FRIDAY, March 29, 2024
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Century 21 Thailand looks to expand franchising into Malaysia, Laos

Century 21 Thailand looks to expand franchising into Malaysia, Laos

AEC expected to bring new opportunities

Century 21 Realty Affiliates (Thailand), a local unit of a US-based real-estate agency, plans to broaden its franchise business into Malaysia and Laos to cash in on the upcoming Asean Economic Community (AEC).
The company expects its franchise business to grow significantly after it acquires a master franchise in Malaysia, said Thitiwat Teerakulthanyaroj, executive vice president. A master franchise is a contract whereby the owner of the brand name gives control of activities in a territory, in this case Malaysia, to the entity specified by the licence.
The company is in talks with its parent company Century 21 Asia-Pacific on acquiring the master licence in Malaysia at a cost of US$1 million (Bt31 million), and the deal is expected to be finalised next month, he said.
Franchise revenue accounts for 10 per cent of the income of the company established in Thailand in 2009. About 60 per cent of revenue is from investment and land services and the rest from sole-agency realty.
The company now has 30 franchisees nationwide, which it plans to expand to 100 within three years to ensure its portfolio can attract investors, as it aims to list on the Stock Exchange of Thailand in 2015.
Century 21 Thailand is adopting the successful model of Century 21 Japan, which has more than 800 franchisees. 
Thitiwat said the Asean market would become more important under the AEC and the company wanted to increase annual revenue growth to 20-30 per cent, and having master franchise licences in more than one country would help it achieve the goal. 
The company sees an opportunity for franchising in Malaysia, especially in Johor Bahru, that country’s nearest city to Singapore. Residents of the island republic often visit Johor Bahru, which benefits to the property-resale market. Century 21 expects to grant the first five franchises there. 
He said the next step would be acquiring a master franchise licence for Laos.
Even though Laos is a small market, the company wants a presence there because many investors in that country are looking for land in border provinces close to Thailand’s Northeastern region, such as Udon Thani. Meanwhile, the company’s franchisees in the Northeast are showing high growth rates. 
“The AEC will cause the property market to grow, especially residential and office buildings, and we will try to help franchisees do business more efficiently,” he said. 
The portfolio of Century 21 Thailand is in the resale market rather than new property. The company foresees the resale market in Thailand growing more strongly than new projects because of rising land prices and the shortage of labour.
The overall value of the Thai property market is Bt600 billion, half in resale. The development of new projects is likely to slow down, with consequential growth of the resale market, especially non-performing assets.
Thitiwat said the company was offering solutions to commercial banks for quick sale of their NPAs after it found that there are many such assets in prime locations but they were in need of renovation, the cost of which banks don’t want to shoulder. 
He said urbanisation was pushing up the prices of land and homes upcountry, so small and medium-sized developers might not be able to compete with large firms for the long term because of limited capital.
“Commercial banks grant financing to small and medium-sized property developers if their projects have presales of 60 per cent, which is not easy to accomplish. As the sole agent for smaller developers, we can quickly close sales because we suggest that developers focus on interior design,” he said.
 
 
 
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