JLL: Japanese will take DIY approach

The second wave of Japanese investors in the Bangkok property market is likely to be in the form of their own investment through existing operations already based in Thailand, says property consultant JLL Thailand.

JLL managing director Suphin Mechuchep said Japanese investors in the second wave are those looking for investment opportunities in the Bangkok property sector — and they will do it on their own.

“The first wave, which began in 2013, used joint ventures with local developers in condo projects,” Mrs Suphin said yesterday. “Now Japanese investors are exploring land plots by themselves to seek an investment opportunity, using their business based in Thailand.”

According to a source in the property sector, Japanese construction firm Obayashi Corp will develop a Grade A office tower with a lettable area of 85,000 square metres on a three-rai plot near Sukhumvit Soi 6 in the Nana area.

The plot was bought last year at a price of 2.6 million baht per sq wah by Thai Obayashi Corp, a joint venture of Obayashi Corp and four Thai partners: the Crown Property Bureau, Bangkok Bank, Siam Commercial Bank and Metro Group.

Mrs Suphin said office is the strongest and most attractive property segment for investment today. Besides a steady income for at least three years from rent, Bangkok office space can generate annual yield of 6.5%.

Yupa Sathienpabayut, JLL’s head of office leasing, said growth in the office segment has heated up since 2013, with vacancy rates across the market stabilising in the single-digit range: 8.7% market-wide and 6% for prime grade.

Strong demand this year is from new tenants such as co-working space operators from New York and Singapore, and IT, online and e-commerce businesses from China.

“Tenants are beginning to talk with landlords of new office towers that are under construction to get a good deal,” Ms Yupa said. “Some under-construction towers that will be completed in the second half are now 100% pre-leased.”

Factors tenants consider when looking for a new office building are location near a skytrain or subway station, column-free floor plate, a larger number of female toilets; plentiful car parking and retail-supported facilities that make up 10% of the total lettable area.

Pitinut Pupatwibul, vice-president for advisory services at JLL’s hotels and hospitality group, said the booming tourism sector spurred Bangkok hotels’ average daily rate (ADR) in the upscale segment to grow by 5.7% to 3,447 baht in the first half of 2018, with an occupancy rate of 80.9%.

ADR at midscale hotels last year crossed the 2,000-baht mark for the first time in more than 10 years. ADR reached 2,075 baht in June, with occupancy at 85%.

The luxury segment saw ADR rise by 4.6% to 6,442 baht with an occupancy rate of 77.2%.

“Bangkok hotels are mostly new, with cheaper room rates when compared with other cities like Hong Kong, Singapore or Tokyo,” Ms Pitinut said. “Food and beverage is also more attractive. Bangkok tourism can rebound in three months after any crisis, shorter than others.”

She said Bangkok hotels will be not challenged by short-term daily rentals like AirBnB, as the gap in room rates between them is negligible.