Thai Industrialists Shift Focus to Real Estate
Car parts manufacturing giants Thai Rung Union have set aside more than €25bn for the development of new property projects in Bangkok and other tourist destinations over the next five years.
Sinthoranee Property, Thai Rung's real estate arm was established seven years ago to identify key growth areas in the country's residential housing market as part of the listed company's diversification strategy.
Thai Rung, which has operated an auto-parts manufacturing and car-assembly business for nearly 50 years, expects to triple the contribution from property from 10% to around 30% by 2020.
The firm, which posted a whopping €15bn in revenue last year, expects flat growth this year due to the slowdown of the domestic auto market, following the expiry of the previous government's first-car scheme offering financial assistance for first vehicle purchases.
Sinthoranee's managing director Wuttichai Phaoenchoke said Thai Rung's portfolio was divided into three key areas: auto-parts manufacturing and auto assembly, contributing 70% of revenue; authorised dealerships for Mitsubishi, Isuzu, Ford, Mazda and Lexus, 20% and property, which makes up the remainder.
"I'm allocating 70% of my time to the development of property projects", said Wuttichai, second generation of the Phaoenchoke family who founded Thai Rung in 1967.
Sinthoranee's current development projects include The Trendy office building in central Bangkok; the Sawaddi Patong a four-star, 150-room hotel in Phuket and The Sea Samui a 30-room boutique villa hotel on Koh Samui.
"We currently have a land bank of more than 80 hectares in four or five major locations, both in Bangkok and other tourism destinations such as Samui, Phuket and Pattaya. Such plots can be utilised for potential development projects in the future, especially mixed-used buildings which combine a community mall and housing units or a condominium and hotel, for instance," he said.
In the meantime, Sinthoranee will conduct a grand opening of its first community mall - Victoria Gardens, Bangkok.
Occupying a gross retail space of around 14,000m², the mall will comprise 200 shops including major chains Foodland Supermarket, McDonalds, Starbucks and MK Suki. Wuttichai said the goal of the development is to attract an average 5,000 vehicles and 10,000 shoppers a day.
Industrialist investors such as Thai Rung are among a growing number of large-scale investors diversifying from their core businesses into real estate. Property experts see this as a signal of growth potential in the locations seeing heavy investment, heralding a sharp improvement for Thailand's residential property markets.
