Paul Ho
If you are going to buying a property in Thailand or particularly getting a property in bangkok, you need to watch this interview. There are many insights which you can gleam from this interview.
Paul: Thank you Mr. Boon Choon Kiat – Managing Director for Chewathai Public Limited for accepting my interview.
It is my honour. Today we just realized that you are coming to Singapore. You have been working in Thailand for sometime, and we have Chewathai which is a Thai developer.
Paul: Just maybe, can you can tell us a little bit about Chewathai?
Boon: Chewathai is a sister company in Thailand. It is a joint venture between a wealthy Thai family and a Singapore developer called Tee Land. We have been in the market for the last 8 ½ years. We have developed about 10 or 11 condominiums, and we are going into houses as well.
Paul: Okay that’s good. Is there any difference in Thailand between a non listed and listed property developer? Will your hands be tied in this case, listed?
Boon: Well, listed means we have access to public funds doing our offers and then after, that we have more access to more financial instruments in the market to raise more funds. We were just recently listed in April 2016 in the secondary market in Thailand.
Paul: This Chewathai Public Limited Company, can you tell us a bit more about the shareholders in the company?
Boon: Initially, the pre-IPO, the shareholders were 51% by the Thai family. They are very prominent, but low profile business oriented type family. Their surname is panichewa. They joint ventured with us. We hold 49%. Of course, being in Thailand, doing business you need a lot of connections.
This particular thai family they have business interests in a lot of industries, in industrial estates, in insurance, in manufacturing, chemicals, they even own a Hertz car rental franchise. They have several car insurance under different brands. We are very, very lucky to have them as a partner.
Of course, in the Singapore side, the 49% partner is Tee Land. TEE land has been in the Singapore market as a boutique developer for the past, maybe 12 years. We were recently listed in the main stock market, in the main board in Singapore about 3 ½ years ago. I think a lot of Singaporeans is very familiar with TEE land.
So, with TEE land, being a developer in itself, in Singapore, as a whole, the condo market is very mature. Meaning the products are very complex and sophisticated. So we have a Thai partner, with a lot of contacts and network and also very rich, and we also have a Singapore developer with the expertise in developing sophisticated products with a Singapore touch. So, it is a wonderful combination.
Paul: Yes, we understand you just mentioned that the other family is a PaniChewa, is that the reason why there is a Chewa …
Boon: Actually, right from the start, the TEE Group has been in Thailand for the past 16 years. I have been doing/looking after the business, but when we started this joint venture about 8 ½ years ago, we specifically requested our Thai partner for a name. And we told them we want something very Thai.
Within one day they came back and say ChewaThai. Actually the word Chewa means lively, Thai in this case the sound sounds like Thai, but in this case, it is “heart”, hence “lively heart”. But it also comes from part of their surname which is PaniChewa.
Paul: How do you compare Chewathai with other property leading developers in Thailand, of which there are a lot?
Boon: There are really a lot of developers. They are the big boys and the very small ones. We are medium sized. We are a boutique developer. To compare with them, of course being big, the cost of funds would be much lower and they have been in the market for a long time. What our strategy is to use our Singapore expertise and develop something that is very competitive. We have to just give the best quality in our products to our customers.
To show that, you know, you buy a branded ones from the big boys, it is more worth buying from us because we may be in a better location, we maybe giving more quality products and more generous in a lot of things that we give than the big boys.
Of course, being medium sized, we also disadvantaged by the fact that they have an established brand. But, we are also in the market for 8 years, so I think, if you go to Thailand now, people will start to know about ChewaThai. It’s just that outside Thailand maybe people are still not so familiar with ChewaThai.
Paul: Well, we understand that you are the managing director of Chewathai public and listed on the exchange and also you do speak a bit of Thai as well. Can you say a few words now to our audience in Thai?
Boon: (Thai)…
Boon: It just said hello I am boon, I have been living in Thailand for the past 18 years.
Paul: Excellent. Also another thing, is there a difference, because I have heard a lot of people telling us we have branded developer therefore, it is more expensive, is that a difference between the pricing strategy of different developers, in short are branded developers selling more expensive?
Boon: Maybe yes, maybe no. But, I’ll tend to say no because each product is very different even if they are on the same location, even if when they are next to each other. So, the more important thing, is what product are they giving? Is it luxurious condominium product or is it just a mid-range condominium product or is it a normal range?
So, the examples were, one product high rise they were selling for 300,000 baht per meter square, and they are luxury collection, they give fully furnished, everything is like quickly. And just next to them, they are selling at half the price at 150,000 baht per meter square. They are not furnished, they are low rise but they are just next to each other. So, it is not really fair to say that branded developers or big boys they are selling more expensive. It is really the location and also the final product that they are giving to the market.
Paul: I think in Singapore most people realize that in Singapore we have condominiums that are selling close to each other. The price difference is actually, typically within 10 to 15% difference, whereas in Thailand there is really a big difference.
Boon: I think the Thai market is really so big and the developers, of course, they do their project study, they may not be focusing on the same product, on the same target group. So, the product that come up have actually different pricing structure. It depends on which target market they are be looking at and also on the final product. That is the most important thing.
Paul: Recently, I went to Bangkok, obviously, we went to look at your projects (at your invitation) at the chewathai interchange, and Surawong and a few other places as well. I have not been to Bangkok a few years prior to this, so I was quite impressed with the elevated rail, the BTS, underground MRT, which I think is as good as the Singapore’s MRT. Obviously, they buy from the same train manufacturers. How is the prices of the properly performed in and around the Bangkok MRT BTS stations?
Boon: BTS MRT they are a very very big thing in Thailand. Very very big thing. Prices around there, land prices and condominiums have gone up so much, and consistently going up and demand for products, near meaning within 500 meters, demand has been consistently very very high. We see in the market people who launched next to the MRT station, on BTS stations, fully sold out within within one day, two days, you know, very, very high demand.
So, yes, the Rail lines or the Mass transit lines have re-scaped the real estate market. We continue to see a lot of demand and land price continue to go up. I do not see any drop in price in terms of the final product in the next 10 years. I think, as a developer, it is really difficult for us to find land near the mass transit stations. I think people realized that, whether you are a tenant, you are a real demand buyer, or you are an investor, or you are a flipper, people realized that and they will continue to demand products near the mass transit lines.
Paul: So, between the Thai people and the Singapore people, you know all Singaporeans are crazy about going near the MRT stations right, near the supermarket stations, I mean between Singapore and Thai, Singapore you know having the benefit of being a Singaporean and you have been staying in Thailand for many years, do you think that Singaporean is more crazy about being near the MRT or the Thai people is being more crazy about being near the MRT stations?
Boon: I think really the Thais. The reason for buying a condominium in Thailand is really to escape the very bad traffic. And you know, during weekdays, people have to drive 1 to 2 hours to get to work. And by buying condominiums near mass transit stations, they can then don’t drive and go to work using the mass transit.
The Thais are really very very particular about the location, whether how far away their condos are from the mass transit. And we see this as an increasing trend. A lot of buyers who bought from us, they actually have their own houses, but it’s are very far. So, the reason for buying is to cut down on transit time.
They will continue to demand that. I think they will be even more crazy than Singaporeans in terms of this. I also think that Singaporeans who have been shopping for condominiums in Thailand or in Bangkok have also used this as a criteria. Because Singaporeans who buy is either for holiday homes or for investment, investments meaning that they want rental, people who rent want to rent near the mess transit stations. So talking about Singaporeans crazy over condominiums near the MRT stations or BTS stations, and also the Thais are the same.
Paul: Actually, I think this question is not scripted, so I just thought I will give you a surprise question. I think most people would say are you sure we can buy freehold property in Bangkok or in Thailand? Can you tell us a bit why Thailand property or strata title can be FreeHold?
Boon: The overriding rationale of foreigners cannot own land is because they have a policy of protectionism. Foreigners cannot buy land, but in terms of condominiums, which is strata titled deeds, they used the concept like the company or partnership where you can own up to 49%. They used the same rationale.
They allow built up condominium to have foreigners to own not more than 49% of the total area, not units, but area. So, in this case, because of this arrangement, it has become legal for foreigners to own strata titled deeds FH up to 49%. You don’t have to worry whether if the purchase unit is part of that 49%, because during transfer of the strata title deeds, the land department office would have checked if your strata title deed or that particular project has already taken up or somebody has taken up all the 49% of the foreign title deeds, you will not be able to effect the transfer.
Paul: There’s a lot of talk about high speed rail (HSR) from Singapore to KL or some say maybe in Bangkok Yunnam, and maybe and so on, is the high speed rail something very distant very remote or is this something tangible for the Thai property market?
Boon: In terms of the property market, if this materializes…
Paul: Why do you say if?
Boon: It depends on when it materialises.
Boon: the current government has been pushing very hard for high speed rail, although there are some implementational issues they are pushing very, very hard for it, and if it materializes in the near future, they would definitely boost up the condominium property market especially those around these stations.
Paul: Okay great. So we have also heard about the Asian Economic Community (AEC) right, and Singapore is one of the driving forces of AEC? Will the easier movement of people and goods within the community, lead to positive impact or congestion or things like that in Thailand.
Boon: They are property market right. definitely, actually AEC if it is implemented in full pledge, it allows free flow of goods or rather at a lower tariffs, it also allows professionals to move around in the community.
So thailand is a country where we need a lot of foreign expertise and foreign professionals to come to work, whatever it is the medical field or engineering field or whatever field we have. If more expertise or professionals come to Thailand, they will either buy a condominium (which is not very expensive to them) or they need to rent. Which means that they will boost up the property market.
In terms of the rental market and also, of the sales market. We actually have seen pockets of cities in Thailand, not Bangkok yet, but those near to the Laotian border, where we have seen cases where property market has picked up, because Laotians have started buying, and even Thai has started investing in condominiums or houses around those border/cities in expectation of AEC.
Paul: I understand. We see a lot of times some people say Bangkok condominiums are a bit expensive of pricey, and of course, having said that there is also, at this point in time, there is various property research that said that there is a shortage of office space in Bangkok, will this lead to, any effect on your segments?
Boon: There are many news or reports on the shortage of office and it is real, because office rental has gone up a lot. We rent office, we do rent office from landlord, so we know, and it is quite difficult to find prime office space now in Thailand or in Bangkok.
So if you equate that to demand for office space to our residential real estate demand, if more international/ regional companies move to Bangkok, which leads to the shortage or the heightened the demand for office base, it means more accommodations needed. And of course, if more accommodations is needed, then the residential property market will definitely will go up.
Paul: Can you give us a few tips for the likely property investor for maybe for Thailand or for Bangkok? Give us a few tips on what we should look for.
Boon: Get somewhere near the mass transit stations. It doesn’t have to be the CBD area, because the CBD area is already more expensive, try to get something that’s fully furnished. First hand, even if it is resale, it must be something that hasn’t been used before. It doesn’t have to be on Sukomvit or Sathon, the prices have increased a lot. There are many new areas we called New CBDs, they are good potential for capital gains.
— Video crimped —
Thank you Mr. Boon Choon Kiat, Managing Director of Chewathai Public Limited for your taking the time out.
Interviewed by Paul HO, www.iCompareLoan.com
If you have questions for Mr. Boon Choon Kiat, you can SMS 9782 8606 “Chewathai” “Name” “Question” and we will collate and forward them to Mr. Boon.
