Dazzling Expectations for Green Building

Approval of green real estate practices in marketable and residential buildings presents very lucrative Green House Gas (GHG) emission cuts in contrast to other financial sectors. This is one of the major conclusions in a Green Real Estate Guide gathered by global real estate services company, Colliers International.

Mr Simon Carter, author of the Guide and Colliers International Regional Head of Sustainability for Asia - Pacific, reached Bangkok a few days back to talk about international best practice and modern trends in green design with neighborhood architects, designers and developers.

“On a daily basis we are observing the effect of global warming in weather patterns all over the world,” said Mr Carter. “With suburban and marketable buildings representing up to 15.4% of greenhouse gas emissions, we look forward to governments and economies will rapidly turn to buildings to attain deep emission cuts promptly.

“At the same time as the move to green buildings has just started, real estate markets in Asia and the world are expected to change promptly, adopting green standards both in developing fresh buildings and improving accessible ones.

“The expertises of green buildings and their capability to work competently have now been established in different locations all over the world. “

Colliers International Thailand Managing Director, Patima Jeerapaet said the Thai Government had approved the Kyoto Protocol on Greenhouse gas emissions, although had not accepted detailed targets for emission cuts.

“Currently there is a policy environment of hushed support, however there may be a requirement for the more substantial incentives and clearer rules comparable to those accepted in other countries, if Thailand is to maintain pace with other markets.”

Ms Patima said proposals by companies like Tesco Lotus, which has constructed two ‘green stores’ in Thailand and has an extensive energy management program in its facilities supervision, have verified the business reimbursement that is achievable from following green practices.

“The winners in the budding ‘carbon economy’ will normally be those who organize early. We believe progressive developers and landlords are now organizing themselves to show the way, before follow, the change that is imminent”.

Impact of Global Afflictions Partial till Now

Among the two storms now hitting Thailand's property market, local political turbulence has had a far bigger impact than the global financial crisis as most of the consumers are Thais who are influenced more by events within their own country, as per Apisit Limlomwongse, managing director of Nexus Property Consultants.

People here are not actually feeling the effect of the global financial crisis yet as the market is already observed as being at a low point and there is not much space left for it to go down.

In Mr Apisit's outlook, the property market is not likely to turn down much more even if political inconsistency drags on for one more year as people are becoming familiarized to it. "It has become part of life, they do this and that and we carry on with our dealing. This also means the impact of global economic instability is not that major as we are already down."

Some people purchasing real estate in fact require a home however others distinguish a benefit in investing now as they look forward to price hike when the political fight alleviates.

Temporarily, developers too appear to be more watchful with Nexus examining that there have been smaller number of fresh project launches recently. "This could be because of several factors. For example, things are always somewhat quiet during the rainy season and add in the politics and the universal financial system - clearly all symptoms are saying don't rush, don't be belligerent."

Mr Apisit noted most outsiders who purchase real estate in Thailand are familiar with the country. As outsiders also have a propensity to purchase the top-tier condominiums in Thailand, having units costing more than 120,000 baht a square meter, it is this segment that will be mostly hit by the global meltdown.

It is the section at 80,000 baht per sq m and lower that looks protected from the political and financial storms.

A recent research by Nexus reveals that 70% of the market stock is in the bracket at 80,000 baht and less. Of the leftovers, 25% is in the 80,000 to 120,000 baht segment and very little is priced more than 120,000 baht per square meter.

Developers Move Concentration to Smaller Projects

Property companies have modified their policies and will build up smaller residential projects to accelerate their sales in the last quarter of 2008 until 2009 for the reason of the pessimistic impact of the country's political chaos and worldwide economy slump.

Preuksa Real Estate chief executive Thongma Vijitpongpun said the company will modify its business plan to start on small residential projects with 100150 units.

"We want to boost our sales and cut down the construction procedure to produce more cash flow, which will help us build up other projects. This appears to be a better alternative than developing large scale projects," he said. He said the company's presales might be lesser than the predictable target of Bt20 billion for 2008, as the first nine months got presales of only Bt14 billion.

Because of the political inconsistency in the country, home purchasers have postponed their resolution to get residences in the third quarter of 2008. The global economic recession has also influenced their poise and the trend is likely to carry on until 2009. Consequently, Preuksa has had to modify its business policy and shift focus to build up small sized projects, he said.

Land and Houses senior executive vice president Naporn Soonthornchitcharoen said his company would go on with the launch of 15 residential projects of value Bt12 billion in the 2009 although build in areas situated near to mass transit. It will build up small projects to increase sales and sustain cash flow, he said.

Thai developers have understood that cash flow is the mean to exist in the financial calamity. To sustain enough liquidity, they will have to regulate construction dealings, and make them shorter and quicker.

"Our business policy will concentrate on reducing inventory and launching small projects in the final quarter of 2008 and in 2009, which will help us increase sales and produce more cash," he said.

Prices Shoot Up In Thailand and Some Developers Change Center of Attention

Thailand prices shoot up and a few developers in Thailand have changed their focus from overseas property owners towards local Thai property owners. Simultaneously, the southern areas of Thailand have observed skyrocketing property values a short time ago.

Land prices in southern Thailand have increased by approximately 85% to 90%, as per a report released by Thailand Treasury Department. The average hike in property values in the southern areas of Thailand in 2007 has been 85.79% which is a large hike particularly when compared to the countrywide average hike which is a quite less at 26.9%.

This is mainly appealing in light of the truth that property values in the capitol and major Thai city of Bangkok have only observed an average price hike of 5.76%. Although it is an appealing duality, all at once it is to some extent understandable by the reality that property values in Bangkok were already quite higher than those in the rural south, with a lot of properties in Bangkok being valued at 500 to 1000 times the price as properties in same size in the south.

On the other hand, the rise in property values has also come all together as a rise in the common strength of the baht. The baht is the major currency of Thailand and for the past five years as per the data mining efforts on the part of various companies the baht has observed a 20% boost in value.

Though the raise in value and the growing financial system is excellent news to the average person in Thailand, it is almost certainly not that great news for somebody that had been taking into account investing in the Thailand property market. Foreign property investments have decreased as the double whammy of increased property values and a stronger baht currency (particularly contrary to a ruthlessly diluted American dollar) has resulted in a spectacular ventilation of foreign investment into the country’s property market.
This has driven several developers, like Japanese developers making up the Saha Group, to turn down investments in building up overseas investment property markets for expanding their holdings within areas more probable to be owned locally.

'Greater Phuket' May Perhaps Have Its Restrictions

Developers following ideas of intensifying Phuket's property market into neighboring Phangnga and Krabi have run into authoritarian troubles that obstruct large hotel developments in Phangnga, says Ramesh K. Hamal, CEO of Green Heritage Group.

The rhythm to generate a Greater Phuket surrounding the other two regions has been well-built for last years. Land on the valued west coast with its magnificent beaches has become limited and exclusive. As beaches on the southern tip are just as striking, a few on the east coast - while presenting in the same way breathtaking vistas - are less perfect.

This has led to a natural coast north into areas of Phangnga near to Phuket. One of the triumphant developments there is the boutique Aleenta Resort & Spa, which released early in 2006 and is only 30 minutes from Phuket International Airport.

Then a group of investors considered purchasing a massive plot in the area to develop a five-star hotel and villa estate. However Mr Hamal said these investors were now rethinking their strategies as Phangnga's regulations disallow hotels from having more than 80 rooms, which would not allow the planned scale of development.

"Phangnga is a different administrative zone and they have different system, even though earlier they did permit developers to build any number of hotel rooms."

He argues that this limit has no financial judgment as some projects need more rooms to produce the preferred return on investment and get the level of service required to guarantee success. "I think the authorities have to be more careful and know the judgment of economies of scale," said Mr Hamal.

It is in the face of such troubles that the Serenity Development Group - an American company in a joint venture with partners in Hong Kong together with a Russian - is at present looking for a plot on Phuket's west coast.

At the same time as reaction has been disturbed by increasing global financial chaos and Thailand's political problems, Mr Hamal remains hopeful about Phuket's medium- to long-term future.

Branded Hotel Condos Enhance Luxury Market in Thailand

Property investors in Asia are all set to pay money for their investment if a luxury branded name is joined to the development.

Branded residences encourage high levels of buoyancy due to the influential class they make available along with the security offered by direct rental and global marketing, it is declared.

They are comparatively fresh in Asia where five star hotels are working with possessors and developers to enhance accessibility and support investment.

An illustration is the current launch by a global management company of a housing project in Singapore where branded condos sold for S$4,000 per square meter which is higher than the average price of S$ 2,500 for luxury condos.

"No one had observed an investment similar to this in Singapore and they sold rapidly. People were paying money for the name and the brand," said Nigel Cornick, Chief Executive Officer of Raimon Land Public Co.Ltd, a Thai based luxury developer.

He considers it has started a movement and more of these types of investments are considered in leading areas in Thailand. Investors are also paying attention towards the better-quality returns these types of projects can distribute. Bigger projects are presenting more and more villas, apartments and a renowned hotel with condos.

In most cases the management companies either sells the residences out-and-out with the owners living onsite, or the apartment turns out to be a part of the hotel supply and in the hotel leasing pool for owners to obtain rental income. Revenue is divided in between the owners depending on the size of their investment.

Added incentives consist of the hotel brand's services like a caretaker, dry-clean, doorman, laundry, spa and private access.

"If the developer and hotel brand have an excellent reputation and a well-built track record, and they put forward sensible or exclusive designs, investor assurance is much higher. The operators can make available security, buoyancy and peace of mind for the owners, particularly when the investment is over and above US$1 million."