How Thai super-luxury property stacks up against coming reforms

Looser foreign ownership caps could propel real estate sector as international property seekers continue to demand centrally located properties, hiking up land values

Major developers in Thailand expressed both raves and reservations in light of reforms mulled for real estate, which include longer-term leases for foreign investors.

“If I speak for all developers, I quite like a long-term leasehold,” said Uthai Uthaisangsuk, senior executive vice president at Sansiri Plc, in a news conference Thursday. “Today, the leasehold [for foreign property buyers]is just 30 years. But if the government can extend from 30 years to 50 years, I think that would be better. This might lead to more single-detached homes, even land, for foreign people to invest in.”

Current Thai laws forbid non-citizens from buying freehold land and single-detached homes but allow one-time renewal of leases for up to 30 years. Up to 49 percent of a condominium project can be made available as freehold to foreign buyers, however.

In March, finance minister Apisak Tantivorawong floated the idea of extending leasehold on Thai real estate up to 50 years for international property seekers.

“If the government opens up the opportunity for foreign buyers to hold residential leases for up to 99 years, like Singapore and Malaysia do, it will boost residential demand as the country is the gateway to the ASEAN Economic Community,” Prasert Taedullayasatit, president of Premium Market at Pruksa Real Estate Plc and the Thai Condominium Association, then said.

Demand from expatriates and foreign buyers tend to converge in “familiar locations” such as the thoroughfares of Langsuan and Wireless Road, Uthai reported. Capital gains on land sold along Wireless Road alone rose from THB1.4 million (USD41,000) per square wah in 2011 to THB1.9 million in 2015, an increase of 36 percent.

In February, a 25-rai (40,000 sqm) Wireless Road parcel by the British Embassy sold for THB2 million per sq wah, the highest record for a land purchase deal in the kingdom. Land values in the area are projected to top THB2.5 million per sq wah this year.

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Accordingly, prices of super-luxury condos in Bangkok or units with a price range of more than THB300,000 per sqm have increased by 10 percent between 2014 and 2016, the highest growth for any condominium segment.

Units at 98 Wireless, Sansiri’s 25-storey super-luxury flagship project in Wireless Road, command an average price of THB580,000 per sqm, a value proposition that would provide investors a substantial profit from capital appreciation, Uthai said. A penthouse in the building, nicknamed The One, has reached a price of THB666,000 per sqm, up 65 percent from the most expensive residential unit listed in Thailand in 2011.

Sansiri has reached about 60 percent of its approximately THB8-billion sales target for 98 Wireless.

“Location has to be the best when you do luxury,” Uthai reasoned. “The second thing to remember is the development itself. You have to pay attention to the design and service. If you build a development where the best comes as standard, it’s likely that affluent individuals are going to buy.”

A comparable development today with features, quality and location would cost at least THB700,000 per sqm, Uthai estimated. “In making our project really luxurious, interiors are really, really important. We invest a lot in our interiors. I think we invested 60 to 70 percent of our money in the interior design of 98 Wireless.”

Sansiri flew in Manhattan-based interior designer Anne Carson to give 98 Wireless its distinct furnishings and fittings. The building, a modern riff on European Beaux Arts architecture, comes with pieces supplied exclusively by Ralph Lauren Home.

Super-luxury, in the end, comes as a bargain in Bangkok relative to other alpha cities, with price points in the segment still far lower than those being bandied in other countries.

A 121-sqm unit in 98 Wireless would fetch THB70 million, the same price as an 86-sqm unit in Singapore, a 40-sqm unit in Hong Kong, a 60-sqm unit in London, and a 52-sqm unit in New York, Uthai said, citing Sansiri’s latest report “Global Luxury Property Market Research 2017.”

Source: http://www.property-report.com/how-thai-super-luxury-property-will-stack-up-against-coming-reforms/