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One thing that I love about Phuket is the ability for luxury to live side by side with abject casualness. You could be sitting next to a multi-millionaire or a packaged tourist on the bar stool, as the ties that bind are the flip-flops adorning your respective feet.

Islands tend to have little social stratification, which can probably be explained in a Robinson Crusoe round-about manner. Be it a local eatery, or stepping down the aisles of Villa Market, or indeed sitting in the crowd at a kids’ sporting event at one of Phuket’s many international schools, the pecking order doesn’t much matter at these venues.

All that equality of course does not necessarily apply to where the top end of the market lay down their heads on comfy pillows at night. The history of luxury pool villas has been recanted many times around the local watering holes, so that’s no place we need to go now.

One clear positive sign for Phuket’s luxury real estate is the amount of impressive new product now coming into the marketplace. Just a few days ago, I had the chance to visit one of the newest launches, Avadina Hills overlooking Layan Beach, and once you catch your breath, all of Bangtao Bay and beyond.

Size does matter in what has been a hand-crafted effort of 22 ultra estate villas. One feature that I personally love is the ample plot size with an average of two rai each. With configurations mainly of four bedrooms, built up areas range from 1,700-1,800 square meters and internal built up space of over 709sqm.

Is the price tag, starting from 300 million baht, high? Certainly, but viewing the high level of quality, the artistic framework of architect Sakakura Associates and landscape planner James Hyatt, ultimately the price tag is attuned to the exclusivity, privacy and view overlooking one of the island’s most sensational vistas.

Writing this, I can almost hear the online boo-birds chirping about the demise of Phuket, being overrun by cheap travellers and with a declining trajectory. Yet, looking at the bare facts and quality of investment into the island’s luxury property sector by well-heeled groups and affiliates like Kajima (Japan), Minor (Thailand), HPL (Singapore), and New World (Hong Kong), the reality seems to suggest that, despite a world gone mad, upscale property is continuing to find a global marketplace in Phuket.

Over the next 12 to 18 months, more than US$500 million in new luxury estate villas will enter into the market, including notable projects such as Rosewood, MontAzure and others, joining Avadina Hills, Anantara Residences and Point Yamu by Como. One reality of the sector is that a fresh phase of demand will be induced by the world class product and will generate sales from both domestic and overseas buyers.

If you want a reality check about Phuket’s leadership in real estate, take a drive on Kamala’s Millionaire’s Mile some time, or take a look at the superyachts that can’t find space at the island’s overfilled marinas.

There is little doubt that our island is transforming into an urbanized landscape, and yes – volume is inevitable in all things we do and see. Yet, putting perspective into the real estate sector, and viewing the positive investment sentiment, all indications are that we will continue to move ahead as we enter the next development cycle.

Luxury living is indeed finding more partners to sleep with, given some very spectacular new products that are gracing our shores.

A stronger-than-expected performance in the first quarter has prompted analysts to revise their year-end growth forecasts for the Thai economy, though some remained cautious in the face of ongoing challenges both at home and abroad.

Data issued in May by Thailand’s National Economic and Social Development Board (NESDB) put year-on-year (y-o-y) growth for the first quarter of 2016 at 3.2%, the country’s highest in three years.

The positive results were attributed to high levels of state spending and a strong showing in Thailand’s tourism industry; however, weak export figures have sounded a note of concern.

State spending proves pivotal

Thailand’s economy expanded by 0.9% during the first three months of 2016, up from 0.8% in the previous quarter.

The results prompted the NESDB to revise its year-end forecast to between 3% and 3.5%, up from its previous estimate of between 2.8% and 3.8% in February. The Bank of Thailand (BoT), the country’s central bank, meanwhile, said it expects the Thai economy to expand by 3.1% in 2016. This comes on 2.5% growth in 2015.

Although the country’s economy has outperformed initial forecasts, growth remained uneven across sectors.

The government pumped BT654bn ($18.5bn) into the economy through direct expenditure and soft loans in a bid to stimulate growth and aid recovery.

Thailand recorded an 8% y-o-y increase in public consumption in the first quarter, while public investment was up 12.4%. The injection of capital helped boost activity and offset more sluggish growth in the private sector, where consumption rose by just 2.3%. Private investment, meanwhile, inched up a more muted 2.1%, according to the NESDB.

Double-digit growth in the construction and tourism sectors contributed significantly to the first-quarter results.

Thailand’s construction sector was up 11.2% y-o-y, supported by strong public investment flows. Increased spending on infrastructure and project development is likely to continue, pointing to a bright outlook for the construction sector and its related industries through 2016 and beyond.

The number of incoming tourists, meanwhile, surged by 15.5% to reach 9m, putting Thailand on track to meet its target of 33m arrivals for the year. The NESDB expects the tourism industry to generate revenues of BT1.68trn ($47.6bn) this year, accounting for 12% of GDP, up from 10% last year.

Hotels and the hospitality industry also benefitted from higher tourist volumes, with the broader services sector recording 15.8% growth.

Setbacks and slowdowns

The first quarter results were more muted for other industries, including manufacturing, agriculture and exports.

Thailand’s manufacturing industry, which accounts for around 30% of GDP, contracted by 0.3% y-o-y, weighed down by declining vehicle output and a slower growth in related industries.

Capacity utilisation in the manufacturing sector remained stagnant at 64% in May, below the historical average of 68%, and could remain at this level due to weak export growth.

Agricultural output, meanwhile, was down for a sixth consecutive quarter, slipping by 1.5% y-o-y on lower demand and adverse weather conditions caused by the El Niño climate pattern, which brought drought to much of Thailand in early 2016.

According to the BoT, exports contracted 1.4% in the first quarter, with the government citing lower commodity and oil prices as well as weak global demand. Among the key segments in decline were industrial goods (7.8%), electronics (5.3%) and agricultural products (2.8%).

A stronger Thai baht, which is up by nearly 2% against the dollar year-to-date, is also expected to curb demand for Thai exports, according to the BoT, which expects exports to decline by 2% over the year – a downward revision from the previous forecast of zero growth.

Fluctuating forecasts

Despite broadly positive early indicators for the year, some experts remain cautious. DBS Bank, for example, warned that weak private sector demand, combined with poor showings in manufacturing and agriculture, could weigh on the country’s full-year growth prospects.

Commenting in a report issued in May, the bank cautioned that ongoing sluggish growth in Thailand’s manufacturing sector could put jobs at risk. The industry currently provides employment for around 16% of Thailand’s workforce.

DBS Bank said full-year growth looked likely to fall short of 3.5%, while also noting that first-quarter growth would have eased to 1.5% if not been for the public sector’s contributions.

The bank’s prediction followed a move in March by the Asian Development Bank to lower its forecast for Thailand’s GDP growth this year from 3.5% to 3%, citing slower growth in key global economies.

Amid continued economic uncertainty, the BoT chose to hold its key one-day repo rate at 1.5% in May. Senior officials at the BoT cited concerns over financial stability, along with the weakened debt service ability of agricultural households and small businesses.

Find your dream home

February 15, 2019ZONEZI No commentsBusiness, News

Builders urge tax breaks for buyers

Property developers are urging the government and its new economic cabinet to use tax incentives to help restore housing demand in the remaining months of this year.

They are concerned that already-soft demand will be weakened further by Monday night’s bomb attack.

Cutting property tax and transaction fees would help to stimulate the economy in general and the property market in particular, said Thongma Vijitpongpun, president and chief executive of Pruksa Real Estate Plc.

He proposes the property transfer fee be reduced to 0.02% from 2%, mortgage fee to 0.01% from 1% and special business tax to 0.01% from 3.3%.

The cuts should be applied to housing units priced 2 million baht or lower, which would help low-income earners to afford their own home, Mr Thongma said.

“If these incentives were applied to higher-priced segments, annual tax revenue could miss the target,” he said.

Atip Bijanonda, president of the Housing Business Association (HBA), said the overall economy in the remaining months and full-year GDP growth would depend largely on economic stimulus.

“We’re not worried about new-home transfers in the rest of the year, as those will keep growing,” he said. “But new-home sales are a concern due to unfavourable market sentiment in the housing sector and the weak economy, which is expected to be dampened further by the deadly bombing.”

The HBA has revised down this year’s housing market forecast to only zero to 5% growth from 5-10%.

Mr Atip suggests developers stay more focused on cash flow and be more cautious of new projects being launched between now and year-end.

Theerathat Singnarongthon, assistant chief executive of Property Perfect Plc, said the company recently scaled down the number of new launches this year to 15 projects worth a combined 20 billion baht from 22 projects worth 26 billion.

“Trying to generate sales amid weak market sentiment is exhausting, particularly after the bombing,” he said.

“We need to be more selective in new launches and make sure of demand.”

Thailand Foreign Direct Investment

Foreign Direct Investment in Thailand is expected to be -5480.00 THB Million by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Foreign Direct Investment in Thailand to stand at 20000.00 in 12 months time. In the long-term, the Thailand Foreign Direct Investment is projected to trend around 24000.00 THB Million in 2020, according to our econometric models.

Forecast	Actual	Q4/16	Q1/17	Q2/17	Q3/17	2020	Unit
Foreign Direct Investment	-31178	-5480	-25100	24000	20000	24000	THB Million

Thailand Foreign Direct Investment Forecasts are projected using an autoregressive integrated moving average (ARIMA) model calibrated using our analysts expectations. We model the past behaviour of Thailand Foreign Direct Investment using vast amounts of historical data and we adjust the coefficients of the econometric model by taking into account our analysts assessments and future expectations. The forecast for – Thailand Foreign Direct Investment – was last predicted on Sunday, October 23, 2016.

Thailand Trade	Last	Q4/16	Q1/17	Q2/17	Q3/17	2020
Balance of Trade	2130	351	2614	2442	1575	135
Exports	18830	16658	17729	18480	16965	19045
Imports	16700	16308	15115	16038	15390	18910
Current Account	3810	5200	4700	4000	1400	5000
Current Account to GDP	3.8	2.66	2.89	3.12	3.35	2.37
External Debt	143135	149251	150779	152133	135538	139000
Terms of Trade	114	113	113	113	113	113
Tourist Arrivals	2874420	2690763	2702194	2700646	2700806	3010000
Gold Reserves	152	152	152	152	152	152
Terrorism Index	7.28	7.35	7.25	7.25	7.25	6.8
Remittances	9545	8452	8299	8230	8193	8149
Crude Oil Production	245	230	220	255	220	250
Foreign Direct Investment	-31178	-5480	-25100	24000	20000	24000

Make a right investment

February 15, 2019ZONEZI No commentsBusiness, News

SET-listed property developer Land and Houses Plc (LH) plans to spend 14 billion baht to build Terminal 21 shopping centres in Pattaya and Phuket.

The investment value of the two shopping malls is estimated at 7 billion baht each, compared with the 3-billion-baht price tag of the first Terminal 21 in Bangkok, LH chairman Anant Asavabhokin said without giving a time frame for development.

The new malls are part of the company’s 20-billion-baht expansion plan over the next six years. Terminal 21 Korat is another project in the pipeline. LH said recently that it would begin developing the shopping mall in Nakhon Ratchasima province next year.

Mr Anant spoke of great potential in the retail business, particularly upcountry, but said LH would use caution next year while awaiting a clearer economic picture.

Apart from shopping malls, the company will turn its attention to hotels and property investments in Britain, he said.

LH will also continue to put money into rental property projects in the US, aiming to invest 15 billion baht over the next several years on top of 5 billion in past spending.

Next year’s investment budget will resemble this year’s amid an uncertain economic outlook, Mr Anant said.

“We will maintain business expansion [in terms of investment budget] next year to be equivalent to this year’s,” he said.

“It is our conservative investment plan in the current economic situation. We need to wait and see if there will be clarity both internally and externally, though local economic momentum is showing better signs.”

The government’s stimulus measures to aid low-income earners and small businesses will ease financial burdens and give a boost to Thailand’s overall economy, Mr Anant said.

In his view, the property market has already bottomed and is on track to rebound.

The property sector avoided big problems but was hit by weak domestic consumption and homebuyers’ difficulty in accessing bank loans, he said.

Next year, LH plans to launch a real estate investment trust (REIT) with shopping mall and hotel projects as the underlying assets, aiming to raise fresh funds for business expansion.

In other news, Land and Houses Bank (LH Bank) is still in talks with potential strategic partners from three Asian financial institutions.

The Asavabhokin family, the founder and major shareholder of property companies Land and Houses and Quality Houses, owns about 75% of LH Financial Group, the parent of LH Bank.

LH shares closed yesterday on the SET at 8.10 baht, up 5 satang, in trade worth 101.15 million baht.

China’s middle class is now the biggest in the world, and growing much faster than America’s, according to research by Credit Suisse.

There are 109 million Chinese with wealth of between $50,000 and $500,000. Since 2000, twice as many Chinese as Americans have joined the middle class.

Credit Suisse measured wealth rather than income to avoid temporary changes caused by unemployment, for example.

Chinese are getting richer at an astonishing rate. Wealth per adult has quadrupled to about $22,500 since 2000. The country now accounts for a fifth of the world’s population, while holding about 10% of global wealth.

“The wealth of the country’s households could well continue to leapfrog the growth rates of developed economies,” Credit Suisse said.

China should also see the number of millionaires soar 74% to 2.3 million by 2020, according to the report.

A report by UBS and PricewaterhouseCoopers found that a new billionaire was created almost every week in China in the first quarter of the year.

Make a right investment

February 15, 2019ZONEZI No commentsBusiness, News

With the island’s real estate market staying strong, some owners could be thinking of selling their property. If so, here are some tips for making this move.

Establishing a Price

Consider what you paid for the property, how long you have lived there, what similar properties have sold for, any improvements added, present condition of the property, ask the agent about the current property climate and arm yourself with the facts.

Signage

Allowing the agent to erect a sign is very important as their brand name and reputation may draw in passers by as they understand the professional nature of the company which can assist with the buying process while also representing their interests.

Qualifying the buyer

A major part of the agent’s job is to ensure that you have a genuine buyer, that he or she is serious and that they actually have the funds available. Many times private sales end in disaster and wasted effort due to misunderstandings between the parties and lack of knowledge of the buying process.

Price Parity

If you are not listing exclusively with one agent, then ensuring that other agents offer the same price is important.

Negotiating

The key to remember is to not get wrapped up in any games. If you keep your goals in focus at all times, you will be better able to respond to offers. You will have three choices when an offer comes in. You can accept the offer, reject the offer or make a counter offer. In the end it is what the buyer is willing to pay that counts.

Sharing costs

In Thailand, it is customary for the seller and buyer to share the transfer costs 50/50, but this is up to you to negotiate. Sellers must understand the costs associated with selling their property and incorporate them into the selling price. Trying to renegotiate who pays what fees after a selling price has been agreed with a buyer will almost certainly lose the sale.

Buyer payment

Let your agent know at the beginning where and how you wish to be paid, as many buyers wish to make payment offshore or outside Thailand and they need to know up front to avoid unnecessary bank and interest charges. Regardless, a percentage of the purchase price must be paid in Thailand to cover transfer and tax fees but the amount depends on negotiation with the seller.

Title Deed

Ensure that there are no complications and that the property is free to be sold with no encumbrances and that the seller is the name on the back of the title deed (or company). If the property was set up through a Thai company, then the company must be ‘clean’ and cannot have been used for other business.

Sellers must ensure that they have all necessary original documentation for their property to complete a sale. A seller should be prepared to provide a buyer with copies of all property documents as soon as a sales price has been agreed so the buyer can complete due diligence on the property. If documentation cannot be provided in time, or is missing, this will delay the sale and could lose the sale altogether.

Incentives

To set your property aside from others, it is a good idea to offer some enticement such as advance rental bookings, thereby effectively giving the buyer a reduction in sales prices; free furniture; maid for a period; and so on.

Reservation deposit

When the buyer makes an offer acceptable to the seller, usually a non-refundable deposit is taken until such time as contracts are exchanged. This is a minimum 150,000 baht or 1 per cent of the selling price, whichever is greater. The reservation agreement allows the buyer 21 to 45 days to review and agree to the contracts. If a deal cannot be reached in that time, the reservation can be extended by mutual agreement.

From offer to close

It is normal once a reservation deposit has been secured for the process to take one to two months or more to the final payment. The buyer first needs a lawyer to do due diligence and for the seller to provide a ‘sale and purchase contract’ which has to be reviewed and agreed by the buyer’s lawyer and any changes made and agreed between the parties.

Once this is completed and contracts are signed, a visit to the land office to exchange title deed and buyer’s final payment is the final stage. In some instances, you may need to first give the land office a 30-day notice period prior to transferring ownership.

Find your dream home

The Board of Investment of Thailand (BOI) has expanded its 2016 investment value target to 550,000 million baht ($ 16 Bln), an increase of about 20% from the previous target of 450,000 million baht

Improved political and economic situation enhance investment climate and investors’ confidence and New opportunities explored in overseas markets while actual investment activities in Thailand to be accelerated.

BOI manpower to be expanded to support more aggressive investment promotion Driven by political and economic recovery, the Board of Investment of Thailand (BOI) has expanded its 2016 investment value target to 550,000 million baht ($ 16 Bln), an increase of about 20% from the previous target of 450,000 million baht.

The new target was announced at the annual meeting, chaired by Deputy Prime Minister Somkid Jatusripitak, with the heads of the BOI’s 14 overseas offices today. Mr Somkid updated the meeting in Bangkok about the positive signal in political and economic recovery and global investment trend that moves toward Asia.

Considering such trend, he recommended BOI to increase manpower to support the expected increase in investment inflow and to grow new and existing markets across Asia, including Japan, Korea, China, India as well as Singapore.

“Other advantages, such as the benefits of using Thailand as the hub to grow business in China, ASEAN and India can be highlighted to draw more investment”

BOI has adjusted its application target from 450,000 million baht to 550,000 million baht. The 10 target industries will remain in focus. We hope to increase the proportion of investment in these target industries to more than 50% of the total investment application.

“Considering the very positive trend in investment applications, coupled with strong investors’ confidence towards economic and political development in Thailand, we are certain to achieve the new investment goal by the end of 2016.”

In the first seven months of 2016, the number of investment incentive applications by project increased by 77% while application value soared by 218%.

The BOI received 853 applications worth 320,720 million baht, up from 483 projects with a value of 100,740 million baht in the same period of 2015.

The value of project applications in the 10 target industries accounted for 43% of the total applications or 138,871 million baht, reflecting the success of investment promotion policy and execution. An investor confidence survey done by the BOI in May 2016 also showed a positive trend.

The survey, released last week, indicated that 32.8% of companies currently investing in the country have plans to expand their investment. The majority of respondents cited good infrastructure, sufficient supplies of parts and suppliers, efficient logistics and strong investment promotion incentives as key factors behind their decisions.

Meanwhile, investors’ concerns over political and economic instability have significantly decreased from the same period last year, showing overall improved confidence in Thailand’s political and economic development.

Investors’ concern over the government sector’s transparency has significantly dropped from 30.15% in 2015 down to only 19.38%. In addition, the increase in GDP growth from 3.2% in the first quarter this year to 3.5% in the second quarter contributed to improved confidence among investors and the business sector in the Thai economy and its outlook.

“Thanks to these positive factors, the overall investment outlook is promising,” said Mrs Hirunya.

To maintain and enhance the positive investment momentum and confidence, the BOI will continue its plan to promote Thai investment opportunities in major markets through international road shows. In the remaining four months, a total of more than 40 road shows are planned in major markets, such as Japan, South Korea, China and northern Europe. The BOI will also work closely with its partners worldwide, including leading organisations in the trade, investment and banking sectors.

Honorary investment advisers will provide information about investment opportunities and government support in Thailand.

“With a concerted effort from the BOI’s 14 overseas offices worldwide, local offices and concerned government organisations, we hope to attract more investment from foreign investors, especially in the 10 target industries that are crucial to supporting the transformation of Thailand to a knowledge-based economy. Coupled with the positive development trend and political and economic stability, the country’s strength as the gateway to ASEAN and South Asia, as well as the upcoming laws that enhance investment climate, including the new BOI law, Eastern Economic Corridor (EEC) law and the competitiveness fund law, Thailand is positioned well as the desirable investment destination,” said Mrs Hirunya.

Make a right investment

February 15, 2019ZONEZI No commentsBusiness, News

THAILAND: Thailand’s new six-month, multiple-entry tourist visas will become available Nov 13, but will limit stays to 60 days at a time.

New Visa

The six-month multiple-entry visa will allow unlimited border crossings during the validity period. However, to prevent foreigners from basically living in Thailand on tourist visas, each entry will be be limited to 60 days.

The new multiple-entry visa will cost 5,000 baht, versus 1,000 baht for a single-entry, 60-day visa, which can be extended in-country for up to 30 days for an additional fee.

More information

February 15, 2019ZONEZI No commentsNews

The total FDI into ASEAN countries in 2014 hit $136.2 billion, and Vietnam was the best performer among emerging territories in receiving inbound investment, according to the United Nations Conference on Trade and Development.

Companies in Thailand and Japan are both eager to grow outside their home markets, which have witnessed low growth and have mature markets, in contrast to Vietnam’s soaring rate.

Vietnam’s politicians also revised the nation’s laws covering M&As, to make the process quicker and more transparent. A new law enacted in July has cut the time to acquire an investment license to just 15 days, a reduction of about two-thirds of the earlier duration.

A month earlier, the government said that foreigners can now buy majority stakes in certain kinds of listed companies.

Vietnam has also specified 18 industries including consumer, property, transport, construction and manufacturing, where foreign investment is allowed.

Taken together, these measures have laid out a clearer path for companies interested in M&A.

“Thai companies have acted more swiftly than their Japanese counterparts in striking M&A deals.”

Yoshida said that the reason was slower decision making process in Japan.Thai companies Central Group and TCC Holding expanded their presence in Vietnam’s retail market with the acquisitions of Big C Vietnam, and the Vietnam operations of fashion e-commerce platform Zalora and Metro Cash&Carry.

Another big-ticket deal that involves a Thai corporate buyer is the $1.1 billion transaction to buy majority stake in Masan Group‘s subsidiaries.

Meanwhile, Japanese investors have been active in various sectors, including ANA Holdings‘ strategic investment in Vietnam Airlines, Taisho’s acquisition of over 24 per cent in DHG Pharma, JX Nippon Oil & Energy’s 8 per cent shareholding in Petrolimex — the country’s largest distributor of petroleum products — and AEON‘s purchase of two local retailers.

Choose your investment

February 15, 2019ZONEZI No commentsBusiness, News