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Thursday, 09 December 1999

Thailand Property Market Shows Improvement

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December 10, 1999

By By Nina Suebsukcharoen, VertiNews.com Correspondent

BANGKOK, Thailand – Thailand's property market has finally turned the corner after being walloped by the economic downturn that swept the region in 1997.

One sign of the broad-based recovery is the keen interest in Thailand shown by foreign investors, who hope to buy properties at fire-sale prices.

"Everybody has been here and had a look," said James Pitchon, executive director of real estate developer CB Richard Ellis (Thailand), in an interview this week with Asian Assets Direct, a sister publication of Commercial Real Estate Direct.

Pitchon said that investors would be wrong to think they could buy Thai property on the cheap. But prospects here are good enough that several international firms have taken major stakes in Thai realty and development firms. Those investors include Starwood (Sansiri), the Soros Fund (Golden Land), Lehman Brothers (Nobel Development), GE Capital (Land and House) and Jupiter Asset Management (Bangkok Land).

In the competition to sell and lease office space, realtors are seeing their market grow for the first time in 16 months, Pitchon said.

"In the previous four quarters, we [had] less total space occupied in Bangkok due to companies closing down," he said. "This is the first time it has gone positive."

By the end of the third quarter, Bangkok had some 6.8 million square meters of vacant office space – a figure that will rise to 7 million by the end of the year.

So while there has been positive movement in sales, the vacancy rate has actually increased as finished office space entered the market.

That's about to change, however. By the end of the year, all major office projects in the works will be completed except for the "All Seasons Tower" in downtown Bangkok.

In the residential sector, realtors are seeing occupancy rates for luxury condominiums in Bangkok's downtown slowly increase. Even though the vacancy rate for such units is still 45 percent, that is higher than a year ago.

"We expect to see a slow but continual sale of existing inventory," Pitchon said. "But we
don't expect to see a dramatic fall in prices."

One reason real estate sales may be picking up is a change in attitude towards buying used property.

Traditionally, Thailand has not had a strong second-hand market for housing because of the Thai preference to buy new homes. But condominiums have been changing hands, a trend Pitchon believes will eventually extend to the general housing sector.

The residential rental market is more resilient to recessions, and continues to have good prospects here. For example, nearly 100 percent of the rental properties in areas popular with expatriates are occupied.

That's because the number of expatriates living in Thailand did not fall as a result of the recession.

Some 54,000 foreigners holding work permits reside in Bangkok, Pitchon said. That number has stayed constant despite the downturn, although the demographics have changed. While the number of expatriates in construction has dropped, "we have seen a huge increase in the legal and accounting industry," Pitchon said.

As occupancy rates slowly increase, real estate has become one of the few safe bets for bank lending because of the willingness of home owners to repay their loans.

Still, the cost of housing remains prohibitive for many Thais. "The reason we haven't seen a greater level of sales [of homes] is that for the mass market, the product is still too expensive, still not affordable," Pitchon said.

In the retail sector, large foreign companies such as Macro, Carrefour and Tesco-Lotus are in a race to expand and increase their market share.

They are adopting both offensive and defensive strategies – going on the offensive to move into new areas and defensively trying to keep competitors out of new territories.



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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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