Property investment yields in Thailand were flat in second quarter of 2010, report shows

News - Banking

Written by Ray Clancy

Monday, 27 September 2010 11:41

Yields for income producing property investments in Thailand have remained flat for the second quarter of 2010, with no notable changes from the previous quarter, a new report shows.

The benchmark interest rate remained the same during the second quarter of 2010 at 1.25% per annum, increasing by 25 bps in July 14th 2010 and this level of interest rate has not affected property yields, according to the Thailand Investment Market View second quarter 2010 report from CB Richard Ellis.

‘Yields will remain unchanged until we see significant increase in bank deposit rates or government bond yields,’ it points out.

In relation to property funds, the average dividend yield of property funds during the second quarter of the year was 7.4%. The Thai Commercial Investment Fund (TCIF) was the only new property fund listed on the Stock Exchange of Thailand.

There are plans to launch five new property funds in the third quarter of 2010, with a total market capitalization of around 6.4 billion Baht, the report says. Most property funds traded on the Stock Exchange of Thailand are trading below their NAV (except CPNRF, TCIF, TLOGIS and FUTUREPF).

Developers have continued to acquire sites for condominium developments. Noble Development has reportedly acquired the remaining 6.3 rai of Raimon Land’s Ploenchit site for a price of around 1.2 million Baht per square wah. This is a record price for this size of transaction.

With regard to major property transactions, the most notable investment transaction was the sale of Dusit Laguna Phuket by Laguna Resorts & Hotels to Dusit Thani in August 2010, the report adds.

There were two office building transactions, Fenix Tower and Pacific Place I & II were sold. Fenix Tower was sold by ING to Rangsit University. The Pacific Place towers I & II were reportedly sold by the administrator of Lehman Brothers’s assets to Thai Property.

Future Park Bangkhae was the largest retail space transaction in Thailand in the quarter. It was sold by Thai Asset Management Corporation (TAMC) to Seacon Development.