The Landmark Residence by Land & Houses is designed in modern luxury style and offers only 24 units for home-buyers who want the convenience of living near Bangkok's Lat Phrao subway station.
The three-storey residences have three bedrooms and four bathrooms. With total floor space of 300 square metres, the starting price for buyers is Bt19.9 million.
Already, four of the project's 24 units have been sold.
A major feature of the townhouses is a master suite bedroom covering 100 square metres, which incorporates a private bathroom with a jacuzzi.
Home-owners' privacy and convenience are enhanced by the townhouses' 3-metre bedroom ceilings and a 6-metre double ceiling between the ground and middle floors.
The modern style of the interior design provides both functionality and elegance for home-owners with a unique lifestyle, say the company's designer.
Although the project has only 24 units, L&H has catered for the small and exclusive community of home-owners by providing a project club house.
"This project is our masterpiece for th luxury market in this area, located close to mass-transit services," said the company's management.
Monday, August 31, 2009
Golden Land offers prime clubhouse zone
Sensing an upturn in the market is on the way, Golden Land is on the way, Golden Land is taking the opportunity to show off some of its most prime housing plots at Golden Heritage and Grnde Monaco, two high-end gated communities.
"We have recorded a relatively high level of sales the past month," says chief executive officer William Wilfong.
"To entice buyers, we show they are getting good value for their money," he adds.
"Both Heritage and Monaco easily display high quality. Buyers know they are making safe investments with us."
golden Land's marketing chief Pat Seth says the company is now launching choice homes that are in the "club-house zones" of the estates.
Being close to the recreational centre commands a premium, which buyers are happy to pay as long as they like what they see, she says.
The clubhouses were among the first structures that were among the firt structures that were among the first structures that were completed along with the entrances. roads and landscaped grounds.
Buyers may take advantage of special packaes that Golden Land is offering for the prime homes during the Thai Exclusive property Skhow at Siam Paragon between September 11 and 20, she says.
Buyers have a choice of incentives offered at the fair, Pat says buyers may receive disfcounts of between 10 and 15 per cent.
Wilfong says the upper segment is hungry fr choice as much supply was scaled back during the prolonged slump last year.
"Lately banks have relaxed rules on mortgages for units priced more than Bt10 million, "he notes.
What the company is doing now is introducing Bt20-million mansions at the two sites.
This is nothing new. Golden Land was the first to ofer high-end homes after the 1997 crcsh when other developers assume demand was dead.
In 2001, its Baan Lad Prao units costing Bt7 million, considered high then,were quickly snapped up, surprised the industry.
For people who have the money, says Wilfong, buying a quality house in a reputable community is always considered a prudent investment irrespective of market fluctuations.
What was true in 2001 may be also true today.
Golden Land is keen to complete sales at Golden Heritage, a 173-rai estate in Pinklao.
Its latest phase wil have a new clubhouse, called "Pallazo Grande",which gardens on a3-rai compound.
He says the earlier success of Golden Legend on Sathorn, now almost sold out, reflects the market's acceptance of its products.
What makes Heritage and Monaco equally distinct from rival projects, is they command strong and unique identities.
The more accomplished buyers are more than likely to take time out to smell the roses, unlike a younger crowd who have yet to amass ample wealth.
"We have recorded a relatively high level of sales the past month," says chief executive officer William Wilfong.
"To entice buyers, we show they are getting good value for their money," he adds.
"Both Heritage and Monaco easily display high quality. Buyers know they are making safe investments with us."
golden Land's marketing chief Pat Seth says the company is now launching choice homes that are in the "club-house zones" of the estates.
Being close to the recreational centre commands a premium, which buyers are happy to pay as long as they like what they see, she says.
The clubhouses were among the first structures that were among the firt structures that were among the first structures that were completed along with the entrances. roads and landscaped grounds.
Buyers may take advantage of special packaes that Golden Land is offering for the prime homes during the Thai Exclusive property Skhow at Siam Paragon between September 11 and 20, she says.
Buyers have a choice of incentives offered at the fair, Pat says buyers may receive disfcounts of between 10 and 15 per cent.
Wilfong says the upper segment is hungry fr choice as much supply was scaled back during the prolonged slump last year.
"Lately banks have relaxed rules on mortgages for units priced more than Bt10 million, "he notes.
What the company is doing now is introducing Bt20-million mansions at the two sites.
This is nothing new. Golden Land was the first to ofer high-end homes after the 1997 crcsh when other developers assume demand was dead.
In 2001, its Baan Lad Prao units costing Bt7 million, considered high then,were quickly snapped up, surprised the industry.
For people who have the money, says Wilfong, buying a quality house in a reputable community is always considered a prudent investment irrespective of market fluctuations.
What was true in 2001 may be also true today.
Golden Land is keen to complete sales at Golden Heritage, a 173-rai estate in Pinklao.
Its latest phase wil have a new clubhouse, called "Pallazo Grande",which gardens on a3-rai compound.
He says the earlier success of Golden Legend on Sathorn, now almost sold out, reflects the market's acceptance of its products.
What makes Heritage and Monaco equally distinct from rival projects, is they command strong and unique identities.
The more accomplished buyers are more than likely to take time out to smell the roses, unlike a younger crowd who have yet to amass ample wealth.
Friday, August 28, 2009
SLIGHT RISE IN US HOUSING PRICES CHEERS SOME BUT MANY REMAIN AFRAID
The worst US housing market since the Great Depression may by on the mend after prices rose in 18 of 20 US cities in June, existing home sales hit a two-year high, and new home sales gained for a fourth consecutive month.
"The sense that something is changing is definitely in the air," said Robert Shiller, the Yale University professor who, with economist Karl Case, created home price indexes in the 1980s now used by Standard Poor's.
"After three years of decline, we might be seeing a turnaround."
Lower home prices and government stimulus efforts have spurred demand and pared the supply of existing homese to the fewest in two years, while sednding new-home inventory to a 16-year low.
Real estate sales buttress consumer spending, which accounts for about 70 per cent of the economy, because new owners tend to buy appliances, drapes and furniture.
The S&P/Case-Shiller home-price index, which tracks 20 metropolitan areas, showed a gain in 18 cities during June, according to the recent report.
Detroit and Las Vegas were the only two that declined. The Federal Housing Finance Agency national index showed a 0.5-per-cdnt increase during June with increases in five out of nine US regions, according to a government report.
"Evidence is mounting that the worst of the economic downturn is behind us, "Federal Reserve Bank of Atlanta president Dennis Lockhart said on Thursday in a speech in Chattanooga, Tennessee. "The beginning stages of recovery are underway."
Other federal officials are less optimistic.
The jobless rate, which hit 9.5 per cent in June before dipping to 9.4 per cent by the end of the year, according to an Aug. 25 report by the White House Office of Management and Budget.
"While the danger of the economy immediately falling into a deep recession has receded, the American economy is still in the midst of a serious economic downturn," the report said.
About 26 per cent of US homes with a mortgage were worth less than the amount owed, according to a Deutsche Bank report this month.
Deutsche Bank analysts Karen Weaver and Ying Shen forecast that as prices drop through the first quarter of 2011, as many as 48 per cent of mortgages may be "underwater".
That means few homeowners will be able to refinance or take home equity loans to get cash.
"After three years of decline, we might be seeing a turnaround."
"The sense that something is changing is definitely in the air," said Robert Shiller, the Yale University professor who, with economist Karl Case, created home price indexes in the 1980s now used by Standard Poor's.
"After three years of decline, we might be seeing a turnaround."
Lower home prices and government stimulus efforts have spurred demand and pared the supply of existing homese to the fewest in two years, while sednding new-home inventory to a 16-year low.
Real estate sales buttress consumer spending, which accounts for about 70 per cent of the economy, because new owners tend to buy appliances, drapes and furniture.
The S&P/Case-Shiller home-price index, which tracks 20 metropolitan areas, showed a gain in 18 cities during June, according to the recent report.
Detroit and Las Vegas were the only two that declined. The Federal Housing Finance Agency national index showed a 0.5-per-cdnt increase during June with increases in five out of nine US regions, according to a government report.
"Evidence is mounting that the worst of the economic downturn is behind us, "Federal Reserve Bank of Atlanta president Dennis Lockhart said on Thursday in a speech in Chattanooga, Tennessee. "The beginning stages of recovery are underway."
Other federal officials are less optimistic.
The jobless rate, which hit 9.5 per cent in June before dipping to 9.4 per cent by the end of the year, according to an Aug. 25 report by the White House Office of Management and Budget.
"While the danger of the economy immediately falling into a deep recession has receded, the American economy is still in the midst of a serious economic downturn," the report said.
About 26 per cent of US homes with a mortgage were worth less than the amount owed, according to a Deutsche Bank report this month.
Deutsche Bank analysts Karen Weaver and Ying Shen forecast that as prices drop through the first quarter of 2011, as many as 48 per cent of mortgages may be "underwater".
That means few homeowners will be able to refinance or take home equity loans to get cash.
"After three years of decline, we might be seeing a turnaround."
POWER LINE PROJECTS FALL IN REVENUE OVER DUBAI CONTRACT DELAY FUNDING CONTRACTION
Construction firm Power Line Engineering expects revenue to decline 12.62 per cent to Bt7.96 billion this year, from Bt9.11 billion last year.
The drop will be due to a delay in a construction contract for the Dubai Lagoon condominium development and a reduction of Ua Arthorn units.
Chairman Swake Srisuchart said the delayed Dubai project and a reduction in funding for Ua Arthorn housing projects from Bt18 billion to only Bt7.5 billion would affect this year's bottom line. Whether the company can turn a profit will depend on an increased provision for doubtful debts.
Swake said the third quarter should return to a profit after a loss in the second quarter, because the company expects Bt450 million in doubtful debts to be paid by clients, out of Bt1.04 billion owed.
Power Line posted a second-quarter net loss of Bt407 million.
Power Line's backlog this year will amount to Bt17.5 billion, Swake said.
He said the company expected an additional backlog of Bt10 billion for projects at home and abroad. Five domestic projects worth a combined Bt4.6 billion are in the works, including the Purple Line's third contract. In addition, the company is preparing bids worth Bt8 billion on projects abroad.
Power Line closed at Bt1.52 yesterday, unchanged from Thursday.
The drop will be due to a delay in a construction contract for the Dubai Lagoon condominium development and a reduction of Ua Arthorn units.
Chairman Swake Srisuchart said the delayed Dubai project and a reduction in funding for Ua Arthorn housing projects from Bt18 billion to only Bt7.5 billion would affect this year's bottom line. Whether the company can turn a profit will depend on an increased provision for doubtful debts.
Swake said the third quarter should return to a profit after a loss in the second quarter, because the company expects Bt450 million in doubtful debts to be paid by clients, out of Bt1.04 billion owed.
Power Line posted a second-quarter net loss of Bt407 million.
Power Line's backlog this year will amount to Bt17.5 billion, Swake said.
He said the company expected an additional backlog of Bt10 billion for projects at home and abroad. Five domestic projects worth a combined Bt4.6 billion are in the works, including the Purple Line's third contract. In addition, the company is preparing bids worth Bt8 billion on projects abroad.
Power Line closed at Bt1.52 yesterday, unchanged from Thursday.
Surayud among 50 accused
The Ministry of Natural Resources and Environment's panel investigating the Khao Yai Thieng forest land scandal has accused 50 landowners, including former premier Surayud Chulanont,of encroaching on the forest reserve.
Withoon Chalayonnawin, chief of the Forest Department's forest protection and forest fire control office, yesterday said aerial image studies show that these landowners occupied the land plots in Nakhon Ratchasima's Sikhiu district after the area was declared a forest reserve.
Khao Yai Thieng was declared part of Khao Tien-Khao Khuen Lan forest reserve in 1965. The aerial images of Khao Yai Thieng taken two years after the declaration show the forest was fertile with no traces of human activity.
"Judging from the aerial images, it's
clear these 50 landowners occupied the land plots when it had already been declared a protected forest," he said.
This means the landowners were not protected unSurayud: Occupies der the June 1998 a 20-rai land plot cabinet resolution,which states that forest dwellers will not face encroachment charges if they can prove they have lived there before the designation of the protected forest area.
In the latest survey by the department, more than 500 rai of forest land in Khao Yai Thieng were owned for agricultural and tourism purposes, said Mr Witoon, a member of the inquiry panel.
A source on the panel said Gen Surayud, who occupies a 20-rai land plot on Khao Yai Thieng, was one of the 50 landowners who allegedly encroached on the forest reserve.
The Khao Yai Thieng land scandal surfaced in 2007, shortly after Gen Surayud was appointed prime minister of the coup-installed government.
Gen Surayud, now a privy councillor,has repeatedly insisted the land acquisition was clean and transparent. He said he had owned the land and a house on Khao Yai Thieng mountain since 1982, and had consistently paid local taxes on the property.
After the 2007 debate on the ethics of cabinet ministers by a group of members of the National Legislative Assembly, Gen Surayud said he was ready to return his land plot to the state if the property in question was proved to encroach on the forest reserve.
Withoon Chalayonnawin, chief of the Forest Department's forest protection and forest fire control office, yesterday said aerial image studies show that these landowners occupied the land plots in Nakhon Ratchasima's Sikhiu district after the area was declared a forest reserve.
Khao Yai Thieng was declared part of Khao Tien-Khao Khuen Lan forest reserve in 1965. The aerial images of Khao Yai Thieng taken two years after the declaration show the forest was fertile with no traces of human activity.
"Judging from the aerial images, it's
clear these 50 landowners occupied the land plots when it had already been declared a protected forest," he said.
This means the landowners were not protected unSurayud: Occupies der the June 1998 a 20-rai land plot cabinet resolution,which states that forest dwellers will not face encroachment charges if they can prove they have lived there before the designation of the protected forest area.
In the latest survey by the department, more than 500 rai of forest land in Khao Yai Thieng were owned for agricultural and tourism purposes, said Mr Witoon, a member of the inquiry panel.
A source on the panel said Gen Surayud, who occupies a 20-rai land plot on Khao Yai Thieng, was one of the 50 landowners who allegedly encroached on the forest reserve.
The Khao Yai Thieng land scandal surfaced in 2007, shortly after Gen Surayud was appointed prime minister of the coup-installed government.
Gen Surayud, now a privy councillor,has repeatedly insisted the land acquisition was clean and transparent. He said he had owned the land and a house on Khao Yai Thieng mountain since 1982, and had consistently paid local taxes on the property.
After the 2007 debate on the ethics of cabinet ministers by a group of members of the National Legislative Assembly, Gen Surayud said he was ready to return his land plot to the state if the property in question was proved to encroach on the forest reserve.
Thursday, August 27, 2009
Cheerful US data buoy recovery hopes
Sales of new US homes hit their highest level in 10 months in July and orders for long-lasting manufactured goods surged, offering fresh evidence a modest economic recovery was taking shape.
The Commerce Department on Wednesday said sales of new single-family homes rose 9.6% from June to an annual pace of 433,000 units, the highest rate since September.
It was the biggest gain since February 2005 and it reduced the supply of unsold homes on the market to its lowest level in more than 16 years, another sign that housing activity had stabilised after a three-year slump.
A report showing mortgage applications rising for a second straight week,with demand for refinancing loans reading their highest level since early June,suggested home sales are still rising.
"The recovery in the housing market is very much under way," said Michelle Meyer, an economist at Barclays Capital in New York.
In a third report, the Commerce Department said a surge in demand for aircraft pushed orders for US-made durable goods up 4.9% last month, the largest advance in two years.
"Big-ticket items are displaying very normal recovery patterns, signaling that the early phase of this recovery may be stronger than people are anticipating. It doesn't mean it will be sustained," said Stephen Gallagher, chief US economist at Societe Generale in New York.
The data was the latest hinting that the US economy's worst slump in 70 years was over or close to it, though analysts cautioned that recovery will be hobbled by sluggish consumer demand,owing to high unemployment.
Highlighting the tight squeeze on households, a survey showed Americans will cut their travel plans for the summerending Labour Day holiday dramatically this year to save money.
While the housing sector appears to be recovering from a three-year slump,there are fears it could falter if a government tax credit of up to $8,000 for firsttime home buyers is not extended. The credit is due to expire at the end of November.
The inventory of new homes available for sale fell 3.2% to 271,000 units in July,the lowest since March 1993.
At July's sales pace, that would be a 7.5-month supply, the lowest since April 2007.
Economists said the home sales data was clearly good news, but they noted the report on orders for durable goods,items meant to last at least three years,was mixed.
Demand for transportation equipment jumped 18.4%, the biggest gain in three years, as civilian aircraft orders at Boeing jumped and the government's "cashfor-clunkers" programme, which gave buyers discounts to trade-in old gas guzzlers for new fuel-efficient cars, lifted auto demand.
Still, new orders excluding transportation climbed 0.8% in July for the first successive three-month advance since the first quarter of 2006. Even more encouraging, shipments of durable goods increased 2%.
But non- defence capital goods orders excluding aircraft - a closely watched proxy for business spending - slipped 0.3% in July after rising 3.6% the previous month.
The Commerce Department on Wednesday said sales of new single-family homes rose 9.6% from June to an annual pace of 433,000 units, the highest rate since September.
It was the biggest gain since February 2005 and it reduced the supply of unsold homes on the market to its lowest level in more than 16 years, another sign that housing activity had stabilised after a three-year slump.
A report showing mortgage applications rising for a second straight week,with demand for refinancing loans reading their highest level since early June,suggested home sales are still rising.
"The recovery in the housing market is very much under way," said Michelle Meyer, an economist at Barclays Capital in New York.
In a third report, the Commerce Department said a surge in demand for aircraft pushed orders for US-made durable goods up 4.9% last month, the largest advance in two years.
"Big-ticket items are displaying very normal recovery patterns, signaling that the early phase of this recovery may be stronger than people are anticipating. It doesn't mean it will be sustained," said Stephen Gallagher, chief US economist at Societe Generale in New York.
The data was the latest hinting that the US economy's worst slump in 70 years was over or close to it, though analysts cautioned that recovery will be hobbled by sluggish consumer demand,owing to high unemployment.
Highlighting the tight squeeze on households, a survey showed Americans will cut their travel plans for the summerending Labour Day holiday dramatically this year to save money.
While the housing sector appears to be recovering from a three-year slump,there are fears it could falter if a government tax credit of up to $8,000 for firsttime home buyers is not extended. The credit is due to expire at the end of November.
The inventory of new homes available for sale fell 3.2% to 271,000 units in July,the lowest since March 1993.
At July's sales pace, that would be a 7.5-month supply, the lowest since April 2007.
Economists said the home sales data was clearly good news, but they noted the report on orders for durable goods,items meant to last at least three years,was mixed.
Demand for transportation equipment jumped 18.4%, the biggest gain in three years, as civilian aircraft orders at Boeing jumped and the government's "cashfor-clunkers" programme, which gave buyers discounts to trade-in old gas guzzlers for new fuel-efficient cars, lifted auto demand.
Still, new orders excluding transportation climbed 0.8% in July for the first successive three-month advance since the first quarter of 2006. Even more encouraging, shipments of durable goods increased 2%.
But non- defence capital goods orders excluding aircraft - a closely watched proxy for business spending - slipped 0.3% in July after rising 3.6% the previous month.
CHINA LEADS COMMERCIAL-PROPERTY SALES
China outpaced the US and the UK combined in first-half commercial-property sales, says New York-based research company Real Capital Analytics.
China's transactions reached US$31.2 billion (Bt1 trillion) following a surge in sales of land-development rights after the government eased credit terms. US sales were $16.2 billion in the first half, while the UK's were $13.7 billion, RCA said.
"There's no question that China will be a more significant player on the world stage for commercial-property transactions versus other Western countries," said Real Capital's managing director Dan Fasulo.
But he added that China's growth "may not be sustainable at this level."
Globally, commercial properties worth some $62.8 billion were sold in the second quarter, up 17 per cent quarter on quarter and the first increase in 18 months, Real Capital said.
The Research firm said sales growth was the first step towards global recovery and that countries receiving the most financial support from their governments would recover more quickly.
Despite the second-quarter figures, first-half commercial-property sales totalled $116.4 billion, down 65 per cent year on year and $500 billion below the market's peak in the first half of 2007.
In China, investors took advantage of easier borrowing terms to buy the rights to develop buildings on state-owned land, Fasulo said. The government retains ownership of the land.
The amount of office space sold in China rose 13 per cent in the first seven months of the year, while sales of property for commercial uses gained 22 per cent, the National Bureau of Statistics of China said earlier this month.
Second-half sales may rise, as investors believe that "the economy has bottomed out, clearing some of the uncertainty," said Lee Hing-yin, director of research for East China at Colliers.
Soho China, the biggest developer in Beijing's central business district, last week said it had bought an office and retail development for 2.45 billion yuan (Bt12.19 billion) that it planned to sell again within a month or two.
"Asia's looking the healthiest,: said Ray Torto, global chief economist for the CB Richard Ellis group.
"They're very optimistic over there, like a young buck. You come back to the US, and you're talking to an older man."
The slow US recovery reflects the "deep connections of itms major institutions to the epicentre of the 2008 financial cataclysm", RCA said.
US spending on commercial property was 6 per cent of the amount spent there in the first half of 2007, Fasulo said, compared with China's spending of 92 per cent of the corresponding 2007 figure.
The volume of properties in default, foreclosure or bankruptcy around the world has reached $230 billion, increasing $96 billion in the second quarter, RCA said.
"The growth in transactions is only a first step in the recovery process," it said. "Pricing and operating fundamentals remain in decline, and debt remains scarce."
China's transactions reached US$31.2 billion (Bt1 trillion) following a surge in sales of land-development rights after the government eased credit terms. US sales were $16.2 billion in the first half, while the UK's were $13.7 billion, RCA said.
"There's no question that China will be a more significant player on the world stage for commercial-property transactions versus other Western countries," said Real Capital's managing director Dan Fasulo.
But he added that China's growth "may not be sustainable at this level."
Globally, commercial properties worth some $62.8 billion were sold in the second quarter, up 17 per cent quarter on quarter and the first increase in 18 months, Real Capital said.
The Research firm said sales growth was the first step towards global recovery and that countries receiving the most financial support from their governments would recover more quickly.
Despite the second-quarter figures, first-half commercial-property sales totalled $116.4 billion, down 65 per cent year on year and $500 billion below the market's peak in the first half of 2007.
In China, investors took advantage of easier borrowing terms to buy the rights to develop buildings on state-owned land, Fasulo said. The government retains ownership of the land.
The amount of office space sold in China rose 13 per cent in the first seven months of the year, while sales of property for commercial uses gained 22 per cent, the National Bureau of Statistics of China said earlier this month.
Second-half sales may rise, as investors believe that "the economy has bottomed out, clearing some of the uncertainty," said Lee Hing-yin, director of research for East China at Colliers.
Soho China, the biggest developer in Beijing's central business district, last week said it had bought an office and retail development for 2.45 billion yuan (Bt12.19 billion) that it planned to sell again within a month or two.
"Asia's looking the healthiest,: said Ray Torto, global chief economist for the CB Richard Ellis group.
"They're very optimistic over there, like a young buck. You come back to the US, and you're talking to an older man."
The slow US recovery reflects the "deep connections of itms major institutions to the epicentre of the 2008 financial cataclysm", RCA said.
US spending on commercial property was 6 per cent of the amount spent there in the first half of 2007, Fasulo said, compared with China's spending of 92 per cent of the corresponding 2007 figure.
The volume of properties in default, foreclosure or bankruptcy around the world has reached $230 billion, increasing $96 billion in the second quarter, RCA said.
"The growth in transactions is only a first step in the recovery process," it said. "Pricing and operating fundamentals remain in decline, and debt remains scarce."
Ministry drops plans to evict forest monks
The Natural Resources and Environment Ministry has scrapped its plan to evict temples encroaching on protected forests.
Minister Suwit Khunkitti yesterday told about 100 monks at a seminar on conservation their monasteries would not be removed from protected areas if the monks provided authorities with help to protect forest lands.
Earlier this month, the Forestry Department, which comes under Mr Suwit's supervision, announced it would begin closing temples which encroach on protected forests.
The policy is in line with the 1995 cabinet resolution instructing the department to remove monks living illegally in national parks, watershed areas and wildlife sanctuaries.
The department said there were 5,529 forest temples occupying 190,000 rai of forest land, most of them in reserves.Sixty-eight temples were initially earmarked for closure.
The eviction plans drew fierce opposition from monks across the country.
"We won't push [the monks] out of the forest, even if the temples were built before or after the declaration of protected forests," Mr Suwit said.
"Monks are the key players in forest protection."
The minister said forestry officials would work with temples to develop a better understanding of how to live in harmony in ecologically fragile areas.
But the ministry would introduce measures to prevent the establishment of new temples in forested areas, Mr Suwit said.
Yongyuth Chamnanrop, chief of Phupayol national park in the northeastern province ofMukdahan,applauded the new position.
"At the ground level, strict law enforcement is sometimes not the right answer," he said."We need compromise."
Phupayol national park recently filed charges against Phu Mai How forest monastery for forest encroachment and destroying a cave in the park.
Minister Suwit Khunkitti yesterday told about 100 monks at a seminar on conservation their monasteries would not be removed from protected areas if the monks provided authorities with help to protect forest lands.
Earlier this month, the Forestry Department, which comes under Mr Suwit's supervision, announced it would begin closing temples which encroach on protected forests.
The policy is in line with the 1995 cabinet resolution instructing the department to remove monks living illegally in national parks, watershed areas and wildlife sanctuaries.
The department said there were 5,529 forest temples occupying 190,000 rai of forest land, most of them in reserves.Sixty-eight temples were initially earmarked for closure.
The eviction plans drew fierce opposition from monks across the country.
"We won't push [the monks] out of the forest, even if the temples were built before or after the declaration of protected forests," Mr Suwit said.
"Monks are the key players in forest protection."
The minister said forestry officials would work with temples to develop a better understanding of how to live in harmony in ecologically fragile areas.
But the ministry would introduce measures to prevent the establishment of new temples in forested areas, Mr Suwit said.
Yongyuth Chamnanrop, chief of Phupayol national park in the northeastern province ofMukdahan,applauded the new position.
"At the ground level, strict law enforcement is sometimes not the right answer," he said."We need compromise."
Phupayol national park recently filed charges against Phu Mai How forest monastery for forest encroachment and destroying a cave in the park.
GH BANK WANTS RULES APPLIED NATONWIDE
The government Housing Bank will ask the Board of Investment to extend the new rules for affordable housing to the provinces in order to provide home-ownership opportunities to low-income earners across the country.
The bank also will offer a special mortagage package for the BoI's low-priced housing project, including a low interest rate long repayment term and maybe easider approval criteria, GH Bank president Khan Parachuabmoh said yesterday.
The new rules for residential projects located in BoI's Zone 1, covering greater Bangkok, went in to effect on June 10.
The new rules are revised from the old rules used since 1993. They include relaxing project size form a minimum of 150 units to 50 units to 50 units and distinguishing between condominium and low-rise projects.
For condos, units must be at least 28 square metres and priced not more than Bt1 million. For low rises, units must have at least 70 square metres of usable space and be priced not more than Bt1.2 million.
Khan siad that if the new rules were applied nationwide, that would help lowe-income earners have the ability to buy a new home.
Buyers who want to finance a Bt1-million residence with BoI privileges must show net income of at least Bt25,000 per month. This will be enough to pay instalments of Bt8,000 per month.
The Thai Real Estate Association, Thai Condominium Association and Business Housing Association agreed with this idea, Tehy also want the BoI to ease its rules further to allow mixed condo projects, with some units priced up to Bt1 million but others priced over Bt1 million, so that they would be more commercially viable.
Follwing this suggestion, the associations offer the condition that mixed condo projects would have at least 50 units priced not more that Bt1 million each.
Industry Minister Charnchai Chairungrueng said the government was ready to consider the ideas as soon as possible after GH Bank and the associations propose them in writing to the BoI.
"We will do anything that helps lower-income people to have a home more esilythan before. This also is one of the government's stimulus measures to drive the economy throuhg the property sector, he said.
As of August 14.25 residential projects with 8,690 units had applied for BoI tax incentives under the new rules. With an estimated comstruction cost of Bt1.89 billion, their total project value would be about Bt8 billion.
Issara Boonyong, president of the Business Housing Association, said the association believed that the new rules would boost BoI-promoted residences to at least 20,000 units worth more than Bt20 billion a year.
Atip Bichanond, president of the Thai Concominium Assocition, said that if the government also stretched the rules for condo projects to include mixed projects, there may be more than 20,000 units a year.
Kittipol Pramoj na Ayudhya, president of the Thai Real Estate Association, said that if the governemtn applied the new rules upcountry, it would support the government's policy to implement a property tax.
That is because it will force provincial landlords to develop their vacant land rather than hold their property, as is the case now.
The bank also will offer a special mortagage package for the BoI's low-priced housing project, including a low interest rate long repayment term and maybe easider approval criteria, GH Bank president Khan Parachuabmoh said yesterday.
The new rules for residential projects located in BoI's Zone 1, covering greater Bangkok, went in to effect on June 10.
The new rules are revised from the old rules used since 1993. They include relaxing project size form a minimum of 150 units to 50 units to 50 units and distinguishing between condominium and low-rise projects.
For condos, units must be at least 28 square metres and priced not more than Bt1 million. For low rises, units must have at least 70 square metres of usable space and be priced not more than Bt1.2 million.
Khan siad that if the new rules were applied nationwide, that would help lowe-income earners have the ability to buy a new home.
Buyers who want to finance a Bt1-million residence with BoI privileges must show net income of at least Bt25,000 per month. This will be enough to pay instalments of Bt8,000 per month.
The Thai Real Estate Association, Thai Condominium Association and Business Housing Association agreed with this idea, Tehy also want the BoI to ease its rules further to allow mixed condo projects, with some units priced up to Bt1 million but others priced over Bt1 million, so that they would be more commercially viable.
Follwing this suggestion, the associations offer the condition that mixed condo projects would have at least 50 units priced not more that Bt1 million each.
Industry Minister Charnchai Chairungrueng said the government was ready to consider the ideas as soon as possible after GH Bank and the associations propose them in writing to the BoI.
"We will do anything that helps lower-income people to have a home more esilythan before. This also is one of the government's stimulus measures to drive the economy throuhg the property sector, he said.
As of August 14.25 residential projects with 8,690 units had applied for BoI tax incentives under the new rules. With an estimated comstruction cost of Bt1.89 billion, their total project value would be about Bt8 billion.
Issara Boonyong, president of the Business Housing Association, said the association believed that the new rules would boost BoI-promoted residences to at least 20,000 units worth more than Bt20 billion a year.
Atip Bichanond, president of the Thai Concominium Assocition, said that if the government also stretched the rules for condo projects to include mixed projects, there may be more than 20,000 units a year.
Kittipol Pramoj na Ayudhya, president of the Thai Real Estate Association, said that if the governemtn applied the new rules upcountry, it would support the government's policy to implement a property tax.
That is because it will force provincial landlords to develop their vacant land rather than hold their property, as is the case now.
Land Act rates to be reviewed
The government will review tax rates proposed under the draft Land and Building Tax Act to be fair to all parties,says Somchai Sujjapongse, directorgeneral of the Fiscal Policy Office.
The draft act sets three rates of property and building tax -0.5% for commercial land and properties,0.1% for residential properties and 0.05% for agricultural properties.
The new law will replace the Building and Land Tax Act B.E.2475 and the Local Development Tax B.E.2508. It will reduce tax revenues for local authorities, who want the rates revised.
The FPO may also consider a progressive rate for high-value properties but it has yet to set a value. Residential units worth less than one million baht are expected to be exempt from the tax, but this could also change, depending on the situation when the tax is implemented, said Mr Somchai.
"The law is aimed at pushing landowners to utilise their land and to bring unused land plots into the market, because the department found that more than 90% of Thais hold less than one rai on average while the other 10% hold more than 100 rai on average," he said.
The office will carefully define "unused land" as many owners try to have unused land categorised as agricultural plots, which qualify for the lowest tax rate, said Mr Somchai.
For example, a piece of land would be defined as an agricultural plot when a certain proportion - possibly 75%is used for growing crops. Currently,some landlords try to avoid tax by growing a few trees on a large plot and claiming it as agricultural land or a public park.
Collections of taxes under the new law should start in 2012, because the Treasury Department has so far only appraised 6 million out of 31 million plots, said Mr Somchai. If the department cannot complete its task by 2012,tax will be collected according to blocks of land.
Developers are urging the office to review tax on land banks for future development. They say they cannot develop projects on all their land plots at the same time without creating an oversupply in the market.
The government should clarity the definition of several words in the bill to prevent the kind of disputes that currently arise over the collection of household tax, said Dr Supalakana Pinitpuvadol, a lecturer at Chulalongkorn University's faculty of law.
For example,"building or other building" in Article 5, which covers rafts,should clarify which rafts are included - rafts in resorts, rafts on rivers used for accommodation or rafts in theme parks, she said. Other terms needing clarification are "depreciation","maintenance cost","other properties" and "tax bases", she said.
The draft act sets three rates of property and building tax -0.5% for commercial land and properties,0.1% for residential properties and 0.05% for agricultural properties.
The new law will replace the Building and Land Tax Act B.E.2475 and the Local Development Tax B.E.2508. It will reduce tax revenues for local authorities, who want the rates revised.
The FPO may also consider a progressive rate for high-value properties but it has yet to set a value. Residential units worth less than one million baht are expected to be exempt from the tax, but this could also change, depending on the situation when the tax is implemented, said Mr Somchai.
"The law is aimed at pushing landowners to utilise their land and to bring unused land plots into the market, because the department found that more than 90% of Thais hold less than one rai on average while the other 10% hold more than 100 rai on average," he said.
The office will carefully define "unused land" as many owners try to have unused land categorised as agricultural plots, which qualify for the lowest tax rate, said Mr Somchai.
For example, a piece of land would be defined as an agricultural plot when a certain proportion - possibly 75%is used for growing crops. Currently,some landlords try to avoid tax by growing a few trees on a large plot and claiming it as agricultural land or a public park.
Collections of taxes under the new law should start in 2012, because the Treasury Department has so far only appraised 6 million out of 31 million plots, said Mr Somchai. If the department cannot complete its task by 2012,tax will be collected according to blocks of land.
Developers are urging the office to review tax on land banks for future development. They say they cannot develop projects on all their land plots at the same time without creating an oversupply in the market.
The government should clarity the definition of several words in the bill to prevent the kind of disputes that currently arise over the collection of household tax, said Dr Supalakana Pinitpuvadol, a lecturer at Chulalongkorn University's faculty of law.
For example,"building or other building" in Article 5, which covers rafts,should clarify which rafts are included - rafts in resorts, rafts on rivers used for accommodation or rafts in theme parks, she said. Other terms needing clarification are "depreciation","maintenance cost","other properties" and "tax bases", she said.
TCC LAND TARGETS SPA RESORT
TCC Land, a property arm of beverage tycoon Charoen Sirivadhanabhakdi, is considering taking over two hotels in Ranong, said a source in the hotel industry.
The source said TCC Land had sent officials to survey the market, and Chansom Hot Spa and Tinidee Hotel @ Ranong could be on the takeover list.
"The group seems to be most interested in Chansom Hot Spa, as it is located right on Phetkasem Road near the entrance to the Raksa Warin hot spring. The hotel is also the only concessionaire to the hot spring and it is also the producer of a mineral-water product," the source said.
Phannee Srokhai, deputy managing director of Chansom Hot Spa, said many groups had shown interest in taking over the hotel.
"What we want to sell is the mineral-water plant located behind the hotel," Phannee said. "The plant was temporarily closed but all the machines function well. But we don't have experience in production and marketing."
Meanwhile, she said the owner had no plan to sell the hotel, but given the economic crisis, might welcome a good offer. "But there has been no formal discussion with any group," she added.
Phannee said the group welcomed TCC Land's proposal, but the result depended on conditions. She estimated the hotel should fetch at least Bt400 million.
The source said TCC Land had sent officials to survey the market, and Chansom Hot Spa and Tinidee Hotel @ Ranong could be on the takeover list.
"The group seems to be most interested in Chansom Hot Spa, as it is located right on Phetkasem Road near the entrance to the Raksa Warin hot spring. The hotel is also the only concessionaire to the hot spring and it is also the producer of a mineral-water product," the source said.
Phannee Srokhai, deputy managing director of Chansom Hot Spa, said many groups had shown interest in taking over the hotel.
"What we want to sell is the mineral-water plant located behind the hotel," Phannee said. "The plant was temporarily closed but all the machines function well. But we don't have experience in production and marketing."
Meanwhile, she said the owner had no plan to sell the hotel, but given the economic crisis, might welcome a good offer. "But there has been no formal discussion with any group," she added.
Phannee said the group welcomed TCC Land's proposal, but the result depended on conditions. She estimated the hotel should fetch at least Bt400 million.
PROPERTY TAX TO CABINET NEXT MONTH
The Finance Ministry's Fiscal Policy Office will propose the property-tax law to the Cabinet again next month, after consideration was postponed this week.
The office's director-general Somchai Sujjapongse, at a seminar organised yesterday by the Thai Real Estate Association, Thai Condominium Association and Business Housing Association, said the law would help boost the income of provincial offices and that they could use it to develop communities.
Earlier, up to 80 per cent of community development funds came from the government, and only 20 per cent was covered by local administration revenue.
Meanwhile, he said, the government could use the law to manage land across the country, especially in cases where landlords own large tracts but refuse to do anything with them. Once the law is put in effect, most landlords will be forced to use their plots for farming or setting up businesses, he added.
Currently, at least 10 per cent of the population holds 100 rai each, while the remaining hold an average of 1 rai per person. Should the law go into effect, it would increase the tax burden on people holding large plots, so they will either be forced to reduce their property or use it to generate income, Somchai said.
According to the office, the property tax proposed will be divided into three levels. Tax for agricultural land will be no more than 0.05 per cent, that for residences 0.1 per cent and that for commercial land 0.5 per cent. But tax for undeveloped land will be 0.5 per cent for the first year, 1 per cent in the second year and will then be increased by an additional 1 percentage point every year.
Once the law is passed, the government will have to evaluate the 30 million individually owned plots across the country within two years.
So far, the Finance Ministry's Treasury Department has only evaluated 6 million plots.
The office's director-general Somchai Sujjapongse, at a seminar organised yesterday by the Thai Real Estate Association, Thai Condominium Association and Business Housing Association, said the law would help boost the income of provincial offices and that they could use it to develop communities.
Earlier, up to 80 per cent of community development funds came from the government, and only 20 per cent was covered by local administration revenue.
Meanwhile, he said, the government could use the law to manage land across the country, especially in cases where landlords own large tracts but refuse to do anything with them. Once the law is put in effect, most landlords will be forced to use their plots for farming or setting up businesses, he added.
Currently, at least 10 per cent of the population holds 100 rai each, while the remaining hold an average of 1 rai per person. Should the law go into effect, it would increase the tax burden on people holding large plots, so they will either be forced to reduce their property or use it to generate income, Somchai said.
According to the office, the property tax proposed will be divided into three levels. Tax for agricultural land will be no more than 0.05 per cent, that for residences 0.1 per cent and that for commercial land 0.5 per cent. But tax for undeveloped land will be 0.5 per cent for the first year, 1 per cent in the second year and will then be increased by an additional 1 percentage point every year.
Once the law is passed, the government will have to evaluate the 30 million individually owned plots across the country within two years.
So far, the Finance Ministry's Treasury Department has only evaluated 6 million plots.
SALES OF BIG-TICKET ITEMS SOAR, BOOSTING US OUTLOOK
US consumers and businesses went on a big-ticket spending spree in July, sending home, car and equipment sales soaring by the largest amount in years.
The sales, detailed in two government reports on Wednesday, confirmed a subtle but marked shift in confidence about the economy. New home sales jumped almost 10 per cent from June, while orders for durable goods like appliances, plances and computers rose nearly 5 per cent in July, the third increase in the past four months.
"It looks like we've hit bottom and we're now slowly trying to dig our way out," said Nigel Gault, chief economist at IHS Global Insight.
Still, it remains unclear whether the growth can be sustained. Though the increases in housing sales and manufacturing last month were dramatic, they came from extraordinarily low levels and were fuelled by temporary government programmes like "Cash for Clunkers" and tax credits for home sales.
Most economists now agree the recession that began in December 2007 has ended or is ending. Some say the US economy is poised to grow strongly in the July-September quarter, but will probably show weaker growth after government stimulus spending tapers off.
Sales of new homes surged to a seasonally adjusted pace of 433,000 in July from 395,000 in June, the Commerce Department said, providing another sign the housing market is bouncing back from the historic bottom reached early this year. Driven by falling prices, the fourthstraight monthly increase was greater than expected. Sales haven't risen so dramatically since February 2005.
While sales are still off nearly 70 per cent from the frenzied peak four years ago, they are still up more than 30 per cent from the bottom in January.
"We can stop worrying about the housing market and start playing closer attention to other issues, such as when credit will start flowing more freely," Joel Naroff, chief economist at Naroff Economic Advisors, wrote in a note to clients.
The improved outlook could help further boost the economy. As home sales rise, builders will gradually need to hire more workers to pour foundations and pave roads, reversing the trend that saw 1.4 million industry jobs shed since the recession began.
"These are crucial elements of a sustainable recovery," David Resler, chief economist at Nomura Securities, wrote in a research note.
Construction job losses have slowed recently, with 76,000 lost in July, about half January's level.
Much like "Cash for Clunkers', homebuyers are rushing to take advantage of a federal tax credit that covers 10 per cent of the home price, or up to US$8,000 (Bt273,000), for first-time owners. Home sales must be completed by the end of November for buyers to qualify.
And there are many deals to be had: the median sales price of $210,100 was 11.5-per-cent lower than levels a year ago, but still up from March's low of $205,100.
Builders and real-estate agents fear that the end of the tax credit could reverse the upward trend. Senator Johney Isakson has introduced legislation to extend it for another year, raise it to $15,000 and make it available to all buyers.
If that doesn't happen, Isakson said in an interview, "the little improvement we have from awful to terrible will go away and it will go back to awful again".
Orders for cars, car parts and aircraft reose more than 18 per cent, helping to drive the durable goods data.
A huge jump in aircraft orders accounted for most of that gain. Also, auo production improved last month as General Motors nd Chrysler reopened many plants that were shut in May and June while the companies restructured and emerged from bankruptcy protection.
The sales, detailed in two government reports on Wednesday, confirmed a subtle but marked shift in confidence about the economy. New home sales jumped almost 10 per cent from June, while orders for durable goods like appliances, plances and computers rose nearly 5 per cent in July, the third increase in the past four months.
"It looks like we've hit bottom and we're now slowly trying to dig our way out," said Nigel Gault, chief economist at IHS Global Insight.
Still, it remains unclear whether the growth can be sustained. Though the increases in housing sales and manufacturing last month were dramatic, they came from extraordinarily low levels and were fuelled by temporary government programmes like "Cash for Clunkers" and tax credits for home sales.
Most economists now agree the recession that began in December 2007 has ended or is ending. Some say the US economy is poised to grow strongly in the July-September quarter, but will probably show weaker growth after government stimulus spending tapers off.
Sales of new homes surged to a seasonally adjusted pace of 433,000 in July from 395,000 in June, the Commerce Department said, providing another sign the housing market is bouncing back from the historic bottom reached early this year. Driven by falling prices, the fourthstraight monthly increase was greater than expected. Sales haven't risen so dramatically since February 2005.
While sales are still off nearly 70 per cent from the frenzied peak four years ago, they are still up more than 30 per cent from the bottom in January.
"We can stop worrying about the housing market and start playing closer attention to other issues, such as when credit will start flowing more freely," Joel Naroff, chief economist at Naroff Economic Advisors, wrote in a note to clients.
The improved outlook could help further boost the economy. As home sales rise, builders will gradually need to hire more workers to pour foundations and pave roads, reversing the trend that saw 1.4 million industry jobs shed since the recession began.
"These are crucial elements of a sustainable recovery," David Resler, chief economist at Nomura Securities, wrote in a research note.
Construction job losses have slowed recently, with 76,000 lost in July, about half January's level.
Much like "Cash for Clunkers', homebuyers are rushing to take advantage of a federal tax credit that covers 10 per cent of the home price, or up to US$8,000 (Bt273,000), for first-time owners. Home sales must be completed by the end of November for buyers to qualify.
And there are many deals to be had: the median sales price of $210,100 was 11.5-per-cent lower than levels a year ago, but still up from March's low of $205,100.
Builders and real-estate agents fear that the end of the tax credit could reverse the upward trend. Senator Johney Isakson has introduced legislation to extend it for another year, raise it to $15,000 and make it available to all buyers.
If that doesn't happen, Isakson said in an interview, "the little improvement we have from awful to terrible will go away and it will go back to awful again".
Orders for cars, car parts and aircraft reose more than 18 per cent, helping to drive the durable goods data.
A huge jump in aircraft orders accounted for most of that gain. Also, auo production improved last month as General Motors nd Chrysler reopened many plants that were shut in May and June while the companies restructured and emerged from bankruptcy protection.
Wednesday, August 26, 2009
OPTIMISM IN US REAL ESTATE MARKET
Home values in 20 US metropolitan areas probably decreased at a slower pace and consumer confidence climbed, signs the recession is easing as the real-estate crisis dissipates, economists said this week.
The Standard & Poor's (S&P)/Case-Shiller Home-Price Index fell 16.4 per cent year on year in June, the smallest drop in almost a year, a median forecast of 31 economists surveyed showed. A report from the Conference Board may show confidence Board may show confidence rose this month for the first time in three months.
Lower prices and government stimulus efforts have made homes more affordable to firts-time buyers, spurring increases in sales that will eventually stem the slide in property values. Gains in housing and stocks will speed the process of restoring the record loss of wealth that has shackled consumer spending, which accounts for 70 per cent of the US economy.
"Home sales are on the way up, building has bottomed, and home prices are the last ditch," said John Herrmann, president of Herrmann Forecasting in Summit, new Jersey.
"The rate of declines in prices is abating so rapidly that we could bottom out by next year. The recovery is starting."
Before the S&P/Case-Shiller figures were released, estimates in a Bloomberg syrvey ranged from declines of 15.7-17.1 per cent. Year-on-year records for the gauge, which was down 17.1 per cent year on year in May, began in 2001, and the measure has fallen each month since January 2007.
Foreclosures represent one risk to a sustained improvement in values as more properties are thrown into an already-flooded market. Americans fell behind on mortgage payments at a record pace in the second quarter, said the Mortgage Bankers Association. The inventory of homes in foreclosure rose to its highest point in three decades of data. Rising unemployment may also limit demand for housing.
At the same time, there are signs the worst of the crisis is over. Existing home sales last month jumped to their highest level in almost two years, boosted by lower prices, tax credits for first-time buers and near-record-low borrowing costs, figures from the National Association of Realtors showed.
Figures for new-homw sales, due soon from the Commerce Department, probably rose last month for the fourth straight month, economists predicted.
Demand has already improved enough for some construction companies to consider cutting back on discounts and incentives. Toll Brothers, the largest US builder of luxury homes, said contracts have risen year on year so far this quarter, for the first time since 2005.
"As the supply of unsold housing inventory shrinks nationwide, and it consumer confidencke continues to improve, we should see stronger demand," said CEO Robert Toll. "It has already positively impacted our pricing power, as we are reducing incentives in many markets."
The Standard & Poor's (S&P)/Case-Shiller Home-Price Index fell 16.4 per cent year on year in June, the smallest drop in almost a year, a median forecast of 31 economists surveyed showed. A report from the Conference Board may show confidence Board may show confidence rose this month for the first time in three months.
Lower prices and government stimulus efforts have made homes more affordable to firts-time buyers, spurring increases in sales that will eventually stem the slide in property values. Gains in housing and stocks will speed the process of restoring the record loss of wealth that has shackled consumer spending, which accounts for 70 per cent of the US economy.
"Home sales are on the way up, building has bottomed, and home prices are the last ditch," said John Herrmann, president of Herrmann Forecasting in Summit, new Jersey.
"The rate of declines in prices is abating so rapidly that we could bottom out by next year. The recovery is starting."
Before the S&P/Case-Shiller figures were released, estimates in a Bloomberg syrvey ranged from declines of 15.7-17.1 per cent. Year-on-year records for the gauge, which was down 17.1 per cent year on year in May, began in 2001, and the measure has fallen each month since January 2007.
Foreclosures represent one risk to a sustained improvement in values as more properties are thrown into an already-flooded market. Americans fell behind on mortgage payments at a record pace in the second quarter, said the Mortgage Bankers Association. The inventory of homes in foreclosure rose to its highest point in three decades of data. Rising unemployment may also limit demand for housing.
At the same time, there are signs the worst of the crisis is over. Existing home sales last month jumped to their highest level in almost two years, boosted by lower prices, tax credits for first-time buers and near-record-low borrowing costs, figures from the National Association of Realtors showed.
Figures for new-homw sales, due soon from the Commerce Department, probably rose last month for the fourth straight month, economists predicted.
Demand has already improved enough for some construction companies to consider cutting back on discounts and incentives. Toll Brothers, the largest US builder of luxury homes, said contracts have risen year on year so far this quarter, for the first time since 2005.
"As the supply of unsold housing inventory shrinks nationwide, and it consumer confidencke continues to improve, we should see stronger demand," said CEO Robert Toll. "It has already positively impacted our pricing power, as we are reducing incentives in many markets."
NOBLE DEVELOPMENT LIFTS LAND PIRCHASES
Property firm Noble Development has revised its plans for investment in enw land plots and will spend Bt1.6 billion this year instead of the original figure of Bt1 billion, as it belives there will be significant economic recovery in the fourth quarter.
President Thongchai Busrapan said now was a good time to be building up a "land bank" for developing residential projects next year. Land prices have stabilised but could rise once the economy shows clear signs of recovery.
"We belived after the end of this year, land prices may increase following an economic recovery and a start to investment in the government's mass-transit projects. So we've increased our budget for buying land from Bt1 billion to Bt1.6 billion this year," he said.
Meanwhile, the company's inventory of finished properties has fallen from its recent average value of Bt8 billion or Bt9 billion to Bt5.6 billion at the end of the first half of the year. This is one of the reasons it has increased its budget for buying land.
"Our presales speeded up beyond our estimates in the first half, and this has forced us to increase our land bank to develop residential projects next year," he said.
Noble Development spent bt600 million on undeveloped land plots in the first half and has now set aside a further Bt1 billion to spend on land in the final third of the year. The money will come from the company's cash flow, Thongchai said.
The focus of its land purchases will be close to Bangkok's existing masstransit system and some locations near the new rail routes.
Nobel Development is planning to launch a new condominium project in the fourth quarter following successful presales for Nobel Reform, a project located close to Aree Skytrain Station on Phaholyothin Road. The project was sold out within five days of opening for bookings.
The company has also succedded in preselling 100 of the 110 units at a townhouse project on Srinakarin Road.
Thongchai said Noble Development would launch four or five residential projects next year, which would boost sales growth at least 10 per cent.
The company achieved first-half revenue of Bt1.27 billion for a net profit of Bt189.53 million. It believes its full-year revenue meet the target of Bt2.5 billion, up 4.16 per cent from Bt2.4 billion last year.
Thongchai said revenue would be even higher next year, because the company would transfer residential projects, including Novel Solo and Nobel Remix, to customers early in the year.
At present, Nobel Development has a backlog of projects that have been successfully presold for Bt3.3 billion. This sum will become revenue once cosntruction of the projects is complete and the units are transferred to customers next year and in 2011.
President Thongchai Busrapan said now was a good time to be building up a "land bank" for developing residential projects next year. Land prices have stabilised but could rise once the economy shows clear signs of recovery.
"We belived after the end of this year, land prices may increase following an economic recovery and a start to investment in the government's mass-transit projects. So we've increased our budget for buying land from Bt1 billion to Bt1.6 billion this year," he said.
Meanwhile, the company's inventory of finished properties has fallen from its recent average value of Bt8 billion or Bt9 billion to Bt5.6 billion at the end of the first half of the year. This is one of the reasons it has increased its budget for buying land.
"Our presales speeded up beyond our estimates in the first half, and this has forced us to increase our land bank to develop residential projects next year," he said.
Noble Development spent bt600 million on undeveloped land plots in the first half and has now set aside a further Bt1 billion to spend on land in the final third of the year. The money will come from the company's cash flow, Thongchai said.
The focus of its land purchases will be close to Bangkok's existing masstransit system and some locations near the new rail routes.
Nobel Development is planning to launch a new condominium project in the fourth quarter following successful presales for Nobel Reform, a project located close to Aree Skytrain Station on Phaholyothin Road. The project was sold out within five days of opening for bookings.
The company has also succedded in preselling 100 of the 110 units at a townhouse project on Srinakarin Road.
Thongchai said Noble Development would launch four or five residential projects next year, which would boost sales growth at least 10 per cent.
The company achieved first-half revenue of Bt1.27 billion for a net profit of Bt189.53 million. It believes its full-year revenue meet the target of Bt2.5 billion, up 4.16 per cent from Bt2.4 billion last year.
Thongchai said revenue would be even higher next year, because the company would transfer residential projects, including Novel Solo and Nobel Remix, to customers early in the year.
At present, Nobel Development has a backlog of projects that have been successfully presold for Bt3.3 billion. This sum will become revenue once cosntruction of the projects is complete and the units are transferred to customers next year and in 2011.
INVENTORY OF NEW RESIDENCES FOR BANGKOK IN SHAINKING
The combined inventory of residences held by listed property developers shrank 2 per cent year on year in the second quarter, due to strong demand from new-home buyers.
The signigicant fallw as revealed in the second-quarter financial results of the listed firms. Their total inventory of residences in the quarter was valued at Bt177.11 billion, down from Bt180.34 billion in the first quarter.
There are two reasons for the decline: some property firms delayed launching new projectes, because of deteriorating economic conditions, relying instead on inventory sales, and - contrary to many expectations - demand for residential properties grew aggressively in the quarter.
Land & house senior executive vice president Naporn Soonthornchitcharoen said his company has adopted a policy of reducing its inventory, form sufficient stock to last an avergae two months last year to enough for only one-and-a-half months this year. This was part to the company's efforts to control its costs.
Meanwhile, demand for new homes in the second quarter was higher than in the first, and that led to the shrinking inventory. L&H's inventory in the second quarter was much the same as in the first, although company revenue in the second quarter, he said.
L&H achieved second-quarter revenue of Bt4.9 billion for a net profit of Bt1.08 billion, up 57 per cent and 71 per cent, respectively, quarter on quarter.
LPN Development managing director Opas Sripayak said his company's inventory at the end of the second quarter was also much the same as at the end of the first, because the company launched new residential projects in the second quarter to replace those that had been sold.
However, the company's inventory was down slightly in the second quarter, because of strong demand for residential projects.
Noble Development president Thongchai Busrapan said his company's inventory shrank in the second quarter, because demand for residential projects recovered.
"We succeeded in selling out Noble Reform within five days of opening presales, and our townhouse project on Srinakarin Road also sold 100 of its 100 units, thanks to strong market demand," he said.
Research by the Real Estate Information Centre shows 9,650 new residences were registered in the greater Bangkok area in May alone. This figure drove the total number of new homes registered in the first five months of the year to 28,800 units, up 5 per cent year on year.
There are two reasons for the decline: some property firms delayed launching new projects, because of deteriorating economic conditions, relying instead on inventory sales, and - contrary to many expectations - demand for residential properties grew aggressively in the quarter.
The signigicant fallw as revealed in the second-quarter financial results of the listed firms. Their total inventory of residences in the quarter was valued at Bt177.11 billion, down from Bt180.34 billion in the first quarter.
There are two reasons for the decline: some property firms delayed launching new projectes, because of deteriorating economic conditions, relying instead on inventory sales, and - contrary to many expectations - demand for residential properties grew aggressively in the quarter.
Land & house senior executive vice president Naporn Soonthornchitcharoen said his company has adopted a policy of reducing its inventory, form sufficient stock to last an avergae two months last year to enough for only one-and-a-half months this year. This was part to the company's efforts to control its costs.
Meanwhile, demand for new homes in the second quarter was higher than in the first, and that led to the shrinking inventory. L&H's inventory in the second quarter was much the same as in the first, although company revenue in the second quarter, he said.
L&H achieved second-quarter revenue of Bt4.9 billion for a net profit of Bt1.08 billion, up 57 per cent and 71 per cent, respectively, quarter on quarter.
LPN Development managing director Opas Sripayak said his company's inventory at the end of the second quarter was also much the same as at the end of the first, because the company launched new residential projects in the second quarter to replace those that had been sold.
However, the company's inventory was down slightly in the second quarter, because of strong demand for residential projects.
Noble Development president Thongchai Busrapan said his company's inventory shrank in the second quarter, because demand for residential projects recovered.
"We succeeded in selling out Noble Reform within five days of opening presales, and our townhouse project on Srinakarin Road also sold 100 of its 100 units, thanks to strong market demand," he said.
Research by the Real Estate Information Centre shows 9,650 new residences were registered in the greater Bangkok area in May alone. This figure drove the total number of new homes registered in the first five months of the year to 28,800 units, up 5 per cent year on year.
There are two reasons for the decline: some property firms delayed launching new projects, because of deteriorating economic conditions, relying instead on inventory sales, and - contrary to many expectations - demand for residential properties grew aggressively in the quarter.
Land grabs take heavy toll
This resort island has no more land left for development after about 5,000 rai has been encroached upon, the Phuket Natural Resources and Environment Office says.
Office chief Phobphol Sirilaksanaphong said authorities were taking action against the encroachers through negotiations or crackdowns on illegal properties.
Encroachment had spread to beachside land that is apparently public property, Mr Phobphol said, adding individual houses and housing projects had sprung up on beaches next to roads that lead to major tourist attractions.
Some houses and buildings had been built on high land despite a law prohibiting construction on land 80 metres above sea level, he said.
Construction permission had been granted by the local administration body and without stringent law enforcement.No legal action had been taken against them, Mr Phobphol said.
Aside from the legal aspect of building on high land, the safety issue was something to be worried about, he said.
Phuket's soil is mainly marl and the province has lots of rain, while quakes occur more frequently than in other parts of the country, he said.
Heavy rain or a quake could lead to a devastating landslide, he said.
Thanan Tanphaiboon, president of the Phuket real estate developers association, said illegal land ownership by foreigners through Thai nominees was nothing new. The government should deal with the problem by considering allowing foreigners to develop land in the province and tax them, he said.
Office chief Phobphol Sirilaksanaphong said authorities were taking action against the encroachers through negotiations or crackdowns on illegal properties.
Encroachment had spread to beachside land that is apparently public property, Mr Phobphol said, adding individual houses and housing projects had sprung up on beaches next to roads that lead to major tourist attractions.
Some houses and buildings had been built on high land despite a law prohibiting construction on land 80 metres above sea level, he said.
Construction permission had been granted by the local administration body and without stringent law enforcement.No legal action had been taken against them, Mr Phobphol said.
Aside from the legal aspect of building on high land, the safety issue was something to be worried about, he said.
Phuket's soil is mainly marl and the province has lots of rain, while quakes occur more frequently than in other parts of the country, he said.
Heavy rain or a quake could lead to a devastating landslide, he said.
Thanan Tanphaiboon, president of the Phuket real estate developers association, said illegal land ownership by foreigners through Thai nominees was nothing new. The government should deal with the problem by considering allowing foreigners to develop land in the province and tax them, he said.
Ananda to seek funds for condos near transit
Ananda Development plans to raise funds next year to invest in condominiums near mass-transit routes, said its chief executive.
The developer is looking at several ways to finance the projects, such as raising funds from current investors,issuing bonds or floating on the stock market, said Chanond Ruangkritya.
But the fundraising will only take place when several conditions are met,such as a global recovery, local economic growth, stable domestic politics and the expansion of Bangkok's mass transit infrastructure, he said.
Ananda will continue to focus on condominiums and expand into office buildings and lifestyle malls on mass transit routes. It will target highly individual and independent people.
"2010 will be a big turn for us as huge funds will be raised," said Mr Chanond."But we cannot say whether it will be $200 million,$300 million or $500 million. It depends on the world situation and Thai politics."
The company has 800 million baht available to acquire two plots of land near the current mass transport routes to develop two condominium projects.
Since 2007 the company has received investment of 100 million (4.7 billion baht) from the TMW Asia Property Fund 1, managed by US-based Primerica Real Estate Investor and Prudential Finance.
About 75 million was budgeted for land acquisition and the development of 14 condominium projects. Ananda has bought 12 plots,10 of which have already been developed. It is in negotiations to buy another two plots.
The company's condominium portfolio now totals 10 projects worth more than 10 billion baht.
The firm says three projects have sold out: Ideo Lat Phrao 17, Mix Phahon Yothin and Q Phaya Thai. Five projects have each sold 85%: Lat Phrao 5, Huai Khwang, Verve Sukhumvit, SathornTaksin and Bluecove Sathorn. Another two projects - Sukhumvit 103 Mix and Verve Ratchaprarop - have sold 65%of their units.
The two remaining land plots are located near the Udomsuk BTS station.The company is waiting for the property market to improve so it can sell the condos at a higher price, said Mr Chanond.
The company expects sales to total 4 billion baht this year. It has recorded more than 3 billion baht -2 billion from condominiums and the rest from low-rise units - in the year to August,he said.
Ananda will realise 800 million baht revenue from its Lat Phrao 17 project by the year-end. Units at the project will be transferred to customers in the fourth quarter, he said.The developer will launch sales of the high-rise tower at its Ideo Morph 38 development from Sept 4-6, after recording sales of 60%for the low-rise tower in May.
The 2.7-billion-baht project will comprise 361 units priced from 130,000 baht a square metre.
It also plans to launch sales in Singapore by the end of the year, offering 10% to 20% of total units, he said.
The developer is looking at several ways to finance the projects, such as raising funds from current investors,issuing bonds or floating on the stock market, said Chanond Ruangkritya.
But the fundraising will only take place when several conditions are met,such as a global recovery, local economic growth, stable domestic politics and the expansion of Bangkok's mass transit infrastructure, he said.
Ananda will continue to focus on condominiums and expand into office buildings and lifestyle malls on mass transit routes. It will target highly individual and independent people.
"2010 will be a big turn for us as huge funds will be raised," said Mr Chanond."But we cannot say whether it will be $200 million,$300 million or $500 million. It depends on the world situation and Thai politics."
The company has 800 million baht available to acquire two plots of land near the current mass transport routes to develop two condominium projects.
Since 2007 the company has received investment of 100 million (4.7 billion baht) from the TMW Asia Property Fund 1, managed by US-based Primerica Real Estate Investor and Prudential Finance.
About 75 million was budgeted for land acquisition and the development of 14 condominium projects. Ananda has bought 12 plots,10 of which have already been developed. It is in negotiations to buy another two plots.
The company's condominium portfolio now totals 10 projects worth more than 10 billion baht.
The firm says three projects have sold out: Ideo Lat Phrao 17, Mix Phahon Yothin and Q Phaya Thai. Five projects have each sold 85%: Lat Phrao 5, Huai Khwang, Verve Sukhumvit, SathornTaksin and Bluecove Sathorn. Another two projects - Sukhumvit 103 Mix and Verve Ratchaprarop - have sold 65%of their units.
The two remaining land plots are located near the Udomsuk BTS station.The company is waiting for the property market to improve so it can sell the condos at a higher price, said Mr Chanond.
The company expects sales to total 4 billion baht this year. It has recorded more than 3 billion baht -2 billion from condominiums and the rest from low-rise units - in the year to August,he said.
Ananda will realise 800 million baht revenue from its Lat Phrao 17 project by the year-end. Units at the project will be transferred to customers in the fourth quarter, he said.The developer will launch sales of the high-rise tower at its Ideo Morph 38 development from Sept 4-6, after recording sales of 60%for the low-rise tower in May.
The 2.7-billion-baht project will comprise 361 units priced from 130,000 baht a square metre.
It also plans to launch sales in Singapore by the end of the year, offering 10% to 20% of total units, he said.
Tuesday, August 25, 2009
LAND NEAR MASS TRANSIT HOLDING UP
The price of land in inner Bangkok and located close to the mass-transit system comes in at Bt400,000 to Bt600,000 per square wah, nearly the same as last year, says research by property developer and agency Aquarius Estate.
One square wah equals 4 square metres.
The Agency for Real Estate Affairs (AREA) reported land prices on Rama I Road (Siam Paragon area) as being higher than other inner-city locations at Bt1 million per square wah.
The AREA's research ranked Silom as the second most-expensive location, at Bt850,000 per square wah, up from Bt500,000 in 2000.
Meanwhile, land on Leab Klong 13 in Pathum Thani's Lam Luk Ka district recorded the lowest price in the greater Bangkok area: Bt2,000 per square wah.
The research showed land prices had risen significantly from 2005-07, since which time they had stabilised.
Sukhumvit Road (Times Square Building area) recorded the strongest growth, from an average of Bt400,000 per square wah in 2005 to Bt750,000 now - up nearly 97 per cent. This was followed by Sukhumvit (Ekamai area), with the average price rising 89 per cent to Bt500,000 per square wah.
However, prices in some areas of Bangkok and its suburbs have recorded drops in the same period, such as land on Rat Uthit Road in Nong Chok district, where prices have fallen 11-13 per cent, the research said.
Aquarius Estate CEO Yongyutt Chaipromprasith yesterday told a press conference demand for grades A and B+ condominium projects located close to the mass-transit system had continued to grow when compared with grades B and C condo projects in the same areas.
The company defines grade-A condominiums as starting at Bt120,000 per square metre, grade B+ at between Bt90,000 and Bt120,000, grade B at Bt60,000 to Bt90,000 and grade C at Bt30,000 to Bt60,000.
Company research showed new condominium projects launching this year would total 65, with 20,000 units, down 7 per cent from 70 projects and 22,000 units last year. Lower supply will force strong demand for residences in the remainder of the year, it said.
Aquarius Estate said 38 condo projects with 12,800 units had been launched in the first half. Sathorn Road had seven new projects, followed by the Chidlom-Ekamai with five.
However, projects locate in the Phya Thai-Ratchathewi area had presales of more than 77 per cent for projects launched in the first half.
The research said the condominium inventory in the market was 173 projects with 25,500 units that would take one to two years to sell.
However, some located more than 500 metres from the mass-transit system could take more than five years to sell out, Yongyutt said.
One square wah equals 4 square metres.
The Agency for Real Estate Affairs (AREA) reported land prices on Rama I Road (Siam Paragon area) as being higher than other inner-city locations at Bt1 million per square wah.
The AREA's research ranked Silom as the second most-expensive location, at Bt850,000 per square wah, up from Bt500,000 in 2000.
Meanwhile, land on Leab Klong 13 in Pathum Thani's Lam Luk Ka district recorded the lowest price in the greater Bangkok area: Bt2,000 per square wah.
The research showed land prices had risen significantly from 2005-07, since which time they had stabilised.
Sukhumvit Road (Times Square Building area) recorded the strongest growth, from an average of Bt400,000 per square wah in 2005 to Bt750,000 now - up nearly 97 per cent. This was followed by Sukhumvit (Ekamai area), with the average price rising 89 per cent to Bt500,000 per square wah.
However, prices in some areas of Bangkok and its suburbs have recorded drops in the same period, such as land on Rat Uthit Road in Nong Chok district, where prices have fallen 11-13 per cent, the research said.
Aquarius Estate CEO Yongyutt Chaipromprasith yesterday told a press conference demand for grades A and B+ condominium projects located close to the mass-transit system had continued to grow when compared with grades B and C condo projects in the same areas.
The company defines grade-A condominiums as starting at Bt120,000 per square metre, grade B+ at between Bt90,000 and Bt120,000, grade B at Bt60,000 to Bt90,000 and grade C at Bt30,000 to Bt60,000.
Company research showed new condominium projects launching this year would total 65, with 20,000 units, down 7 per cent from 70 projects and 22,000 units last year. Lower supply will force strong demand for residences in the remainder of the year, it said.
Aquarius Estate said 38 condo projects with 12,800 units had been launched in the first half. Sathorn Road had seven new projects, followed by the Chidlom-Ekamai with five.
However, projects locate in the Phya Thai-Ratchathewi area had presales of more than 77 per cent for projects launched in the first half.
The research said the condominium inventory in the market was 173 projects with 25,500 units that would take one to two years to sell.
However, some located more than 500 metres from the mass-transit system could take more than five years to sell out, Yongyutt said.
CABINET APPROVES EXCISE WAIVER
Consumers should be able to buy air-conditioners for 10 to 15 per cent less than current prices following the Cabinet's decision to approve a tax waiver, Deputy Finance Minister Pruttichai Damrongrat said yesterday.
Manufacturers said they were ready to bring their retail prices down immediately, but only by the full amount for newly produced equipment.
The Cabinet approved the Finance Ministry's proposal to waive excise duty on air-conditioners with a capacity below 72,000 British thermal units. After the 15-per-cent tax is waived, the retail price should fall by between 10 and 15 per cent, said Pruttichai.
He said this would relieve some of the burden on small and medium-sized enterprises and would help local businesses compete against some air-conditioning units brought into the country but evading the duty.
Somyos Kiratichivanant, managing director of Bitwise (Thailand), manufacturer and distributor of the Tasaki brand, said most manufacturers had a large level of old stock as sales had been slow due to the economic slowdown.
"However, consumers expect prices to be cut immediately. So, we may slash the prices of our old stock somewhat in order to have a psychological impact and be competitive," he said.
He said an old-stock air-conditioner currently priced Bt10,000 could be reduced to Bt9,000 to Bt9,500, but not to Bt8,500. The manufacturer would therefore still bear some loss.
"It will not however be possible for units that are old inventory to be reduced by as much as 15 per cent from their previous price tag," said Somyos.
He added that the company had a lot of stock for some of its Tasaki range and it could take until the end of the year to release it.
However, prices could be lowered for some models immediately.
Meanwhile, Finance Minister Korn Chatikavanij said the ministry had been unable to submit its draft property tax bill for Cabinet consideration this month.
He said the Fiscal Policy Office needed more time to gather public opinion from all interested parties, adding that private firms in the provinces also wanted to submit their own proposals to the ministry, said Korn.
He pledged to submit the draft law to the Cabinet soon. It would then take about two or three months for the government's legal advisory body, the Council of State, to review the draft.
Korn said the government may not therefore be able to submit the bill to Parliament in the current session.
He ruled out any change to the tentative tax rates already proposed.
According to the draft, residential units will be subject to an annual tax of 0.1 per cent of the property's value, while owners of land used for agricultural purposes will have to pay 0.05 per cent of the land's value and land for commercial use will be subject to a 0.1-per-cent tax.
Undeveloped land will be taxed at 0.5 per cent over the first three years, rising to a maximum of 2 per cent over the next six years.
Manufacturers said they were ready to bring their retail prices down immediately, but only by the full amount for newly produced equipment.
The Cabinet approved the Finance Ministry's proposal to waive excise duty on air-conditioners with a capacity below 72,000 British thermal units. After the 15-per-cent tax is waived, the retail price should fall by between 10 and 15 per cent, said Pruttichai.
He said this would relieve some of the burden on small and medium-sized enterprises and would help local businesses compete against some air-conditioning units brought into the country but evading the duty.
Somyos Kiratichivanant, managing director of Bitwise (Thailand), manufacturer and distributor of the Tasaki brand, said most manufacturers had a large level of old stock as sales had been slow due to the economic slowdown.
"However, consumers expect prices to be cut immediately. So, we may slash the prices of our old stock somewhat in order to have a psychological impact and be competitive," he said.
He said an old-stock air-conditioner currently priced Bt10,000 could be reduced to Bt9,000 to Bt9,500, but not to Bt8,500. The manufacturer would therefore still bear some loss.
"It will not however be possible for units that are old inventory to be reduced by as much as 15 per cent from their previous price tag," said Somyos.
He added that the company had a lot of stock for some of its Tasaki range and it could take until the end of the year to release it.
However, prices could be lowered for some models immediately.
Meanwhile, Finance Minister Korn Chatikavanij said the ministry had been unable to submit its draft property tax bill for Cabinet consideration this month.
He said the Fiscal Policy Office needed more time to gather public opinion from all interested parties, adding that private firms in the provinces also wanted to submit their own proposals to the ministry, said Korn.
He pledged to submit the draft law to the Cabinet soon. It would then take about two or three months for the government's legal advisory body, the Council of State, to review the draft.
Korn said the government may not therefore be able to submit the bill to Parliament in the current session.
He ruled out any change to the tentative tax rates already proposed.
According to the draft, residential units will be subject to an annual tax of 0.1 per cent of the property's value, while owners of land used for agricultural purposes will have to pay 0.05 per cent of the land's value and land for commercial use will be subject to a 0.1-per-cent tax.
Undeveloped land will be taxed at 0.5 per cent over the first three years, rising to a maximum of 2 per cent over the next six years.
CPN speeds up development spurt
Central Pattana Plc (CPN), the country's largest commercial property developer,is speeding up expansion with plans for at least eight new projects over the next six years, bringing its total to almost 30 shopping centres by 2016.
Naris Cheyklin, senior executive vicepresident for finance and accounting,said the Central Group affiliate wanted to grow in line with the country's econ-omy, which is expected to return to an upward trend.
As well, he said, if the company's first overseas retail development is successful, it would accelerate overseas expansion. CPN is committed to expanding outlets in China through its own developments and by acquisitions.
"Investing in China at the moment has lower business risk than in Thailand.The Chinese economy is now 10 years ahead of Thailand," Mr Naris told an analysts' briefing yesterday.
Between 2001 and 2005, CPN opened four new shopping centres and made plans to add eight more between 2006 and 2010.
Mr Naris said CPN planned to spend 5.84 billion baht from 2010-12 to develop projects, including one on the site of the the former Pre-Cadet School on Rama IV Road next to the Suan Lum Night Bazaar, and in Chiang Mai.
The company will enter a lease agreement with the Crown Property Bureau after the completion of site clearing on Rama IV Road. It will develop a shopping centre on its own but will join with some partners to develop some office buildings. CPN has contacts from foreign investors in Japan and some Western countries to jointly develop the office blocks.
CPN will finance its future expansion by using operating cash flow, bank loans or debenture issues and its property fund.
The SET-listed company will transfer its assets in Chiang Mai and another retail project to the listed CPN Retail Growth Fund (CPNRF) to raise an additional 3-4 billion baht next year. This excludes funds to be raised from the sale of its Central Pin Klao mall, one of the company's best performers, to the fund in November.
During the first half, CPN's revenues grew by 31% year-on-year to 2.97 billion baht and net profit rose 13% to 587 million. The increasing revenues were driven by the opening of four new pro-jects in Chaeng Watthana, Pattaya, Udon Thani and Chon Buri.
Net profit did not grow much because the company faced additional operating costs and depreciation and amortisation of the new projects in addition to higher sub-lease payments for Central Plaza Lat Phrao after the renewal of its sublease agreement. The company expects its revenues this year to grow above its earlier projection of 25%.
CPN shares closed yesterday on the Stock Exchange of Thailand at 20.70 baht, down 20 satang, in trade worth 54.08 million baht. CPNRF units rose 10 satang to 9.15 baht, in trade worth 3.9 million baht.
Naris Cheyklin, senior executive vicepresident for finance and accounting,said the Central Group affiliate wanted to grow in line with the country's econ-omy, which is expected to return to an upward trend.
As well, he said, if the company's first overseas retail development is successful, it would accelerate overseas expansion. CPN is committed to expanding outlets in China through its own developments and by acquisitions.
"Investing in China at the moment has lower business risk than in Thailand.The Chinese economy is now 10 years ahead of Thailand," Mr Naris told an analysts' briefing yesterday.
Between 2001 and 2005, CPN opened four new shopping centres and made plans to add eight more between 2006 and 2010.
Mr Naris said CPN planned to spend 5.84 billion baht from 2010-12 to develop projects, including one on the site of the the former Pre-Cadet School on Rama IV Road next to the Suan Lum Night Bazaar, and in Chiang Mai.
The company will enter a lease agreement with the Crown Property Bureau after the completion of site clearing on Rama IV Road. It will develop a shopping centre on its own but will join with some partners to develop some office buildings. CPN has contacts from foreign investors in Japan and some Western countries to jointly develop the office blocks.
CPN will finance its future expansion by using operating cash flow, bank loans or debenture issues and its property fund.
The SET-listed company will transfer its assets in Chiang Mai and another retail project to the listed CPN Retail Growth Fund (CPNRF) to raise an additional 3-4 billion baht next year. This excludes funds to be raised from the sale of its Central Pin Klao mall, one of the company's best performers, to the fund in November.
During the first half, CPN's revenues grew by 31% year-on-year to 2.97 billion baht and net profit rose 13% to 587 million. The increasing revenues were driven by the opening of four new pro-jects in Chaeng Watthana, Pattaya, Udon Thani and Chon Buri.
Net profit did not grow much because the company faced additional operating costs and depreciation and amortisation of the new projects in addition to higher sub-lease payments for Central Plaza Lat Phrao after the renewal of its sublease agreement. The company expects its revenues this year to grow above its earlier projection of 25%.
CPN shares closed yesterday on the Stock Exchange of Thailand at 20.70 baht, down 20 satang, in trade worth 54.08 million baht. CPNRF units rose 10 satang to 9.15 baht, in trade worth 3.9 million baht.
SEC puts Maris on probation
The Securities and Exchange Commission has put Maris Tarab, managing director of ING Funds, on a three-year probation following his failure to protect the interest of TU Dome Residential Complex Property Fund (TU-PF) unit holders.
Maris was also fined Bt231,750, while ING Funds had to pay a penalty of Bt1.9 million. Siam City Bank, as the fund's trustee, was fined Bt421,650.
The SEC statement said it had discovered that the three parties had failed to perform their duty of making unit holders' benefits their top priority.
TU-PF had declared that it was going to invest in a building on a land plot that had a 30-year lease in one individual's name. However, it turned out that several other people also owned the plot.
Despite knowing about the land's joint ownership, Maris had the fund pay Bt173.5 million to the lessee and the contractor without seeking approval from the unit holders.
This action faces the risk of being opposed by the joint owners, which in turn could hurt the unit holders.
He also had the fund pay leasing fees worth Bt808.4 million before the long-term lease was signed.
In 2008, Maris and ING Funds tried to solve the problem. The lessee became the plot's single owner when the 30-year lease was signed.
The company also waived its management fee for five months and reduced it by half to 0.25 per cent of net asset value for 31 months.
Maris's probation began on Monday.
Maris was also fined Bt231,750, while ING Funds had to pay a penalty of Bt1.9 million. Siam City Bank, as the fund's trustee, was fined Bt421,650.
The SEC statement said it had discovered that the three parties had failed to perform their duty of making unit holders' benefits their top priority.
TU-PF had declared that it was going to invest in a building on a land plot that had a 30-year lease in one individual's name. However, it turned out that several other people also owned the plot.
Despite knowing about the land's joint ownership, Maris had the fund pay Bt173.5 million to the lessee and the contractor without seeking approval from the unit holders.
This action faces the risk of being opposed by the joint owners, which in turn could hurt the unit holders.
He also had the fund pay leasing fees worth Bt808.4 million before the long-term lease was signed.
In 2008, Maris and ING Funds tried to solve the problem. The lessee became the plot's single owner when the 30-year lease was signed.
The company also waived its management fee for five months and reduced it by half to 0.25 per cent of net asset value for 31 months.
Maris's probation began on Monday.
IRPC TO ADD VALUE TO LAND RESOURCES
IRPC, a unit of PTT Group, will focus on adding value not only to its core petrochemical business but also to its spare land over the next five years.
CEO Pailin Chuchottaworn said yesterday that the company's 2010-2014 investment plan was aimed at its becoming a top integrated petrochemical complex in Asia, which could be achieved through greater exploitation of its existing assets and resources.
The company will continue developing and maximising its four core businesses - petrochemical, refinery, port and product inventory, and property - to boost revenue and profit, he said.
The company will further improve the production capacity of the petrochemical business and its product quality as well as invest more on developing new and high-yielding products.
The company owns 15,000 rai of land nationwide, but only 3,000 rai are fully utilised.
The idle 12,000 rai will be developed to generate further income.
Of the total, 1,200 rai are located close to its petrochemical complex in Rayong, 3,800 rai in a different location in the province and 2,800 rai in Songkhla.
"There are many options to maximise land assets and the most likely one is we will seek a partner to jointly develop projects on them, such as renewable-energy production," he said.
The fastest ways to make money from land are by selling or renting parcels or planting energy fuel crops on them, he said.
If all the business targets go as planned, the company should earn as much as 23 per cent on investment capital in five years, up from the present 8-9 per cent.
The company has budgeted US$1.2 billion (Bt41 billion) for investment in the next five years, mostly on 16 new projects.
One of them is the expansion of propylene production capacity to 412,000 tonnes per year from the current 312,000 level, which is expected to cost $88 million.
However, IRPC might revise its previously planned projects, such as the upgrade of the refinery to meet the Euro 4 standard and the expansion of ABS/SAN plastic production capacity.
"We'll make a decision this year on whether to implement the projects," he said.
IRPC will definitely cancel the plan to boost refining capacity to 258,000 barrels per day from the present 215,000 barrels.
The refinery will mainly serve the petrochemical business, not the retail oil business, Pailin said.
CEO Pailin Chuchottaworn said yesterday that the company's 2010-2014 investment plan was aimed at its becoming a top integrated petrochemical complex in Asia, which could be achieved through greater exploitation of its existing assets and resources.
The company will continue developing and maximising its four core businesses - petrochemical, refinery, port and product inventory, and property - to boost revenue and profit, he said.
The company will further improve the production capacity of the petrochemical business and its product quality as well as invest more on developing new and high-yielding products.
The company owns 15,000 rai of land nationwide, but only 3,000 rai are fully utilised.
The idle 12,000 rai will be developed to generate further income.
Of the total, 1,200 rai are located close to its petrochemical complex in Rayong, 3,800 rai in a different location in the province and 2,800 rai in Songkhla.
"There are many options to maximise land assets and the most likely one is we will seek a partner to jointly develop projects on them, such as renewable-energy production," he said.
The fastest ways to make money from land are by selling or renting parcels or planting energy fuel crops on them, he said.
If all the business targets go as planned, the company should earn as much as 23 per cent on investment capital in five years, up from the present 8-9 per cent.
The company has budgeted US$1.2 billion (Bt41 billion) for investment in the next five years, mostly on 16 new projects.
One of them is the expansion of propylene production capacity to 412,000 tonnes per year from the current 312,000 level, which is expected to cost $88 million.
However, IRPC might revise its previously planned projects, such as the upgrade of the refinery to meet the Euro 4 standard and the expansion of ABS/SAN plastic production capacity.
"We'll make a decision this year on whether to implement the projects," he said.
IRPC will definitely cancel the plan to boost refining capacity to 258,000 barrels per day from the present 215,000 barrels.
The refinery will mainly serve the petrochemical business, not the retail oil business, Pailin said.
Mass transit still a big draw for condos
Despite a housing market contraction in the first half of the year, condominiums near BTS and MRT routes continued to sell better than those in other areas,according to a recent survey.
The best condo sales rates were in Lat Phrao and mid-Sukhumvit (between Phra Khanong and Onnuj), near MRT and BTS stations, with average sales rate of 79% and 78% respectively.
The average sales rate in the overall market was 64%- or 46,137 out of 71,581 units offered at 173 active sites in August 2009- according to the property developer and consultant Aquarius Estate Co Ltd.
"The key success factor for best-selling projects was location within 500 metres'walking distance to BTS and MRT stations," said Yongyutt Chaipromprasith,the company's chief executive.
He said the condominium market in the first quarter was sluggish but improved in the second quarter, highlighting the rising sales volume of grade B properties.
The company classifies condominiums in terms of prices and materials - higher than 120,000 baht per square metre for grade A;90,000 to 120,000 baht for grade B+;60,000 to 90,000 baht for grade B; and 30,000 to 60,000 baht for grade C.
In the first eight months of the year,38 new condominiums were launched with a total of 12,864 units,5,450 units of which, or 42%, were sold. Average prices in the surveyed zones were 84,500 baht per sq m.
The company surveyed nine zones:Phaya Thai-Ratchathewi, Rama IVYaowarat, Ratchadamri, prime Sukhumvit (Chidlom-Ekamai), mid-Sukhumvit,outer Sukhumvit (Onnuj-Udom Suk),Phahon Yothin, Thon Buri and Rama IX.
The average price per square metre rose by 28% from 2007 to 2008, climbing from 57,600 to 74,000 baht. However,the price dropped to 70,000 baht per in the first eight months of 2009 as most of the supply was grade C.
"New condominium development has moved to locations near mass transit,"he said. Newly launched projects near transit routes this year accounted for 55% of the market, up from 39% in 2007 and 32% in 2008.
The survey found that many developers were using eased payment terms as a strategy to speed up buyers' decisions. Some developers faced problems like tighter project finance by banks,environmental impact assessments and other regulations related to construction.
Between January and May this year,housing market ratios changed slightly from all of 2008. The proportion of newly registered detached houses rose from 34% to 39% but the condominium ratio declined from 48% to 44%. Townhouses and shophouses were little changed, from 15% to 16%, and duplex houses dropped from 3% to 1%.
The best condo sales rates were in Lat Phrao and mid-Sukhumvit (between Phra Khanong and Onnuj), near MRT and BTS stations, with average sales rate of 79% and 78% respectively.
The average sales rate in the overall market was 64%- or 46,137 out of 71,581 units offered at 173 active sites in August 2009- according to the property developer and consultant Aquarius Estate Co Ltd.
"The key success factor for best-selling projects was location within 500 metres'walking distance to BTS and MRT stations," said Yongyutt Chaipromprasith,the company's chief executive.
He said the condominium market in the first quarter was sluggish but improved in the second quarter, highlighting the rising sales volume of grade B properties.
The company classifies condominiums in terms of prices and materials - higher than 120,000 baht per square metre for grade A;90,000 to 120,000 baht for grade B+;60,000 to 90,000 baht for grade B; and 30,000 to 60,000 baht for grade C.
In the first eight months of the year,38 new condominiums were launched with a total of 12,864 units,5,450 units of which, or 42%, were sold. Average prices in the surveyed zones were 84,500 baht per sq m.
The company surveyed nine zones:Phaya Thai-Ratchathewi, Rama IVYaowarat, Ratchadamri, prime Sukhumvit (Chidlom-Ekamai), mid-Sukhumvit,outer Sukhumvit (Onnuj-Udom Suk),Phahon Yothin, Thon Buri and Rama IX.
The average price per square metre rose by 28% from 2007 to 2008, climbing from 57,600 to 74,000 baht. However,the price dropped to 70,000 baht per in the first eight months of 2009 as most of the supply was grade C.
"New condominium development has moved to locations near mass transit,"he said. Newly launched projects near transit routes this year accounted for 55% of the market, up from 39% in 2007 and 32% in 2008.
The survey found that many developers were using eased payment terms as a strategy to speed up buyers' decisions. Some developers faced problems like tighter project finance by banks,environmental impact assessments and other regulations related to construction.
Between January and May this year,housing market ratios changed slightly from all of 2008. The proportion of newly registered detached houses rose from 34% to 39% but the condominium ratio declined from 48% to 44%. Townhouses and shophouses were little changed, from 15% to 16%, and duplex houses dropped from 3% to 1%.
Three sites top B1m per square wah
The market price of land in three locations - Siam Paragon, and the areas in front of the Chidlom and Phloen Chit BTS stations - is estimated at 1 million baht per square wah or 400 million baht a rai,according to the latest survey by the independent property consulting firm Agency for Real Estate Affairs (AREA).
AREA managing director Wason Kongchan said the price of the Siam Paragon plot was 82% higher than in 2005, while it had been estimated at 800,000 baht per square wah early this year.
The agency said a few small plots had sold at 1.2 million to 1.5 million baht per square wah, such as a three-rai parking lot at Central Chidlom, two rai of empty land next to Center Point Witthayu, and one rai of empty land next to the Sukhumvit MRT station.
"These plots are small and considered as exceptional. Therefore, the highest estimated market price as of mid-2009 still remains at 1 million baht per square wah," said Mr Wason.
The second most expensive land price is 850,000 baht per square wah in areas around the Bangkok Bank headquarters on Silom Road and the Ratchadamri BTS station because they are close to mass transit and could be developed as grade A office buildings.
He said the market prices of the two locations were lower than the highest prices because the return on investment for grade A office buildings is still lower than for retail spaces.
Silom used to command the highest market prices at 500,000 baht per square wah in 1994 when the agency started preparing its benchmark prices. At that time, there were no mass transit systems;the BTS opened in december 1999.
Ranked third at 800,000 baht per square wah were areas around Yaowarat Road, Wireless Road and Sathon and Narathiwas roads, close to BTS stations.
The cheapest prices in the capital area are Lam Luk Ka Klong 13 at 2,000 baht a square wah or 1 million baht a rai for a plot sized at four rai.
AREA projects that land prices in Greater Bangkok will increase by 3%this year over 2008 and by another 2%next year but forecasts may change if further economic problems emerge.
AREA managing director Wason Kongchan said the price of the Siam Paragon plot was 82% higher than in 2005, while it had been estimated at 800,000 baht per square wah early this year.
The agency said a few small plots had sold at 1.2 million to 1.5 million baht per square wah, such as a three-rai parking lot at Central Chidlom, two rai of empty land next to Center Point Witthayu, and one rai of empty land next to the Sukhumvit MRT station.
"These plots are small and considered as exceptional. Therefore, the highest estimated market price as of mid-2009 still remains at 1 million baht per square wah," said Mr Wason.
The second most expensive land price is 850,000 baht per square wah in areas around the Bangkok Bank headquarters on Silom Road and the Ratchadamri BTS station because they are close to mass transit and could be developed as grade A office buildings.
He said the market prices of the two locations were lower than the highest prices because the return on investment for grade A office buildings is still lower than for retail spaces.
Silom used to command the highest market prices at 500,000 baht per square wah in 1994 when the agency started preparing its benchmark prices. At that time, there were no mass transit systems;the BTS opened in december 1999.
Ranked third at 800,000 baht per square wah were areas around Yaowarat Road, Wireless Road and Sathon and Narathiwas roads, close to BTS stations.
The cheapest prices in the capital area are Lam Luk Ka Klong 13 at 2,000 baht a square wah or 1 million baht a rai for a plot sized at four rai.
AREA projects that land prices in Greater Bangkok will increase by 3%this year over 2008 and by another 2%next year but forecasts may change if further economic problems emerge.
Used-home sales off 20-25%
Sales of used homes in the first half dropped by 20-25% from last year in line with the economic situation but should improve by the second half, said Visit Kunatharakul, president of the Real Estate Sales and Marketing Association (Resam).
He said sentiment recovered in July and August, resulting in an expectation of a 15-20% drop by the end of the year.However, political risks that affect business confidence still needed to be watched, he said.
The association plans to deal with financial institutions to develop fasttrack mortgage applications for secondhand home buyers in order to improve the attractiveness of used homes for buyers.
As well, Resam has joined with the Building Safety Inspectors and Officers Association (BSA) to introduce a usedhome inspection service, helping buyers and sellers establish selling prices that are as fair as possible.
BSA president Chollachai Thammaviwatanakul said home inspection would help assure buyers that a used home was ready to occupy. It would cover five areas including architecture, structure, roofing, electrical and sanitation systems.
"This programme will enable a buyer to estimate whether the selling price is worth it or not. It will show facts based on a report made by certified inspector and approved by our committee," he said.
However, the inspection would not be a guarantee of a home's condition.It would just inform the buyer which parts of the unit were in good condition and which should be repaired, while the seller would get a more accurate idea of the selling price.
Service fees for home inspection are 8,000 baht for a single house with a usable area of less than 400 square metres and 5,500 baht for a townhouse or condominium smaller than 100 sq m. For Resam members' customers,the rates are 5,500 and 3,850 baht respectively.
Currently, the BSA has a total of 800 certified inspectors for nine types of buildings covered by the building inspection law. The association expects to train 200 more inspectors during this year.
In another development, the real estate agency Century 21 Realty Affiliates (Thailand) will offer its franchises to 21 franchisees who will pay only US$21 each for the right to operate the brokerage business under its brand.
Qualified applicants must have at least three years of experience in real estate brokerage. The company will provide support in terms of a database, IT and training for staff. Century 21 franchisees normally pay 60,000 baht. The company expects to have at least 100 franchisees within two years.
He said sentiment recovered in July and August, resulting in an expectation of a 15-20% drop by the end of the year.However, political risks that affect business confidence still needed to be watched, he said.
The association plans to deal with financial institutions to develop fasttrack mortgage applications for secondhand home buyers in order to improve the attractiveness of used homes for buyers.
As well, Resam has joined with the Building Safety Inspectors and Officers Association (BSA) to introduce a usedhome inspection service, helping buyers and sellers establish selling prices that are as fair as possible.
BSA president Chollachai Thammaviwatanakul said home inspection would help assure buyers that a used home was ready to occupy. It would cover five areas including architecture, structure, roofing, electrical and sanitation systems.
"This programme will enable a buyer to estimate whether the selling price is worth it or not. It will show facts based on a report made by certified inspector and approved by our committee," he said.
However, the inspection would not be a guarantee of a home's condition.It would just inform the buyer which parts of the unit were in good condition and which should be repaired, while the seller would get a more accurate idea of the selling price.
Service fees for home inspection are 8,000 baht for a single house with a usable area of less than 400 square metres and 5,500 baht for a townhouse or condominium smaller than 100 sq m. For Resam members' customers,the rates are 5,500 and 3,850 baht respectively.
Currently, the BSA has a total of 800 certified inspectors for nine types of buildings covered by the building inspection law. The association expects to train 200 more inspectors during this year.
In another development, the real estate agency Century 21 Realty Affiliates (Thailand) will offer its franchises to 21 franchisees who will pay only US$21 each for the right to operate the brokerage business under its brand.
Qualified applicants must have at least three years of experience in real estate brokerage. The company will provide support in terms of a database, IT and training for staff. Century 21 franchisees normally pay 60,000 baht. The company expects to have at least 100 franchisees within two years.
Monday, August 24, 2009
WHAT DOES IT TAKE TO BECOME A FINANCIAL HUB?
We grow up thinking the world is wellbalanced - that good cancels out evil, assets equal liabilities, and life is a simple bellshaped curve. But it is not. There is a lot of inequality around. We like buying, but we do not sell that often, except when forced to. Risks in the financial world are like that.
George Soros recently pointed out a simple fact that I had taken for granted. But I realised that common sense is not common. The reason why financial markets are dangerous is because the risks of going long - buying only but not selling - is not the same as going short - selling or borrowing what you do not have.
If you buy something and its price goes to zero, all you lose is your asset. However, if you borrow or you short a product, you can lose not only everything you have but owe far more than you realise.
This was the common sense that AIG failed to appreciate. If you insure cars or lives, you are working with the law of large numbers. As long as your premium covers the estimated loss, you are still making money.
But if you insure banks, which are highly leveraged institutions, or borrowers, which is what the derivative trading subsidiary of AIG did in London, the losses are amplified by the embedded derivatives.
Imagine anyone trying to insure the recent global bank losses of nearly US$3 trillion (Bt104 trillion). The banks lost a lot because they are highly leveraged institutions. The lower the price of assets that they hold, the more they became bankrupt. So AIG needed more than $180 billion to bail it out, compared with the initial request for funding of only $10 billion.
This brings us back to the use of a domestic currency as an international reserve currency.
When a domestic currency is circulating only within its own country, it is one citizen lending to another. The left hand is borrowing from the right hand.
If someone does not pay his debt, there are laws to protect the lender and even if the corporate sector overborrowed and collapsed, the state can intervene by either nationalising the debt or taxing the rest of the population to pay for the losses.
Asians have not forgotten the 19th century, when foreign debt was enforced through gunboats and also military invasion. So, it does not pay to owe foreign debt too much, because a central bank cannot print foreign currency.
So why should a country want its currency to be an international reserve currency? There are two basic reasons. The first is seigniorage, which is the fact that anyone who issues a currency is actually borrowing money without paying interest.
All central banks earn seigniorage from currency issuance. In a sense, it is the premium citizens pay to the central bank for safeguarding the value of their currency. Therefore, the country that issues a global reserve currency enjoys seigniorage from foreigners who hold its currency. This amount can be very large indeed, as the US clearly is in that position.
But the actual benefits received for trade and commercial services when the currency is the reserve standard are larger. In the days of the British Empire, London benefited hugely from being the financial centre for sterling, as well as the trading centre for commodities, international loans and related legal and commercial services.
Although sterling lost its role as a major reserve currency to the US dollar, London became the centre for the offshore eurodollar market and also an important complement to New York.
The biggest commercial banks, brokers, fund managers and insurance companies were located in both London and New York, because they shared the same language, common law and also business practices.
So what makes an international financial centre? After working in Hong Kong, I finally understood that an international financial centre must satisfy three basic conditions - it must protect property rights, it must have lower transaction costs and it must have high transparency.
The first condition is obvious and yet not so obvious. Most Western economists say that London and New York have superior property rights because they have well accepted common laws and an excellent and fair judiciary.
But protection of property rights is more than just about laws and enforcement. Protection of property rights means also political stability, the absence of nationalisation, predatory taxation and the power of a strong military. To put it bluntly, no successful international financial centre operates in a war zone or a banana republic.
The second condition of low transaction costs is very important. No financial centre will succeed if it is not convenient to do business with low regulatory costs and good communications infrastructure. The best financial centres have excellent telecommunication, transport and living conditions.
Transaction costs are also associated with geography. It is no coincidence that New York dominates in the American time zone and London dominates in the European and African time zone. Asia has no dominant financial centre for reasons that I will discuss later.
The third condition is high transparency, because markets thrive on information. If information is not accurate, timely and accessible, investors do not know how to protect their funds and make good decisions.
Next, I shall look at why Japan failed to make the yen a dominant global reserve currency.
This is the second part of a series.
George Soros recently pointed out a simple fact that I had taken for granted. But I realised that common sense is not common. The reason why financial markets are dangerous is because the risks of going long - buying only but not selling - is not the same as going short - selling or borrowing what you do not have.
If you buy something and its price goes to zero, all you lose is your asset. However, if you borrow or you short a product, you can lose not only everything you have but owe far more than you realise.
This was the common sense that AIG failed to appreciate. If you insure cars or lives, you are working with the law of large numbers. As long as your premium covers the estimated loss, you are still making money.
But if you insure banks, which are highly leveraged institutions, or borrowers, which is what the derivative trading subsidiary of AIG did in London, the losses are amplified by the embedded derivatives.
Imagine anyone trying to insure the recent global bank losses of nearly US$3 trillion (Bt104 trillion). The banks lost a lot because they are highly leveraged institutions. The lower the price of assets that they hold, the more they became bankrupt. So AIG needed more than $180 billion to bail it out, compared with the initial request for funding of only $10 billion.
This brings us back to the use of a domestic currency as an international reserve currency.
When a domestic currency is circulating only within its own country, it is one citizen lending to another. The left hand is borrowing from the right hand.
If someone does not pay his debt, there are laws to protect the lender and even if the corporate sector overborrowed and collapsed, the state can intervene by either nationalising the debt or taxing the rest of the population to pay for the losses.
Asians have not forgotten the 19th century, when foreign debt was enforced through gunboats and also military invasion. So, it does not pay to owe foreign debt too much, because a central bank cannot print foreign currency.
So why should a country want its currency to be an international reserve currency? There are two basic reasons. The first is seigniorage, which is the fact that anyone who issues a currency is actually borrowing money without paying interest.
All central banks earn seigniorage from currency issuance. In a sense, it is the premium citizens pay to the central bank for safeguarding the value of their currency. Therefore, the country that issues a global reserve currency enjoys seigniorage from foreigners who hold its currency. This amount can be very large indeed, as the US clearly is in that position.
But the actual benefits received for trade and commercial services when the currency is the reserve standard are larger. In the days of the British Empire, London benefited hugely from being the financial centre for sterling, as well as the trading centre for commodities, international loans and related legal and commercial services.
Although sterling lost its role as a major reserve currency to the US dollar, London became the centre for the offshore eurodollar market and also an important complement to New York.
The biggest commercial banks, brokers, fund managers and insurance companies were located in both London and New York, because they shared the same language, common law and also business practices.
So what makes an international financial centre? After working in Hong Kong, I finally understood that an international financial centre must satisfy three basic conditions - it must protect property rights, it must have lower transaction costs and it must have high transparency.
The first condition is obvious and yet not so obvious. Most Western economists say that London and New York have superior property rights because they have well accepted common laws and an excellent and fair judiciary.
But protection of property rights is more than just about laws and enforcement. Protection of property rights means also political stability, the absence of nationalisation, predatory taxation and the power of a strong military. To put it bluntly, no successful international financial centre operates in a war zone or a banana republic.
The second condition of low transaction costs is very important. No financial centre will succeed if it is not convenient to do business with low regulatory costs and good communications infrastructure. The best financial centres have excellent telecommunication, transport and living conditions.
Transaction costs are also associated with geography. It is no coincidence that New York dominates in the American time zone and London dominates in the European and African time zone. Asia has no dominant financial centre for reasons that I will discuss later.
The third condition is high transparency, because markets thrive on information. If information is not accurate, timely and accessible, investors do not know how to protect their funds and make good decisions.
Next, I shall look at why Japan failed to make the yen a dominant global reserve currency.
This is the second part of a series.
RECORD FAILURE RATE FOR US MORTGAGES
Americans fell behind on their mortgage payments at a record pace in the second quarter as job losses and falling realestate prices thwarted government efforts to stabilise the housing market.
The proportion of loans with one or more payments overdue rose to a seasonally adjusted 9.24 per cent of all mortgages, an all-time high, from 9.12 per cent in the first quarter, the Mortgage Bankers Association said last week.
The inventory of homes in foreclosure increased to 4.3 per cent, the most in three decades of data, and loans overdue by at least 90 days, the point at which foreclosure proceedings typically begin, rose to 7.97 per cent, the highest on record.
"We've seen a significant drop in the problem with sub-prime loans, and we've moved now to a problem with prime fixed-rate loans," said Jay Brinkmann, the association's chief economist.
"Job losses are driving it, and we expect that to continue into next year."
Home-owners fall behind on their mortgage payments when they lose their jobs, and falling prices mean they cannot sell their homes for enough to pay off their loans, Brinkmann said. Companies have shed 5.7 million jobs since January 2008, the biggest employment loss since the Great Depression. The median US home price fell 16 per cent year on year in the second quarter, the steepest drop on record, said the National Association of Realtors.
The percentage of loans on which foreclosure actions have started was 1.36 per cent, down from 1.37 per cent in the first quarter, driven by the decline in subprime loans. New foreclosures on prime loans increased from 0.94 per cent to 1.01 per cent, while sub-prime loans dropped from 4.65 per cent to 4.13 per cent, Brinkmann said.
The proportion of loans with one or more payments overdue rose to a seasonally adjusted 9.24 per cent of all mortgages, an all-time high, from 9.12 per cent in the first quarter, the Mortgage Bankers Association said last week.
The inventory of homes in foreclosure increased to 4.3 per cent, the most in three decades of data, and loans overdue by at least 90 days, the point at which foreclosure proceedings typically begin, rose to 7.97 per cent, the highest on record.
"We've seen a significant drop in the problem with sub-prime loans, and we've moved now to a problem with prime fixed-rate loans," said Jay Brinkmann, the association's chief economist.
"Job losses are driving it, and we expect that to continue into next year."
Home-owners fall behind on their mortgage payments when they lose their jobs, and falling prices mean they cannot sell their homes for enough to pay off their loans, Brinkmann said. Companies have shed 5.7 million jobs since January 2008, the biggest employment loss since the Great Depression. The median US home price fell 16 per cent year on year in the second quarter, the steepest drop on record, said the National Association of Realtors.
The percentage of loans on which foreclosure actions have started was 1.36 per cent, down from 1.37 per cent in the first quarter, driven by the decline in subprime loans. New foreclosures on prime loans increased from 0.94 per cent to 1.01 per cent, while sub-prime loans dropped from 4.65 per cent to 4.13 per cent, Brinkmann said.
Phuket land holdings all legal, office insists
The Phuket Land Office says it is unable to determine if any land on the resort island is registered on behalf of foreigners in the name of proxies.
However, an executive at the office,who asked not to be named, yesterday said the office could confirm that all land on the island was legally owned by Thais.
He said all land title deeds had been issued legally.
The Thailand Research Fund released a research paper on Sunday in which it claimed about 90% of beach property in Phuket was controlled by foreigners through their Thai proxies.
It said foreigners' land holdings in Phuket were the most concentrated on Patong and Rawai beaches.
Foreigners were also said to control most of the land in prime tourism areas in Chiang Mai and Rayong provinces.
Local officials and legal experts have helped clear the way for foreign investors to take control of the country's rice farms and property in resort provinces,the research found.
The official at the Phuket Land Office said about 140,000 land title deeds had been issued for land in Phuket. About 90,000 of these were for land in Muang district, up to 40,000 in Thalang district and about 12,000 deeds in Kathu district,which covers Patong.
Patong deputy mayor Chairat Sukkhabal said all land ownership in his municipality was legal.
"I insist that in Patong, Thai nationals own 98% of beach land, while the other 2% is co-owned by Thais and foreigners," he said.
Mr Chairat said most hotels in Patong were owned by local well-to-do families,such as the Ekwanichs, Yitengs, Pachanthabuts, Keesins, Somnams, Jirayus and Tantiwits.
All land on Patong beach belongs to Thais, he said, but some foreigners had married Thais and started up tourism businesses on the land together.
"They [foreigners who have married Thais] have the right to do this. They can develop the land into business premises, but they cannot take the land away.
"Thai shareholders are required to take part in the management of the businesses they co-own."
Prices of land in Patong municipality,a popular tourist attraction in Phuket,are just as high as they are in the Silom and Sukhumvit areas in Bangkok, Mr Chairat said.
Investors in Patong tended to put their money into hospitality businesses,ranging from restaurants and beer bars to hotels.
The officer at the land office said land in the Patong area was priced at more than 80,000 baht a square wah,or over 30 million baht a rai. All the land in prime areas such as Thaweewong Road and on Patong beach had been scooped up.
However, an executive at the office,who asked not to be named, yesterday said the office could confirm that all land on the island was legally owned by Thais.
He said all land title deeds had been issued legally.
The Thailand Research Fund released a research paper on Sunday in which it claimed about 90% of beach property in Phuket was controlled by foreigners through their Thai proxies.
It said foreigners' land holdings in Phuket were the most concentrated on Patong and Rawai beaches.
Foreigners were also said to control most of the land in prime tourism areas in Chiang Mai and Rayong provinces.
Local officials and legal experts have helped clear the way for foreign investors to take control of the country's rice farms and property in resort provinces,the research found.
The official at the Phuket Land Office said about 140,000 land title deeds had been issued for land in Phuket. About 90,000 of these were for land in Muang district, up to 40,000 in Thalang district and about 12,000 deeds in Kathu district,which covers Patong.
Patong deputy mayor Chairat Sukkhabal said all land ownership in his municipality was legal.
"I insist that in Patong, Thai nationals own 98% of beach land, while the other 2% is co-owned by Thais and foreigners," he said.
Mr Chairat said most hotels in Patong were owned by local well-to-do families,such as the Ekwanichs, Yitengs, Pachanthabuts, Keesins, Somnams, Jirayus and Tantiwits.
All land on Patong beach belongs to Thais, he said, but some foreigners had married Thais and started up tourism businesses on the land together.
"They [foreigners who have married Thais] have the right to do this. They can develop the land into business premises, but they cannot take the land away.
"Thai shareholders are required to take part in the management of the businesses they co-own."
Prices of land in Patong municipality,a popular tourist attraction in Phuket,are just as high as they are in the Silom and Sukhumvit areas in Bangkok, Mr Chairat said.
Investors in Patong tended to put their money into hospitality businesses,ranging from restaurants and beer bars to hotels.
The officer at the land office said land in the Patong area was priced at more than 80,000 baht a square wah,or over 30 million baht a rai. All the land in prime areas such as Thaweewong Road and on Patong beach had been scooped up.
Nominee ownership under watch
The Lands Department has joined the Business Development Department in checking the shareholding structures of companies suspected of holding land plots and having exceeded the foreign shareholding limit, according to Anuwat Maytheewibulwut, the Lands Department's director-general.
By law, a company that owns land must not have foreign nationals holding more than 49% of its shares.
"We (the two departments) check them annually in June," he said."If we find anything unusual, we will ask the department to check the changes in its shareholding structure."
If the investigation reveals that the firm holding the land have an illegal shareholding structure, the Lands Department will ask it to transfer the plots within 180 to 365 days.
Recently, the Lands Department found a company in Phuket whose foreign ownership exceeded the legal limit.
The firm had formerly registered with a legal ownership - with foreigners holding a 49% stake and Thais the balance.However, it later increased its capital,with foreign nationals taking up all new shares, making it ineligible to own land.After the department learned about this case, it took action to have the firm transfer the land it owned.
Over the past five years, the department forced companies whose foreign ownerships exceed the legal limit to transfer 28 plots, said Mr Anuwat.
To prevent further incidents, all lands offices nationwide are told to check every new transaction or registration, a tall order given the more than 31 million plots in the country, he said.
"Whenever we learn about it or get information from other agencies or court orders, we will check it out. The government already notified us on the issue of illegal shareholding by foreigners. We're ready to handle this issue," the directorgeneral added.
Patima Jeerapaet, chairman of the property committee of the Joint Foreign Chambers of Commerce in Thailand (JFCCT), suggested the government establish a new agency or upgrade the current ones to promote agricultural investment legally, the same way the Board of Investment was set up to promote industrial investment.
"Let's attract them [foreign investors]to do it within the proper legal framework," he said."It's not disastrous that they enter to invest but they should do it right and legally. The thing is, do they know our laws?"
Mr Patima said trying to block overseas investment in Thai agricultural land, especially from the Middle East where food supplies were scarce, was next to impossible."I was approached by Thai landlords asking me to seek foreign investors to buy their farm land," said Mr Patima, who is also the managing director of Colliers International Thailand.
"They said they had 5,000 rai of farm land to sell. They hope to get good prices from foreign buyers. How can we or the government prevent this?"
In his view, Thais will stand to gain from more jobs and higher incomes if overseas investors are allowed to invest in farm land. They can also learn new technology from foreigners.
By law, a company that owns land must not have foreign nationals holding more than 49% of its shares.
"We (the two departments) check them annually in June," he said."If we find anything unusual, we will ask the department to check the changes in its shareholding structure."
If the investigation reveals that the firm holding the land have an illegal shareholding structure, the Lands Department will ask it to transfer the plots within 180 to 365 days.
Recently, the Lands Department found a company in Phuket whose foreign ownership exceeded the legal limit.
The firm had formerly registered with a legal ownership - with foreigners holding a 49% stake and Thais the balance.However, it later increased its capital,with foreign nationals taking up all new shares, making it ineligible to own land.After the department learned about this case, it took action to have the firm transfer the land it owned.
Over the past five years, the department forced companies whose foreign ownerships exceed the legal limit to transfer 28 plots, said Mr Anuwat.
To prevent further incidents, all lands offices nationwide are told to check every new transaction or registration, a tall order given the more than 31 million plots in the country, he said.
"Whenever we learn about it or get information from other agencies or court orders, we will check it out. The government already notified us on the issue of illegal shareholding by foreigners. We're ready to handle this issue," the directorgeneral added.
Patima Jeerapaet, chairman of the property committee of the Joint Foreign Chambers of Commerce in Thailand (JFCCT), suggested the government establish a new agency or upgrade the current ones to promote agricultural investment legally, the same way the Board of Investment was set up to promote industrial investment.
"Let's attract them [foreign investors]to do it within the proper legal framework," he said."It's not disastrous that they enter to invest but they should do it right and legally. The thing is, do they know our laws?"
Mr Patima said trying to block overseas investment in Thai agricultural land, especially from the Middle East where food supplies were scarce, was next to impossible."I was approached by Thai landlords asking me to seek foreign investors to buy their farm land," said Mr Patima, who is also the managing director of Colliers International Thailand.
"They said they had 5,000 rai of farm land to sell. They hope to get good prices from foreign buyers. How can we or the government prevent this?"
In his view, Thais will stand to gain from more jobs and higher incomes if overseas investors are allowed to invest in farm land. They can also learn new technology from foreigners.
Sunday, August 23, 2009
DUBAI HOUSE PRICES IN UNCHARTED TERRITORY
Just one year ago, property prices in Dubai were surging to record peaks undeterred by a real-estate slump in major markets, but they have since gone into free fall and have yet to find the bottom.
Market watchers in the former Gulf boomtown differ slightly on the magnitude of the decline so far, but all seem to agree that the prices of Dubai property, which was selling unchecked over the past three years, should drop further.
"The decline in prices still has a little bit to go before bottoming out," said Sana Kapadia, vice president of equity at the regional investment bank EFG-Hermes.
"We expect a total drop in Dubai of between 50 to 60 per cent from peak prices in 2008. We have seen a cumulative decline of 45 to 50 per cent so far in Dubai," she told AFP.
Consultancy firm Colliers International echoed similar estimates in its quarterly report this month stating that the prices of Dubai housing units had dropped by half by the end of June, compared to peak prices last summer.
A report by Landmark Properties last week put the drop in villa and apartment prices in the same period at 44 and 36 per cent, respectively.
According to a price index set by the real-estate brokerage firm, the average sale price for apartments has dropped from around 1,500 dirhams (Bt13,780) per square foot to around 950 dirhams.
Prices are expected to fall further as market liquidity remains tight and costly. Mortgages are scares, with interest rates between 8.5 and 9 per cent, Landmark Properties said.
"Our forecast is that prices will have bottomed out by the end of the year, and should stabilise in the first half of 2010," Kapadia said.
This crash has dragged the emirate's economy into contraction after years of breakneck growth, driven mainly by a property sector benefiting from an abundance of cash from a huge regional oil windfall and foreign investments.
The economic slowdown has also led to job lesses in the emirate, which had become a workforce magnet during the boom times, leading to forecasts of a drop in population that would put further pressure on demand and prices.
A few areas, however, have seen flickering signs of recovery.
Prices in the recently completed upmarket neighbourhoods on the palm-shaped island Palm Jumeirah, which took a sever beating after shooting to record levels, rose slightly in the second quarter as investors with cash appeared to jump om bargains.
A report by the property management company, Asteco, last month said the prices of villas and apartments on the Palm had risen respectively by 20 per cent and 7.0 per cent in the second quarter, compared to the first quarter, when they tumbled up to 65 and 53 per cent respectively from peak levels.
Asteco still however registered an average drop of 13 and 15 per cent in the value of villas and apartments in Dubai in the second quarter.
"It would be a terrible mistake to believe that we are out of the woods," said Jeremy Mayhew-Sanders, head of investments and development at Sherwoods Property, referring to such few recovery signs.
He said that some prices had improved due to an artificial shortage of units on offer in some areas, as low prices had pushed some owners to pull their units from the market.
But a shortage of new housing units - a major catalyst for the surge in prices and rents over the past few years - should be the least worry for buyers as thoudans of new units are being delivered this year, with more scheduled to be ready next year.
"Many under-construction projects are nearing delivery time, bringing more units into the market ... There is a lot of supply that has to be absorbed," Kapadia said.
Landmark Properties projects some 22,700 residential units to be delivered by the end of this year, with 40,400 others to be delivered in 2010, although many projects have reportedly been put on hold for lack of cash and interest.
Selling these units would be an uphill struggle for their owners as speculators, who were the real movers of the market, have vanished.
"Between 2006 and 2008, we had purely speculative investors looking for quick return ... These guys have been seriously caught short," Mayhew-Sanders said.
Kapasia also agreed that the past volumes of sales would not be achieved again "since a large portion was speculative."
But she pointed out that the "second half of 2010 could see a potential recovery", after a period of price stability.
"For a real substantial recovery, we need greater availability of liquidity, in tandem with more clarity and transparency with regards to property laws, so as to boost confidence for investors and end-users."
Market watchers in the former Gulf boomtown differ slightly on the magnitude of the decline so far, but all seem to agree that the prices of Dubai property, which was selling unchecked over the past three years, should drop further.
"The decline in prices still has a little bit to go before bottoming out," said Sana Kapadia, vice president of equity at the regional investment bank EFG-Hermes.
"We expect a total drop in Dubai of between 50 to 60 per cent from peak prices in 2008. We have seen a cumulative decline of 45 to 50 per cent so far in Dubai," she told AFP.
Consultancy firm Colliers International echoed similar estimates in its quarterly report this month stating that the prices of Dubai housing units had dropped by half by the end of June, compared to peak prices last summer.
A report by Landmark Properties last week put the drop in villa and apartment prices in the same period at 44 and 36 per cent, respectively.
According to a price index set by the real-estate brokerage firm, the average sale price for apartments has dropped from around 1,500 dirhams (Bt13,780) per square foot to around 950 dirhams.
Prices are expected to fall further as market liquidity remains tight and costly. Mortgages are scares, with interest rates between 8.5 and 9 per cent, Landmark Properties said.
"Our forecast is that prices will have bottomed out by the end of the year, and should stabilise in the first half of 2010," Kapadia said.
This crash has dragged the emirate's economy into contraction after years of breakneck growth, driven mainly by a property sector benefiting from an abundance of cash from a huge regional oil windfall and foreign investments.
The economic slowdown has also led to job lesses in the emirate, which had become a workforce magnet during the boom times, leading to forecasts of a drop in population that would put further pressure on demand and prices.
A few areas, however, have seen flickering signs of recovery.
Prices in the recently completed upmarket neighbourhoods on the palm-shaped island Palm Jumeirah, which took a sever beating after shooting to record levels, rose slightly in the second quarter as investors with cash appeared to jump om bargains.
A report by the property management company, Asteco, last month said the prices of villas and apartments on the Palm had risen respectively by 20 per cent and 7.0 per cent in the second quarter, compared to the first quarter, when they tumbled up to 65 and 53 per cent respectively from peak levels.
Asteco still however registered an average drop of 13 and 15 per cent in the value of villas and apartments in Dubai in the second quarter.
"It would be a terrible mistake to believe that we are out of the woods," said Jeremy Mayhew-Sanders, head of investments and development at Sherwoods Property, referring to such few recovery signs.
He said that some prices had improved due to an artificial shortage of units on offer in some areas, as low prices had pushed some owners to pull their units from the market.
But a shortage of new housing units - a major catalyst for the surge in prices and rents over the past few years - should be the least worry for buyers as thoudans of new units are being delivered this year, with more scheduled to be ready next year.
"Many under-construction projects are nearing delivery time, bringing more units into the market ... There is a lot of supply that has to be absorbed," Kapadia said.
Landmark Properties projects some 22,700 residential units to be delivered by the end of this year, with 40,400 others to be delivered in 2010, although many projects have reportedly been put on hold for lack of cash and interest.
Selling these units would be an uphill struggle for their owners as speculators, who were the real movers of the market, have vanished.
"Between 2006 and 2008, we had purely speculative investors looking for quick return ... These guys have been seriously caught short," Mayhew-Sanders said.
Kapasia also agreed that the past volumes of sales would not be achieved again "since a large portion was speculative."
But she pointed out that the "second half of 2010 could see a potential recovery", after a period of price stability.
"For a real substantial recovery, we need greater availability of liquidity, in tandem with more clarity and transparency with regards to property laws, so as to boost confidence for investors and end-users."
RIVER-VIEW BLUES
The copy in the sales brochures sounded heavenly enough, over 8 rai of land on the banks of the Chao Phraya River with a soaring view of the Bangkok skyline.But for a group of condo owners of the luxury Chatrium project on Charoen Krung Road, the reality has been much different, after they discovered that their title contracts contain less land than originally promised in the original sales contracts and pre-sales brochures.
The case stands as a prime example of the importance for property buyers to protect their interests, know their consumer rights and read the fine print before signing final contracts.
The Chatrium project envisioned from the start three buildings located just off the river, one a hotel, the second a serviced-apartment building and the last one, closest to Charoen Krung Road, a 260-unit condominium.
But the condo buyers, who committed to their purchases in 2004, found that their title deeds for the condo juristic person covered six rai of land, not the 8-2-75.4 rai as promised in the original project developed by City Realty.
The missing land was split away from the juristic person covering the condo and serviced apartment to a City Realty subsidiary to run the Chatrium Suites Bangkok hotel. For the condo buyers,the concern is that the hotel property covers most of the riverfront area splitting up the overall plot means there is no guarantee that the condo owners can continue to enjoy access to the river area.
The split between the condo residents and the hotel has already led to some conflicts.
"I first found out that something was unusual from another unit owner last year. But I didn't really think about it until the hotel started operations late last year," one condo owner said.
The owner said that on Loy Kratong day (Nov 12,2008), the hotel set out dinner tables in the riverfront area, which was blocked off from the condo residents.
"When I walked up, a hotel security guard asked me whether I had a table reservation," the owner said indignantly.
A handful of owners raised the issue with City Realty, a major property developer owned by Chali Sophonpanich. No formal response has yet been received.
The disgruntled condo owners visited the land office for Bang Kho Laem district to examine the official deeds for the property. To their surprise, they found that the total site of 8-2-75 rai had been subdivided into five plots in December 2006, just before the condo units were transferred to the buyers. A three-rai plot was separated for the hotel, leaving a little over five rai for the condo itself and an adjacent serviced-apartment building. Of the total property, one rai was carved out to form a four-metrewide path running 180 metres lengthwise to the river.
A group of condo owners, speaking to the Bangkok Post on condition of anonymity, said they felt deceived.
"The developers took the cream of the property away [at the river] and added a path. Why did they do this? What about the value of our assets?" asked a working mother who moved into her condo earlier this year with her family.
She said she was attracted to the project's design and its proximity to the Shrewsbury International School next door, also operated by City Realty. The developer's reputation and prominent shareholders were also key selling factors.
"Yes, the project was completed as promised. But I think the developer was also selfish, regardless of what the sales contract says," another owner said.
"What happens if this hotel or the riverside plot is sold to someone else?Will [the condo owners] be banned from using the riverside area?"
The owners, mostly well-educated,well-off white-collar professionals, said the relatively high prices of the units -70,000 baht per square metre on average in 2004- were due largely to its riverside location and access.
One owner named Chaiyos, a lifeinsurance executive, said he hoped the experience could be used as a lesson to others."There are other issues as well,such as the common area and expenses,that the [condo] juristic person manager needs to clarify," he said.
When asked whether the condo owners, upon transfer of their units,verified the land plot assigned to the juristic person, they mostly acknowledged that they focused on their unit deeds rather than that for the overall site.
"We were stupid. What can we say?But we didn't imagine that [City Realty]would do this," one buyer said.The developer perspective
For City Realty, however, the separation of title deeds splitting the hotel property from the condo was necessary under the law.
Sathorn Chanruangvanich, a first executive vice-president of City Realty, said the hotel simply could not operate if it was located on the same plot as the condo.
The one-rai "path" was added to the five-rai plot reserved for the condo building to help secure a building occupancy permit and meet floor-area-ratio requirements, a rule under the building code that limits the building space that can be constructed on a plot of land.
Mr Sathorn said the company had intended to develop the hotel from the start, but it did not formally inform the condo buyers of its plans as it had yet to receive approval for its environmental impact assessment study.
"If we advertised the building [closest to the river] would be a hotel and we could not develop it, we might be sued by customers for breaking our promise,"he said.
From City Realty's perspective, the hotel can only enhance values for the condominium and its owners.
Mr Sathorn acknowledged that the company failed to clarify sufficiently to condo buyers when the units were transferred about the overall project direction.It "understood" that customers knew about the project, as a questionnaire on the hotel plan was distributed to the condo buyers, a survey that mostly showed support for the hotel.
"We certainly never had any bad intentions or sought to deceive or cheat our customers. But there might have some miscommunication or lack of communication between us and the [condo buyers]," Mr Sathorn said.
But the condo owners argue that while they understood from the start that a hotel would be part of the site, City Realty never communicated that the riverfront area would be split from the holdings of the condo juristic person.
In any case, City Realty, as manager of the condo juristic person, plans to meet with all the condo owners to discuss the situation next month to find a solution.
City Realty vice-president Vatchara Bunnag said the company tried to clearly outline issues regarding the common areas and fees in a regulation handbook distributed to all condo owners during the transfer period.
The increase this year in commonarea fees stemmed from the higher expenses carried by the juristic person as more units have been occupied.
"The higher fee affects us too as we own all the serviced-apartment units,representing half of all the co-owners [of the juristic person]," Mr Vatchara said.
"Some of the co-owners might be worried that since we hold a majority vote, we may vote for something they don't agree with. But we want to say that this way facilitates management and decision-making in the project."
City Realty itself has a strong vested interest in ensuring that the overall property is well-maintained.
Mr Vatchara also pointed to City Realty's track record as proof that it is committed to running a quality, reputable business."We have extensive experience in property management. All our projects are well-managed and taken care of,"he said.
City Realty's projects include Bangkok Garden on Soi Narathiwat 24, Royal Cliff Garden Condo in Pattaya, I-House Building 4 and 5 in Royal City Avenue and and Floral Chiang Mai.
Mr Sathorn echoed the sentiment."Trust us," he said, adding that aftersales management was a priority for City Realty.
"This project is not [and will not be]our last one. We have never thought to end the company with this one project.And we are certainly very cautious about the company's and the [Sophonpanich]family's reputation," he said.
"Real estate is all about a developer's reliability."
TIMELINE
Mid-2004: Riverside Garden Condominium, later known as Chatrium, launched for sale, offering 260 units of 62-188 sq m, 80% of which are sold. First sales brochure says riverside site would exceed 8 rai with three buildings: a hotel next to the river, serviced apartment in the middle and condominium at the back near Charoen Krung Road. Only the condos would be for sale. October 2004: First customers sign sales contracts with title deeds specifying size of 8-2-75.4 rai. Map on deed show s almost rectangular plot adjacent to river. December 2006: Construction completed and developer seeks permission to open building for usage. Title separation done. January 2007: Condominium and serviced apartment buildings registered as a juristic person. Late 2007: Condo unit transfers start and residents start moving in. Late 2008: Hotel opens, operated by Dusit Thani Group. April 2009: First juristic person meeting held.
The case stands as a prime example of the importance for property buyers to protect their interests, know their consumer rights and read the fine print before signing final contracts.
The Chatrium project envisioned from the start three buildings located just off the river, one a hotel, the second a serviced-apartment building and the last one, closest to Charoen Krung Road, a 260-unit condominium.
But the condo buyers, who committed to their purchases in 2004, found that their title deeds for the condo juristic person covered six rai of land, not the 8-2-75.4 rai as promised in the original project developed by City Realty.
The missing land was split away from the juristic person covering the condo and serviced apartment to a City Realty subsidiary to run the Chatrium Suites Bangkok hotel. For the condo buyers,the concern is that the hotel property covers most of the riverfront area splitting up the overall plot means there is no guarantee that the condo owners can continue to enjoy access to the river area.
The split between the condo residents and the hotel has already led to some conflicts.
"I first found out that something was unusual from another unit owner last year. But I didn't really think about it until the hotel started operations late last year," one condo owner said.
The owner said that on Loy Kratong day (Nov 12,2008), the hotel set out dinner tables in the riverfront area, which was blocked off from the condo residents.
"When I walked up, a hotel security guard asked me whether I had a table reservation," the owner said indignantly.
A handful of owners raised the issue with City Realty, a major property developer owned by Chali Sophonpanich. No formal response has yet been received.
The disgruntled condo owners visited the land office for Bang Kho Laem district to examine the official deeds for the property. To their surprise, they found that the total site of 8-2-75 rai had been subdivided into five plots in December 2006, just before the condo units were transferred to the buyers. A three-rai plot was separated for the hotel, leaving a little over five rai for the condo itself and an adjacent serviced-apartment building. Of the total property, one rai was carved out to form a four-metrewide path running 180 metres lengthwise to the river.
A group of condo owners, speaking to the Bangkok Post on condition of anonymity, said they felt deceived.
"The developers took the cream of the property away [at the river] and added a path. Why did they do this? What about the value of our assets?" asked a working mother who moved into her condo earlier this year with her family.
She said she was attracted to the project's design and its proximity to the Shrewsbury International School next door, also operated by City Realty. The developer's reputation and prominent shareholders were also key selling factors.
"Yes, the project was completed as promised. But I think the developer was also selfish, regardless of what the sales contract says," another owner said.
"What happens if this hotel or the riverside plot is sold to someone else?Will [the condo owners] be banned from using the riverside area?"
The owners, mostly well-educated,well-off white-collar professionals, said the relatively high prices of the units -70,000 baht per square metre on average in 2004- were due largely to its riverside location and access.
One owner named Chaiyos, a lifeinsurance executive, said he hoped the experience could be used as a lesson to others."There are other issues as well,such as the common area and expenses,that the [condo] juristic person manager needs to clarify," he said.
When asked whether the condo owners, upon transfer of their units,verified the land plot assigned to the juristic person, they mostly acknowledged that they focused on their unit deeds rather than that for the overall site.
"We were stupid. What can we say?But we didn't imagine that [City Realty]would do this," one buyer said.The developer perspective
For City Realty, however, the separation of title deeds splitting the hotel property from the condo was necessary under the law.
Sathorn Chanruangvanich, a first executive vice-president of City Realty, said the hotel simply could not operate if it was located on the same plot as the condo.
The one-rai "path" was added to the five-rai plot reserved for the condo building to help secure a building occupancy permit and meet floor-area-ratio requirements, a rule under the building code that limits the building space that can be constructed on a plot of land.
Mr Sathorn said the company had intended to develop the hotel from the start, but it did not formally inform the condo buyers of its plans as it had yet to receive approval for its environmental impact assessment study.
"If we advertised the building [closest to the river] would be a hotel and we could not develop it, we might be sued by customers for breaking our promise,"he said.
From City Realty's perspective, the hotel can only enhance values for the condominium and its owners.
Mr Sathorn acknowledged that the company failed to clarify sufficiently to condo buyers when the units were transferred about the overall project direction.It "understood" that customers knew about the project, as a questionnaire on the hotel plan was distributed to the condo buyers, a survey that mostly showed support for the hotel.
"We certainly never had any bad intentions or sought to deceive or cheat our customers. But there might have some miscommunication or lack of communication between us and the [condo buyers]," Mr Sathorn said.
But the condo owners argue that while they understood from the start that a hotel would be part of the site, City Realty never communicated that the riverfront area would be split from the holdings of the condo juristic person.
In any case, City Realty, as manager of the condo juristic person, plans to meet with all the condo owners to discuss the situation next month to find a solution.
City Realty vice-president Vatchara Bunnag said the company tried to clearly outline issues regarding the common areas and fees in a regulation handbook distributed to all condo owners during the transfer period.
The increase this year in commonarea fees stemmed from the higher expenses carried by the juristic person as more units have been occupied.
"The higher fee affects us too as we own all the serviced-apartment units,representing half of all the co-owners [of the juristic person]," Mr Vatchara said.
"Some of the co-owners might be worried that since we hold a majority vote, we may vote for something they don't agree with. But we want to say that this way facilitates management and decision-making in the project."
City Realty itself has a strong vested interest in ensuring that the overall property is well-maintained.
Mr Vatchara also pointed to City Realty's track record as proof that it is committed to running a quality, reputable business."We have extensive experience in property management. All our projects are well-managed and taken care of,"he said.
City Realty's projects include Bangkok Garden on Soi Narathiwat 24, Royal Cliff Garden Condo in Pattaya, I-House Building 4 and 5 in Royal City Avenue and and Floral Chiang Mai.
Mr Sathorn echoed the sentiment."Trust us," he said, adding that aftersales management was a priority for City Realty.
"This project is not [and will not be]our last one. We have never thought to end the company with this one project.And we are certainly very cautious about the company's and the [Sophonpanich]family's reputation," he said.
"Real estate is all about a developer's reliability."
TIMELINE
Mid-2004: Riverside Garden Condominium, later known as Chatrium, launched for sale, offering 260 units of 62-188 sq m, 80% of which are sold. First sales brochure says riverside site would exceed 8 rai with three buildings: a hotel next to the river, serviced apartment in the middle and condominium at the back near Charoen Krung Road. Only the condos would be for sale. October 2004: First customers sign sales contracts with title deeds specifying size of 8-2-75.4 rai. Map on deed show s almost rectangular plot adjacent to river. December 2006: Construction completed and developer seeks permission to open building for usage. Title separation done. January 2007: Condominium and serviced apartment buildings registered as a juristic person. Late 2007: Condo unit transfers start and residents start moving in. Late 2008: Hotel opens, operated by Dusit Thani Group. April 2009: First juristic person meeting held.
Subscribe to:
Posts (Atom)