Thai developers told of investment barriers

They voiced this view at a seminar titled “AEC: Pros and Con for the Property Sector” conducted by the Real Estate Information Centre yesterday.
Prasert Taedullayasatit, director and chief business officer of Pruksa Real Estate, who has experience with investing in Vietnam, said Thai developers would need to study local laws and find the best partners when expanding into Asean countries.
Each nation has its own set of barriers to foreign businesses entering the property sector, especially regarding land-ownership rights. These affect residential projects, office buildings, and the hospitality business, he said.
“We took three years after deciding in 2009 to invest in Vietnam before launching our first project there worth Bt3.5 billion this year,” he said.
The main problems in Vietnam are rights to own land and the economy, which faced high inflation in 2010 that had a negative impact on business expansion, Prasert said.
Colliers International Thailand associate director Tony Picon said Myanmar currently had one of the highest barriers to property developers, with the requirement that foreign investors may only operate in a joint venture in which the local partner has at least a 51-per-cent interest, which is also the case in Thailand.
However, he said the demand in the property sector would grow strongly in AEC countries, especially Myanmar, where the supply of office space, serviced apartments and hotels was not enough to serve the market. This has driven the rental price of office space in Yangon to US$150 (Bt4,620) per square metre per month, compared with $30 for a grade A office in Bangkok.
James Pitchon, executive director of CB Richard Ellis Thailand Co, said all the countries in Asean had barriers to entering the property sector. However, some of them still needed investment in this sector, including Vietnam and Cambodia.
Like Myanmar, those two countries have an insufficient supply of residential, office, and hotel facilities to serve the demand that will see strong growth when the AEC becomes effective in 2015, bringing in new investment from multinational companies, he said.
Suphin Meechuchep, managing director of Jones Lang LaSalle (Thailand) Co, said the supply of office space in Jakarta was only 4.3 million square metres, or just over half of Bangkok’s 8 million square metres. But Jakarta has an office vacancy rate of only 5 per cent, indicating strongly growing demand for office space.
In the Philippines, demand for residential projects is also growing strongly, especially for condominiums priced lower than Bt3 million. Most developers who invest in condos and open them to rental will enjoy returns of at least 6 per cent a year, she said.
Malaysia and Singapore also have strong demand in the residential and hospitality sectors, while the governments of both countries encourage foreign investors to come in. This is in contrast to the more difficult situation in other AEC countries, said Poramet Chantanakomet, country head of DTZ (Thailand) Co.