BANGKOK, NNA - Japanese real estate firms are penetrating the Thai property market in succession by joining forces with local partners to cash in on growing demand for residences.
Tokyo Tatemono Co., one of the major developers in the Tokyo metropolitan area, is the latest entrant into Southeast Asia's second-largest economy amid swelling condominium supply in Bangkok.
The company recently signed a joint venture agreement with Raimon Land Public Co. to implement a 9.1 billion baht ($288 million) project envisaging the development of two high-rise condo complexes, one in Sathorn and the other in Prompong, both at the heart of the capital.
It is the first real estate project in Thailand for the company, boasting an over 100-year history, following ongoing development projects in Singapore and Myanmar in the Southeast Asian region.
It calls for the supply of about 400 units in total, each costing more than 10 million baht, with construction set to start later this year for completion in 2021.
Katsuhito Ozawa, executive managing officer of the Tokyo-based firm, said his company has a good long-term prospect for property investment in Thailand and believes that its stable economic growth will continue to create more residential demand.
Raimon Land, which will own a 51 percent stake in the planned joint venture, has mainly specialized in middle- and upper-grade residences in the center of the capital, and aims to double its annual revenue to 10 billion to 12 billion baht in the next five years in partnership with Tokyo Tatemono, CEO Adrian Lee said.
Japanese developers have been flocking to the Southeast Asian nation since Mitsui Fudosan Co., a leading real estate firm at home, tapped the Thai market by teaming up with Ananda Development Public Co. in 2013 for a project involving 1,875 residential units.
Major rivals such as the Mitsubishi Estate group, railway-to-property and hotel chain conglomerate Tokyu Corp. and Nomura Real Estate Development Co. followed suit via partnerships with local counterparts.
The number of housing units built in 20 joint projects between Mitsui Fudosan and Ananda totals about 16,000, the largest among Japan-Thai alliances, while Mitsubishi Jisho Residence Co. and AP (Thailand) Public Co. have joined hands on 11 projects supplying nearly 12,000 units in total.
Meanwhile, various partnerships have emerged such as Hankyu Hanshin Properties Corp. and Sena Development Public Co., Osaka-based Shinwa Real Estate Co. and Woraluk Property Public Co., and Tokyo-based Hoosiers Holdings and All Inspire Development Public Co.
The property market in Bangkok remained vigorous in the first quarter of this year, said Nalinrat Chareonsuphong, managing director of Nexus Property Marketing Co. "We have started to see more condominium projects that target Japanese people in Thailand and we expect to see at least four to five mega projects come from Japanese developers this year."
A Thai real estate analyst told NNA on condition of anonymity that Japanese investors have turned to the real estate and service sectors as "a new opportunity" to expand business abroad on the back of steady growth in the property market, especially the condo segment, although they previously focused on the manufacturing sector.
The Thai government's investment promotion schemes such as the Eastern Economic Corridor, a national project to develop a vast industrial area east of Bangkok, are prompting the expansion of mass rapid transit systems in the capital and suburban areas, providing foreign investors with positive factors to tap into the property market.
Nexus's Nalinrat said the proportion of medium- to small-sized developers, including foreign competitors, increased obviously in the first quarter of 2018.
The rising trend of Japanese investment is also an opportunity for Thai developers to benefit from funding and expertise in innovative space management in residential complexes, the analyst said. (NNA/Kyodo)