Turning Japanese – Thai Japanese joint ventures in condominium development

Turning Japanese

Turning Japanese – Thai Japanese joint ventures in condominium developmentJapanese investment in the Thai property market is gathering pace, with several of Japan’s leading developers tapping Thailand’s rapid urbanisation, growing mass transit system and regional integration.

Thai-Japanese joint ventures in condominium development for the 2013-17 period have chalked up 33 projects worth a combined 132 billion baht. The Japanese developers have transferred not just funds, but also construction technology, work procedures and innovative design to Thailand.

Anuphong Assavabhokhin, chief executive of SET-listed developer AP Thailand Plc, which entered a joint venture with Mitsubishi Estate Group (MEC) in 2014, says AP has applied Japanese design in space and quality control at every step of the work process.

“This year we will use a checklist that we learned from our partner,” he says. “The checklist we are developing will collect defects or problems we found in construction at a previous project. It will be used as a guideline for contractors to follow and as a tool to inspect and improve construction quality.”

The ideas AP has absorbed from MEC include two new strategies: a sense of place and a sense of space and innovation. At two new projects AP and MEC plan to launch in the first half, design and marketing will be linked with each project’s location and surroundings. View and wind direction will also figure in the design.

Since co-working space has become a hallmark of the new generation’s lifestyle, AP will apply the “digital city” concept to new condo projects this year. Facilities in the common areas will support interactive technology and devices such as an intelligent hub with touchscreen panels and a table, USB chargers and controls for lighting, curtains, climate and multimedia. Fibre-optic lines will be installed in all units at new projects.

In 2014, the first year of the AP-MEC partnership, AP used an interlocking layout at its condo projects to optimise space. A year later it applied traditional Japanese design at some projects, and last year it introduced perspective windows to create dramatic angles.

AP will also continue its AP Academy, an institution where MEC helps develop training courses to support Thai students interested in real estate.

“Our three-year partnership is a matter of more than the money we inject together, but also an investment in knowledge, technology and human resources to raise Thai property standards,” Mr Anuphong says.

During 2014-16, the joint venture launched eight projects with 6,500 units worth a combined 27 billion baht and a sales rate of 85% on average. This year’s plan calls for opening two new condo projects worth 14 billion baht in the first half.

Overall project value rose from 10.9 billion baht in 2014 to 13.4 billion in 2015 before falling to 2.7 billion in 2016 amid subdued sentiment, especially during the fourth-quarter mourning period.

“AP and MEC share the same principle: investment is important, but caution is important too,” Mr Anuphong says. “From this year on, we will develop condo projects with MEC worth about 20 billion baht a year.”

The Thai property market has attracted Japanese investors to condo development since 2013, a year that ushered in the first joint venture since the global financial crisis between SET-listed Ananda Development Plc and Mitsui Fudosan, one of Japan’s biggest property developers.

During 2013-16, Ananda-Mitsui launched 12 condo projects worth a combined 57 billion baht. This year they plan to launch seven new projects worth 25.5 billion baht.

Two new entrants, Shinwa Group and Hankyu Realty Co, are also set to launch condo projects in 2017.

Shinwa Group last year set up a joint venture with Woraluk Property Co, owned by Wichai Poolworaluk. W-Shinwa Co will launch a condo project in the second quarter worth 1.2 billion baht and featuring innovative design.

Wichai Chula-Olarnkun, W-Shinwa’s co-chief executive, says the project will be developed with dual floors in a Runesu structure, an innovation Shinwa Group has applied in Japan for decades.

The structure allows for recessed space between the floor of one level and the ceiling under it, maximising the unit’s area. The additional space is hidden underneath the unit’s floor and can be used for storage. It can be utilised as a work space, a small bed or to create a higher ceiling.

Other characteristics adopted from Shinwa Group will include noise-reduction walls, rapid-dry floors and deodorising/dehumidifying tiles imported from Japan.

Last year, Hankyu Realty, a subsidiary of Kansai-based developer Hankyu Hanshin Holding Group, set up a joint venture called Sena Hankyu 1 Co with SET-listed Sena Development Plc. The partners plan to launch a mid-range condo project this year near a mass transit line.

Sena deputy chief executive Kessara Thanyalakpark says the company will apply technology from the Japanese partner to increase competence and add value.

“We as a mid-sized developer will be stronger amid high competition in the market,” she says. “Our capital will be stronger for business expansion, while we can learn know-how, work processes and condo development from our Japanese partner, which focuses on quality and functions.”

Surachet Kongcheep, associate director of property consultant Colliers International Thailand, says Japanese developers have shown a keen interest in the Thai property market in recent years.

“They are interested in condo development because residential projects are a shorter-term investment than commercial property,” he says. “It usually takes only a few years to gain from an investment in condo development.”

A healthy period of investment in an office building, by comparison, is about five years. And the retail sector poses difficulties for new entrants because big, established players dominate the market.

Hankyu had studied a few Thai developers before settling on Sena. Both are aiming for the mid-range segment. It will focus on units priced at 100,000-150,000 baht a square metre as the customer base is the largest and has strong purchasing power.

Mr Surachet says Japanese developers prefer locations near existing mass transit lines or ones under construction.

Suphin Mechuchep, managing director of property consultant JLL Thailand, says Japanese developers entered the Thai property sector with condos a few years ago, when the market was healthy.

“Japanese investors in condo development focused on the luxury segment, and the Thai developers they had joint ventures understood the market well,” she says. “Like local investors, they are now looking to diversify into non-residential, due to the condo slowdown.”

Turning Japanese – Thai Japanese joint ventures in condominium development

Turning Japanese – Thai Japanese joint ventures in condominium development

Source: Bangkokpost

 12,290 ,  6 

No Comments Yet

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Siam Scope Magazine