|
Thursday, 15 May 2008 |
|
FOREIGN PROPERTY OWNERSHIP
The government is considering allowing greater foreign ownership in property
firms and extending leasehold periods beyond 30 years to stimulate the business,
according to Finance Minister Surapong Suebwonglee.
The amendment would stimulate market segments that have been hit by sluggish
demand, he said yesterday.
''This has been discussed quite seriously over the past two to three months.
We need to think about the percentage of shareholding and leasing access
compared with the number of years. The crisis that we have had in the past two
years led us to think and look at a new paradigm,'' he said at an investor forum
held by Euromoney.
Dr Surapong said the government would consider new rules on leasing more on
par with the region. The government has also abandoned a controversial proposed
change to the Foreign Business Act, which tightened the definition of foreign
ownership to promote foreign direct investment, he added.
Longlom Bunnag, the chairman of the real estate agency Jones Lang LaSalle
(Thailand), said property related to tourism and recreation was expected to
benefit the most from any changes because of high demand.
''Existing laws allow foreigners to secure 50-year leaseholds in Bangkok's
red zone, which is the commercial area such as on Sathon Road. ... I think
Phuket, Samui and Pattaya may be in the government's sights for changes in
regulations to benefit villas, resorts and long-stay travellers,'' he said.
Mr Longlom said the idea could improve Thailand's competitiveness, since many
countries now offered longer leaseholds _ for instance, 50 years in China and
Hong Kong and 99 years in Singapore. ''Thailand has the shortest eligible period
for lease contracts.''
Issara Boonyoung, vice-president of Housing Business Association, disagreed
with the idea of allowing foreigners to freely conduct transactions related to
exchange of properties because it could restrict housing access for Thais.
''Thai people have lower purchasing power than foreigners. If the government
allows foreigners to sell or buy freely, there will be no land left for Thais,''
he said.
Foreign ownership should have conditions and limitations, he said. For
example, the government should continue protecting land for agricultural
purposes due to its low prices, otherwise the country may lose most of its land
to foreigners.
Regarding the increase in the foreign quota in condominiums from 49%, the
government should limit the size of land plots to prevent developers from using
legal loopholes to register townhouses as condo units, Mr Issara said.
However, Assoc Prof Manop Bhongsadadt of Chulalongkorn University said the
issue was ''very sensitive'' and unlikely to survive the three readings required
in Parliament to change the law.
It would be easier to extend leasehold periods from the current 30 years to
90 years as in the UK, he said. ''It will turn illegal transactions as in Phuket
and Samui into legal transactions. The government is likely to collect more
taxes.''
Mr Issara also agreed that extended leaseholds would create transparency and
prevent the use of nominees. However, he said longer leaseholds and higher
foreign quotas in condominiums should be allowed only in specific areas.
PARISTA YUTHAMANOP & KANANA KATHARANGSIPORN
Bangkok Post
|
|
|
Sunday, 11 May 2008 |
|
source: Bkk Post May
The luxury property market is still strong due to healthy demand and high
purchasing power, reflected in the fact that fewer than 20% of purchasers seek
loans, according to Chatchai Payuhanaveechai, a senior vice-president at
Kasikornbank.
Most buyers of luxury units pay cash as they are seeking better returns than
from bank deposits in the face of inflation that is hovering around 6%, he said.
Yields on bonds and debentures are also seen as unattractive and stocks are too
volatile, while prime real estate can bring rental returns of 5-8% per year.
''You need to know the real estate market and each asset's liquidity. Choosing a
good location is the key,'' Mr Chatchai said.
Developers of luxury units are offering more than 7,000 units at 24 projects in
an exhibition taking place until May 18 at Siam Paragon, while three property
brokerage firms are looking for combined sales of 2.75 billion baht.
Aliwassa Pathnadabutr, managing director of the property consultancy CB Richard
Ellis (Thailand), said demand in the segment remained healthy.
Unit prices have been increasing at between 7% and 15% a year depending on the
project and location, while units at the very top end of the market can fetch
nearly 300,000 baht per square metre, she said.
Sixty percent of luxury property buyers are Thais and 40% are foreigners, up
from 15-20% in the past, according to CBRE.
''Confidence is a major factor affecting decision-making and demand in this
segment,'' Ms Aliwassa said.
CBRE is selling six projects worth a combined 15 billion baht and hopes the
exhibition would generate sales of two billion baht. At a similar event last
year, the company generated 800 million baht from five projects.
Harrison, another participating real estate brokerage, expects sales of 600
million baht from eight projects where it has four billion baht worth of units
on offer.
Phanom Kanjanathiemthao, managing director of the property agency Knight Frank
Chartered (Thailand), said his company was selling three projects worth 10
billion baht and expected to sell 40 to 50 units worth 150 million baht, up from
50 million baht from a single project in the 2007 showcase.
One of the three projects is the 400-unit My Resort condominium worth two
billion baht at the Phetchaburi-Asok Junction, being developed by Everland.
After a month of pre-sales, 20 units worth 100 million baht have been sold.
''Demand in the high-end segment is strong but prices are up 20-30% due to
higher costs of construction and land. Developers needed to increase their
marketing budget as sales slowed down last year,'' Mr Phanom said.
According to the company's research, average prices of Bangkok condominiums have
risen from 65,000 baht per sq m to 82,000 baht in the past year. New
condominiums in Hua Hin are fetching 120,000 baht per sq m, up from 85,000 baht,
as construction costs are 10-15% higher and land prices in the resort town have
risen 20-30%.
Somchao Tantaterdtham, president of the Thai Real Estate Association, said
transfers of residential units during the first two months of 2008 increased
from the same period last year due to higher confidence among consumers.
Significantly, transactions were up even though new tax incentives approved by
the government did not take effect until late March.
Transfers of single houses and townhouses totalled 1,200 units in January and
1,167 in February, up from 903 and 1,150 units respectively in the same two
months last year.
Condominium unit transfers totalled 973 units in January and 888 in February, up
from 616 and 759 respectively in January and February 2007.
''Risks remain. Higher oil prices affected overall construction costs while
steel prices never go down. Under such circumstances, the government should
support building the investment atmosphere,'' Mr Somchao said.
|
|
|
Tuesday, 06 May 2008 |
|
source: Bangkok Post/Nigel Cornick 6 May 2008
Over the past three years, Thailand's resort areas have rapidly progressed as
desirable destinations for upmarket real estate investors.
The tourism industry has opened the eyes of many buyers and the Kingdom has
clearly established itself as a place where people want to reside, in terms of
affordability, lifestyle and cost of living.
There are not really any negatives except one, and it relates to foreign
ownership.
Regulations currently limit foreign freehold to 49% of the saleable area in a
condominium, and because of this, the industry is being held back by as much as
four times its growth potential.
Last year, Raimon Land sold four billion baht worth of resort real estate, but
it could have sold almost double that if there were no restrictions.
Relaxing the quota to 70% or more would provide a major upside for the industry.
If we had the ability to guarantee foreign ownership, the market would expand
significantly, as there is no doubt that the demand is there.
It is frustrating, not only for the real estate industry, but for the prosperity
of the country as a whole, as the opportunity to attract more overseas
investment is huge.
Of the destinations hardest hit by the regulations outlined in the Foreign
Business Act, Phuket and Koh Samui stand out. They rely on overseas investors,
as Thai buyers show limited interest.
Thai nationals typically prefer to buy in Hua Hin and increasingly in Pattaya,
although there are indications that this is slowly changing in Phuket where
attractive capital gains and rental yields are being realised.
Overseas investors on the other hand, are driven more by lifestyle imperatives.
They are seeking a pleasant retirement location or a second home; investment
yields are often a secondary concern.
Thai and foreign buyers may have different motivations for condominium
purchasing, which creates an interesting dynamic when it comes to pricing and
future resale.
This is clear in the current quota system, which divides condominiums into two
separate markets: Thai and foreign. If you are a Thai and buying into a project,
your future gains are greatly limited as you are buying part of the Thai quota
and can only sell to a Thai.
Essentially, Thais cannot sell to foreigners. So the foreign quota system is
actually working against Thais themselves and hindering them from profiting from
real estate investments in the future.
Because of the quota, it raises serious questions for developers regarding
whether it is worthwhile investing in destinations that are not popular with
Thai nationals.
In Pattaya, it is a slightly different story, where we are seeing an increase in
Thai buyers, as they see investment potential in terms of both capital gains and
rental returns due to the active executive expatriate and retiree rental market
in the area.
Hua Hin presents a different case altogether, due partly to its long association
with the Royal Family. But the former high percentage of Thai buyers against
overseas buyers is changing. The split used to be 70% Thais, 30% foreigners. Now
it is 60% Thais and 40% foreigners. Once foreign demand reaches 49%, Thais will
no longer be able to sell to them.
The stage is set for Thailand's property industry to continue to benefit from
the international perception created by the tourism industry, but if key issues
are not solved, there is a risk the industry will never reach its full
potential.
Perhaps we are not doing enough to create awareness in the right circles. But if
there is not a change soon, we could lose opportunities to neighbouring
countries such as Vietnam and Malaysia, who have adjusted regulations to entice
overseas buyers to their countries.
It is unlikely that Vietnam will be taking any property investment business away
from Thailand soon, because there's no stock and little infrastructure. It is
still not considered a "world" destination.
In other words, everyone knows where Phuket is, but they don't know about Na
Trang. However, they will in the future and destinations like Na Trang will
certainly become competitors.
The main point is that these countries are prepared to change their rules and
regulations to attract foreigners. They want foreigners to come and buy their
real estate.
As such, it is not so much a question of how much Thailand is losing from the
quota system, but how much it could be gaining if the Condominium Act increased
the quota for foreign buyers.
This is extremely important to a developer's investment strategy. They don't
want to have 50% of their buildings sitting empty with no or few prospects of
finding a buyer.
Thailand's property sector and all the associated industries could receive a
huge boost in investment, which would benefit the entire nation, if it raised
the foreign quota in the nation's condominiums. It is what the industry, and
indeed the country, truly deserves.
Nigel Cornick is Chief Executive Officer of
Raimon Land Public Co., Ltd, Thailand's luxury international property developer
with projects in Bangkok, Phuket and Pattaya.
|
|
|
Tuesday, 06 May 2008 |
source: The Nation/Dr Teerachon Manomaiphibul May 5, 2008
Real estate is one of the most regulated industries in Thailand.
Although strict regulation makes a lot of sense for an industry that has a
direct impact on people's lives, excessively strict regulations can hurt its
growth and prosperity.
Strict zoning regulations, issued in 2006, have made the development of new
projects costlier and more time-consuming. These regulations cover floor area
ratio; gross building area per land area ratio; open space ratio; and open space
per gross building area ratio.
Meanwhile, the Environmental Investigation Agency has become stricter. This
change in stance is affecting many residential projects because the Environment
Impact Assessment (EIA) approval process is time-consuming. This can cause a
significant reduction in the internal rate of return for the project.
If the developers are to retain the required return, the increased cost will
eventually be transferred to the customers.
The Natural Resources and Environment Committee also revised the laws for the
Environmental Investigation Agency. The key differences are:
- The new EIA criteria applies to any building covering more than 2,000 square
metres.
- The new criteria is applicable to projects covering more than 10,000 sq m.
- Projects with 250 subplots or more, or area over 100 rais are also covered in
the EIA.
We recommend setting up a one-stop service to reduce the time in which a permit
can be issued, and having one ageancy where the EIA submission can take place.
These measures will make the process more convenient and reduce the cost of
construction. There is already a proven example of one-stop service within
Thailand with the Industrial Estate Authority of Thailand.
|
|
|
Tuesday, 06 May 2008 |
source: Bkk Post May 5 2008
The sharp rise in developments seeking EIA approval has increased the workload
at the Office of Natural Resources and Environmental Policy and Planning. In the
past, the ONEP received between 200 and 300 EIA reports for approval each year.
But currently it has 1,400 reports on its table, up from 500 at the end of last
year, says secretary-general Kasemsun Chinnavaso.
''Given the increasing number of projects, I really sympathise with the seven
officials working for this division who are responsible for the initial
revisions of the reports,'' he says.
The workload has been even heavier lately because two of his staff are on
maternity leave.
''We have to work without holidays, spending so much time reading reports that
are around 400 pages. The number of jobs has increased but we can't add more
staff. And we can't outsource the work because there are no related laws
supporting such activity.''
The expert reviewers also work hard. Currently there are 11 committees with
experts from different agencies, who have to review reports for at least 3,000
projects a year. Only two of the committees are responsible for residential and
serviced property projects.
''The number of meetings has also increased from once a month to every week _
otherwise the 1,400 projects might not finish,'' says Mr Kasemsun.
It's been suggested that developers might take the EIA process more seriously if
they had to pay into an environmental fund. One proposal involved a fee of 0.5%
of the project value. This money could be used to correct environmental problems
or cover related liabilities.
Mr Kasemsun disagrees, saying it would be hard to establish and administer. It's
also not clear what would happen to the funds, and whether all the money should
be returned to a developer after each project completes construction.
Some officials proposed a special fund after a recent incident in which a
concrete block fell at a construction site and injured passers-by.
''Instead, I proposed additional insurance coverage, which project owners
normally have, for third parties,'' he says.
|
|
|
Tuesday, 06 May 2008 |
source: Bkk Post May 5 2008
Green seal of approval
Property developers have been complaining about Environmental Impact Assessment
(EIA) reports, saying they are a major cause of delays in starting construction
or delivering units to customers. But for property buyers, an EIA is a
significant factor for concern when deciding to buy a unit. ''An EIA is a
guarantee that a project owner gives to customers,'' says Kasemsun Chinnavaso,
secretary-general of the Office of Natural Resources and Environmental Policy
and Planning (ONEP).
''Many people misunderstand that an EIA is a permit but it's not. It's a must
report for any place including a hotel, residential building, condominium or
serviced apartment where many people live together for any activity, as the
environment might be affected before, during and after the construction.''
For example, before construction, the area will be assessed and if there is
piling work or other activity that may cause noise, dust or damage to the
surrounding areas, the EIA report will specify how to prevent or manage possible
danger.
After construction, the EIA is a guideline for how many people can live in the
area without feeling crowded. An EIA report for a residential project must
contain provisions for a green area where people can relax. If it is a large
housing project, plans for public spaces and waste-disposal areas are required.
''Take Muang Thong Thani as an example,'' explains Mr Kasemsun, referring to one
of the largest residential complexes in Asia. It is next to one of the region's
biggest convention centres as well. ''When there's an exhibition, the number of
people going there may be as many as 100,000 or more _ the equivalent to the
population of Chiang Mai's Muang district. Everyone consumes and produces waste.
So how can we manage waste water and rubbish amounting to at least 10 tonnes?''
The main goals of an EIA report, he says, are prevention, reduction, treatment
and maintaining environmental quality.
Still, some developers resent what they see as more paperwork and delays at a
time when costs of building materials and labour have been rising rapidly. Some
invoke Article 39 of the Building Control Law to start construction before
obtaining a construction permit.
That's a very bad idea, in Mr Kasemsun's view. ''Consumers will end up having
problems,'' he says.
''Some developers agree to pay more for fast-track approval. But if they do
everything legally and properly, they can save unnecessary costs. If they cannot
do things right, finally the issue will return to square one.''
For property buyers, if an EIA report has not been approved, they may not be
able to obtain their units as the project cannot be registered as a lawful
building.
Mr Kasemsun believes developers should use EIA approval as a selling point
instead of complaining about the system. Over the past two months, he has been
talking to developers with approved reports, suggesting that they place messages
confirming EIA approval in their brochures or advertisements.
''Many customers don't know how an EIA is important to them,'' he says. ''It can
build confidence among buyers.''
"Many people misunderstand that an EIA is a permit but it's not. It's a must
report for any place including a hotel, residential building, condominium or
serviced apartment where many people live together for any activity, as the
environment might be affected before, during and after the construction," says
Kasemsun Chinnavaso, the ONEP secretary-general. THITI WANNAMONTHA
A thorough EIA report should cover waste management and water treatment systems,
traffic flows, green area, air flow, security, fire prevention and sprinkler
systems _ the most important elements in a high-rise building.
''If a project is waiting for an EIA and the developer wants to open sales,
information about the contents of the EIA can be put in the brochure as the
developer or its consultant has all the details.''
Mr Kasemsun likens an EIA to a take-home thesis. The ONEP provides a checklist
for the preparation of an EIA report for registered consulting firms
commissioned to do the reports.
Developers who run afoul of the rules could encounter even more costly delays
since work on their projects could be forced to stop.
If the ONEP finds that a developer lacks proper approvals, it will hold
discussions with representatives of the Bangkok Metropolitan Authority (BMA),
the Department of Civil Engineering and its expert review committee. It will
then conduct a site survey to determine whether the breaches are serious enough
to warrant stopping construction.
If construction stops, the ONEP will check whether the report done by the
consultant contained factual errors. If the errors are seen as intentional, the
consultant will get a first warning and the information will be published on the
ONEP website.
Ultimately, the process aims to secure co-operation and benefits for residents
and their neighbours, says Mr Kasemsun.
There are even cases in which rules are eased. In early March the office
cancelled a new requirement for condominium developers to plant one big tree for
every ton of air-conditioning capacity, after deciding the rule was too strict.
''We cancelled it as some projects might have evaded the regulation by claiming
they had no air-conditioning systems in their buildings. And after getting EIA
report approval, they would install them or claim customers had done so later,
at which point we wouldn't have been able to do anything.''
The department has reverted to an earlier regulation calling for one square
metre of green area per resident or 0.5% of the total residential area. Half of
the green space must contain big trees but the types grown are up to the
developers.
Mr Kasemsun suggests that project owners and residents consider approaching the
Forestry Department and the National Park, Wildlife and Plant Conservation
Department, which encourage the enlargement of green areas. Project owners can
even get a tax deduction.
Green areas may create extra work and expense but residents will get many
benefits back, and the developers' images will be improved as well.
''I have trees at my house and every summer I have to sweep leaves _ more than
30 bags _ and hire BMA staff to dispose of them,'' he says. ''What I get back is
shade and many little animals like squirrels, crows, cuckoos and doves and other
birds. Sometimes I don't need an alarm clock. More importantly, I have
'relatives' visiting every year. They're giant honey bees.''
Full EIA report guidelines are available in Thai and English at the ONEP
website: www.onep.go.th/eia
|
|
|
