Japanese boost for property market

According to Bank of Thailand reports, the Japanese cumulative investment in Thailand was worth Bt2.4 trillion as of June 30, 2017.
Meanwhile, Board of Investment (BOI) reported that Japanese firms have recorded new investment of nearly Bt57.5 billion as of the end of 2016. This puts Japan as the number one source of investments in Thailand.
In the first half of this year, Japanese firms also applied for tax incentive from BOI worth up to Bt65.46 billion, according to the organisation.
After strong investment in Thailand from Japanese firms in automobile, manufacturing, and other industries over 20 years, especially a huge investment in the year 2016-2017, Japanese property firms are turning to setting up joint ventures with local property firms.
“We decided to expand our investment in packaging in Chon Buri province two years ago to serve the strong demand from industries operating in the east of Thailand, which now Thailand’s government is promoting through the Eastern Economic Corridor (EEC) [plan]”, said Akira Ichikawa, president of Sumitomo Forestry Co Ltd.
“We see strong demand to buy residential from both local and foreign buyers in Thailand, especially in locations with mass transit systems now that Thailand’s government has made a huge investment to develop the country’s infrastructure project,” he added. 
“As a result we decided to expand our residential business in Thailand by joint ventures with local property developers, Grande Asset Hotels and Property Plc and Property Perfect Plc,” said Ichikawa.
As the centre of the Asean regional community, Thailand is a good gateway for its business expansion in others Asean country to develop residential projects over time, he added.
 Sumitomo Forestry Co Ltd is the latest Japanese firm to expand its investment in residential projects in Thailand. They follow a number of property firms that have done the same since 2013 (see graphic).
“We set up a joint venture firm, not only for the capital to expand our investment in property projects but [also because] we need to get more innovative construction from our Japanese partner, who has long experience doing business,” said Property Perfect Plc chief executive officer Chainid Adhayanaskul recently.
Japanese property firm Shinwa Group, which expanded its investment in Thailand property market last year to the tune of Bt1.2 billion, plans to further expand its investment through new condominium projects worth over Bt2 billion in the next year. 
Shinwa Group director Tomoyasu Yamabe said earlier this year that it expanded its investment in Thailand after seeing strong demand for residential projects in Thailand’s market. 
The group was also interested to expand its investment in others Asean countries, such as the Philippines, Vietnam, Malaysia, Indonesia and Singapore. “The Philippines and Vietnam are the next two priorities for our investment expansion in 2018 after launching our first condominium project, Runesu Thonglor 5, worth Bt1.2 billion in Thailand early this year,” he said.
Meanwhile, Chainid from Property Perfect said most Japanese firms are interested in expanding their Thailand investment because of the strong demand for residential properties. He attributes that demand partly to the government’s policy to develop the country’s infrastructure projects.
“This is partly driving the rising demand for residential property located close to mass transit,” Chainid said.
There’s a big bonus for Thai property firms partnering with Japanese developers with long experience in managing major construction projects, he said.
“This is the way for Thai property firms to learn about the technology to build residences … and also learn innovating design to match customer demands.”