Japanese agent taps rentals

Villa Sikhara

Strong Japanese demand for rental condominiums has prompted the Japanese property agent Siam Kotobuki Co Ltd to move into property development, with the launch of a 600-million-baht building in Soi Thong Lor 25, said managing director Seita Hagiwara.

Over its 15 years in the housing agency business, the company has observed steady growth in demand for rental condominiums among Japanese clients. Each year it manages a total of around 2,000 condominium and apartment units for rent at average monthly rates between 45,000 and 75,000 baht.

“We’re not worried about an economic slowdown in Japan, which might cause downsizing in some organisations overseas,” Mr Hagiwara said. “Japanese firms will continue hiring Japanese executives as they need to maintain production quality but temporary staff will be laid off if there is downsizing.”

Thailand is one of the top three destinations for Japanese investment, along with China and Vietnam. With about 40% of the overseas investment in Thailand, Japanese investors will ride out current challenges and be ready to resume expansion when the economy recovers. Currently, there are a total of 1,292 Japanese firms in Thailand with total investment of around 164 billion baht, he said.

There are 42,736 Japanese nationals living in Thailand. About 30,000 live in Bangkok and have monthly accommodation spending of around 50,000 baht per head. Eighty percent live on Sukhumvit Road between Asok and Ekamai.

The most popular locations were Sukhumvit Soi 39, 49 and 55 or Thong Lor due to more convenient transport, a lot of Japanese restaurants and a Japanese international school, the largest in Asia outside Japan, located nearby.

“We are a Japanese developer for Japanese buyers and residents. We know what they like and don’t like,” said Mr Hagiwara.

The problem with many apartments and condominiums in these locations is that they are too small for Japanese families, who want larger units.

Seeing an opportunity, the company formed a joint venture with the Palakawong Na Ayudhya family to set up Sikhara Kotobuki Co with registered capital of 100 million baht, and is investing 400 million baht to develop the Villa Sikhara condominium.

Backed by LH Bank with 200 million baht, the project will be located on a 1.5-rai site, comprising 64 units sized from 89 to 112 square metres and priced at 98,000 to 104,000 baht per sq m or with unit prices of between 9.15 million and 13.5 million baht.

The company will offer a guaranteed annual return of 6% on investment for five years for the first 10 units booked. Currently, it has 25 units left for sale. It is now awaiting environmental approval and a construction permit. Construction is scheduled to be completed in August 2009.

“Amid unfavourable sentiment in stock market, property investment would be an alternative as stock investments might leave only paper while property investment would leave a tangible unit,” he said.

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