Developers Diversify in the Downturn

Engel Volkers

Universal shop design for its boutiquestyle high-end estate agencies is a key element in the global branding of Engel & Volkers

Difficult economic conditions tend to lead to imaginative ways of making money. An interesting example is the attempt by the property agency Engel & Volkers Thailand to get developers to diversify and become its licensed property agents.

Garry Irvin, the international estate agent franchise network’s licence distribution manager in Thailand, says he has held discussions with developers who seem to be attracted to the plan because it gives them an international reach for their products. After clients reject property they have developed it at least gives them a chance to sell them something else and at least lock in a sales commission.

Headquartered in Hamburg, Germany, Engel & Volkers finds that more people are interested in becoming property agents in a recession than when the going is good. The company has sold more licences in the first quarter of this year than ever before.

The licence fee is 34,500 (1.65 million baht). With this comes two weeks of training in Hamburg plus 30 years of experience distilled in nine very thick manuals and support from the master licence partner in setting up shop.

With a clear-cut specialisation in buying and selling high-end residential properties in top locations, Engel & Volkers has branches in key cities in 28 countries. Locations include Berlin, Munich, Dublin, London, Budapest, Barcelona, Cape Town, Florida and Dubai.

Mr Irvin is not much worried about the ongoing global economic storm, pointing out that the property business is cyclical and it is best to jump in at the bottom of the market when many companies are folding. He noted, however, that only the strongest will re-emerge to take off when the situation improves.

The Engel & Volkers’ master licence for Thailand is currently held by Double 8 Realty Company, which acquired it from the Phuket-based professional Martin Philips. Mr Philips continues to be the master licencer for the rest of the region outside Thailand.

Licence distribution manager Garry Irvin

Licence distribution manager Garry Irvin

Aside from Double 8’s initial shop in Hua Hin, it has also opened an office at the Laguna Phuket resort complex and is working on setting up another one in the Thong Lor area of Bangkok. Mr Irvin is also negotiating with clients to start two more offices in the Asok and Ratchadamri areas in the next three to four months.

Talks are also being held with one party to open shops in Pattaya and Jomtien, with longer term target to spread to Samui and Chiang Mai as well, for a total of around 15 shops in the country.

Although people are still jittery about the economy, Mr Irvin pointed out that property transactions have not halted completely. The low end of the market – which this international chain does not operate in – remains strong because people still need somewhere to live. Transactions are also continuing in the middle segment, while the most luxurious properties continue to attract buyers who are somewhat immune to the ebbs and flows of the market.

Mr Irvin’s plan for Bangkok is to try to obtain rental contracts from big German and European companies while also actively looking for land plots of around one to two rai for a number of hotels chains that are interested in opening here. These are mostly four-star and boutique establishments and not luxury ones.

He also sees potential in Chiang Mai because the northern city has a lot of Japanese and Koreans living and working there especially at the huge industries on the eastern side. There are also a large number of German, Swiss and Scandinavian retirees who appreciate the slower pace of life and have made it their home.

However, said Mr Irvin, Chiang Mai’s big challenge is that its many housing compounds are spread out over quite a wide geographical area. That means it would be necessary to develop niches to fit a definite demand. Golf course properties look the most promising because some expatriates are eyeing them.

While Thailand is turning into a popular place to retire, Mr Irvin would like the Thai government to follow the example of Malaysia, which has set up a specific programme intended to ease the expatriate retirement process. Called “Malaysia My Second Home”, this is a one-stop shop that helps retirees with their visas and retirement planning and includes assitance in buying properties.

“It’s above all a sign that the Malaysian government welcomes foreigners to come and retire there.”

While admitting that Scandinavians and Britons who had previously bought a lot of properties in Hua Hin had stopped doing so over the winter, Mr Irvin is confident that they will be back. Aside from these two groups, Hua Hin had also attracted Swiss and German buyers. Pattaya also attracts these four groups, plus Russians, Koreans and Japanese among others. The mix of nationalities at certain Pattaya projects can sometimes be remarkable, with one of them, Siam Royal View Pattaya, attracting people from 30 different countries.

What Mr Irvin likes about Thailand is that is no matter what happens, be it a natural or man-made disaster, this country is resilient and bounces back time and time again. It is also aided by the fact that its biggest regional competitor, Bali, is badly handicapped because people still remember the bombing there even though it took place years ago.

Mr Irvin said Thais toying with the idea of buying property in Europe would really need deep pockets because of the substantially higher prices there. An 80-square-metre condominium in Hamburg can cost as much as 30 million baht.

About the author

Nina Suebsukcharoen Nina Suebsukcharoen
Nina Suebsukcharoen is a senior journalist with The Bangkok Post, Thailand's first English language newspaper and specialises in the property and real estate sector.
Other posts by Nina Suebsukcharoen ( 33 )

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