, the fastest pace in 15 years, according to a July 23 forecast by the central bank. Improving prospects for the economy have helped to drive a 29 percent gain in the benchmark SET Index this year and lifted the baht to a 13-year high.

 

source – www.bloomberg.net

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Foreign inflows returning

Friday, August 13th, 2010

Easing political and economic concerns have led to a surge in foreign capital inflows this month, says the Bank of Thailand.

During the first week of August, the bond market enjoyed US$400 million in net foreign capital inflows, reflecting investor anticipation of further interest rate increases, while the stock market recorded $187 million in net foreign capital flows, said Bandid Nijathaworn, the deputy governor for monetary stability.

“The inflow reflects a reversal from the second quarter, during which foreign outflows were prompted by the political trouble. Foreign investors are now showing greater confidence in the economy,” he said.

These factors together with strong export revenue have led to a continued baht appreciation to 31.92 to the US dollar from 32.16 at the start of the year.

Dr Bandid said the stronger baht would reduce import costs, in turn helping to reduce economic risk from overreliance on external drivers.

Even so, international reserves continued to increase, reaching $153 billion as of Aug 6 from $140 billion at the start of the year and reflecting the central bank’s steady buying of the dollar. Its swap position decreased to $12 billion from $16 billion during the same period.

“The baht appreciation has not affected exports, which increased by 30% in the first six months of the year [year-on-year]. A more important factor aiding exports is the global economic recovery,” said Dr Bandid. “The stronger baht will lead to a more balanced economic momentum.”

US policymakers will likely use an easy monetary policy as an economic stimulus in light of fiscal constraints. The trend will lead to a further weakening of the dollar, he said.

The central bank expects world economic growth to slow down in the second half of the year. Weakening US growth aside, problems in the global economy also stem from public debt problems in Europe and Beijing’s measures aimed at cooling down its economy.

“There is a satisfactory economic recovery pushed by exports and domestic demand. Tourism has quickly recovered. The key economic risk will likely come from external factors,” said Dr Bandid.

The market now expects the central bank to increase interest rates further after increasing them by a quarter percentage point to 1.5% in mid-July. Any further change to the policy interest rate will be decided at the next Monetary Policy Committee meeting on Aug 25.

Dr Bandid said the central bank expected interest rates to remain favourable for business because the previous level was very low. Home mortgages are expected to be affected by the interest rate increase, as 80% of them have floating rates.

In any case, the baht’s appreciation will help to ease inflation, as imports account for 15% of the consumer price index, he added.

 

source – www.bangkokpost.com

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