Thai developer in UAE roadshow for Four Seasons Residences project

BANGKOK // The Thai developer behind a Four Seasons hotel complex in the South East Asian country is hoping to tap UAE investor demand for higher returns as the Dubai property sector shows signs of slowing down.

Country Group Development will go on a roadshow in Dubai and the wider Arabian Gulf in January to market its Four Seasons Residences in Bangkok to a broader base of investors from outside east Asia. Four Seasons is an international luxury hospitality company based in Canada.

The residences, currently under construction, are located along the Chao Phraya river and next to a 312-room Four Seasons hotel and 101-room Capella Hotel. The 32 billion baht (Dh3.39bn) Chao Phraya Estate, as the overall riverside development is called, is about 35 per cent complete. Construction started in 2014 and is scheduled to finish in the fourth quarter of 2018.

The project is funded through a mix of equity and debt, with debt accounting for 75 per cent of the total cost. About half of the 355 units in the residences have already been sold, primarily to Thai investors. Foreign investors include those from Hong Kong, Taiwan and Singapore, according to the developer.

Returns for investors buying Bangkok luxury condominiums off plan are currently about 10 to 20 per cent, according to Surachet Kongcheep, an analyst at Colliers International in Bangkok.

Rental yields for condominiums are lower than in the past few years, at about 5 per cent, in the Bangkok inner city area close to the Sky Train stations.

“This was due to too much supply in the market, and the second-hand units or unsold units are still available in the market, but condominium prices in Bangkok still have room to grow,” Mr Kongcheep said. “Mostly investors are more focused on capital gain than rental yield.”

Capital gains from the Bangkok residential market are likely to remain flat this year, he said.

“There has been a slowdown in sentiment of appetite for real estate [in Middle East], and the interest [of the investors] has been abroad,” said Ben Taechaubol, the chief executive of Country Group Development. “It is difficult to forecast a sales figure for [the] Middle East but it would appeal to them given the [Four Seasons] brand.”

However, it is the large European cities and destinations elsewhere that have an established market with the world’s ultra high-net worth individuals, such as the French Alps, that are popular with UAE citizens. “A primary attraction of overseas property is the safe haven status that comes with cities such as London,” according to Julian Walker, a director at Spot Blue, a London-based property broker involved in property markets in Turkey, the United Kingdom, Spain, the United States, Portugal and ski resorts.

“Owning an immovable asset in sterling or euros is a sensible addition to any investment portfolio, especially one based primarily in dollars or pegged to oil prices, and likely to achieve steady long-term capital growth,” he said.

Back in the UAE, apartment sale prices in Dubai increased 0.19 per cent month on month in August but have decreased 1.7 per cent year on year, according to the research company Reidin’s data released last week.

Villa sale prices decreased 0.07 per cent month on month and 2.5 per cent year on year, it said. Rental yields for Dubai’s Palm Jumeirah apartments average 7 per cent and villas about 4 per cent, according to Colliers. In Dubai Marina, the rental yield is about 6 to 7 per cent, and at Jumeirah Lakes Towers it is about 9 per cent.

During the first half of this year, Dubai reported 5,685 residential transactions, a drop of about 30 per cent compared with the same period last year, according to Reidin. The total value of the transactions was Dh9.5bn, a drop of 37 per cent. Emiratis comprised the majority of buyers, followed by other Gulf nationals and other Arab nationals.

At last month’s Cityscape Global, overseas developers with luxury projects under construction, including those from Turkey and Lebanon, actively courted UAE investors.

“For investors who look for capital gains, the most opportune time is to buy during construction and to transfer immediately before or after completion,” Mr Taechaubol said. “[However] in this [Thai] project the majority are long-term buyers.”

Prices at the luxury residential-hotel complex in Bangkok start at US$950,000 for a two-bedroom apartment, four-bedroom apartments are going for $3.5 million, and $20m gets you the penthouse unit. For non-Thai expats and foreign investors the units are being sold with a 75-year lease.

The Bangkok-listed Country Group Development reported revenue of 174m baht in the second quarter, up from 125m baht during the same time last year. It reported a loss of 71.5m baht during the three-month period due to costs related to condominium sales, but that was still down from losses of 114.7m baht a year earlier.

The UAE has some major investments in Thailand. Mubadala Petroleum, a subsidiary of Mubadala Development Company, produces crude oil from three fields in that country.

This year, the DP World chief executive Sultan Ahmed bin Sulayem met the deputy prime minister of Thailand to explore investments in ports, trade, shipping and logistics industries. DP World already owns 34.5 per cent of the Laem Chabang International Terminal on the Gulf of Thailand.

Trade between the two countries has fallen in the past few months. Thailand imported goods worth $3.2bn during the first half, down from $5.4bn during the same period last year. It mostly imports crude oil, finished oils, natural gas and metal ores.

Thailand exported goods worth $1.6bn to the UAE during the first six months, down from $1.7bn in the first half last year. It mostly exports cars, air conditioners, precious stones and computer processors.

On the back of the trade connections and tourist numbers, the budget carrier flydubai expects to start a double daily service to Bangkok from November 29. In July, Emirates added a seventh daily flight to Bangkok from Dubai.

Tourism numbers to Thailand from the UAE have shown an upward trend.

During the first seven months of this year, 73,708 people from the UAE visited the country, a rise from 69,893 visitors during the same period last year, according to the latest data from the Thai Consulate in Dubai.

For the whole of last year, 124,719 travellers from the UAE went to Thailand, up 5.78 per cent over 2014.

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