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Hot News: KBank Private 'indicates' Investment-Utilization of land
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KBank Private 'indicates'
Investment-Utilization of land

KBank Private Banking 'recommends' opportunities to generate income from land held with Land Loan for Investment products that convert land into loans for investment

Mrs. Korakot Atsakulchai, Executive Director, Head of Non Capital Market Solution, Private Banking Group, Kasikornbank, revealed that the overall picture of the Thai real estate market this year is as challenging as the overall economy and other businesses. There are 5 factors that are both opportunities and challenges to watch, including: 1. Saturation of supply. From the survey, it was found that the proportion of land used for residential development accounts for 90% of all land development. However, there is saturation of the residential market. Residential project developers have 240,000 units of housing for sale, while each year there are only 80,000 buyers who want to buy. In addition, there is a greater amount of land ready for development entering the market from the development of transportation networks, whether roads or electric trains. At the same time, there is still a large amount of land that owners want to release into the market due to the impact of the land tax burden.

2. Decreasing domestic demand, such as declining domestic purchasing power due to high household debt and high real estate prices compared to income. And high interest rates. In addition, the demand for land by project developers and investors for speculation has decreased due to market conditions and land storage costs and tax burdens. 3. Foreign demand from tourism that has recovered well, the demand for long-term residence from conflicts abroad or the relocation of production bases to Thailand, which has allowed related businesses to grow well, which is an opportunity that has been seen more in the past year.

4. Market dominance by major players because many groups of real estate businesses have

High barriers to entry into the market because they require capital, information, and expertise, resulting in few players in the market and difficulty for new players to enter, giving major players high bargaining power, especially in land trading during low demand and high supply. 5. The potential of rural land in some areas with government development policies has led to speculation. The demand for agricultural land and the awareness of carbon credits have led to increased land use for reforestation. However, speculative investment in land is still very high risk because the clarity of various projects is still in its initial stages.

Mr. Anawin Chiamprasert, Head of Research and Consulting Services, Jones Lang LaSalle (Thailand) Co., Ltd. (JLL), said about the opportunities for Thai real estate that even though the overall economy is still slowing down However, the consumer confidence index and spending demand have recovered from last year. The tourism sector, which is expected to see more than 40 million foreign tourists in 2024, will benefit the real estate sector, including hotels and shopping malls located in the center of tourism and commerce. In addition, JLL sees that the warehouse, factory and industrial land market will continue to grow as a result of the expansion of the e-commerce market after the outbreak of COVID-19, including the relocation of production bases from China to Southeast Asia, where Thailand is considered a key destination for investors and has the ability to compete in attracting investment from high-value industries, especially in the Eastern Economic Corridor (EEC) development project. Meanwhile, the housing market in Bangkok and its vicinity still faces challenges from high interest rates, which directly affects projects priced below 5 million baht due to liquidity problems and reduced purchasing power. As a result, the trend of condominium and apartment rental rates in the city center has continuously increased. In the past, new projects that are about to enter the market are all large mixed-use projects that combine various types of space usage, such as shopping malls, office buildings, hotels and residences. This is to meet the needs of buyers and tenants who currently prefer convenience in living, working and doing various activities. In the project area, including efforts to create project selling points, whether it is a pet-friendly project concept, health and wellness activities (Health & Wellness), and most importantly, environmentally friendly projects (Green & Environmental-friendly), which will help attract customer groups to the project sustainably. In addition, there are new opportunities for alternative real estate, such as the data center market for storing hardware and software for cloud services, healthcare centers, research and development centers for various drugs and vaccines, warehouses for rent for storing goods or personal items, cold storage for storing food, drugs or other products, including international schools, etc. Landowners and investors who want to develop various projects need to truly understand the real estate business in order to be able to create a business plan that meets the rapidly changing needs in both the short and long term.

Mrs. Korakot said that from KBank Private Banking's experience in providing comprehensive real estate consulting services for more than 8 years, the bank understands the needs of landowners. Initially, the bank recommends that landowners organize a land portfolio to know the potential of the land to determine strategies for each plot of land in each location that has different development potential according to business needs and whether or not the land can be utilized to reduce

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