What new initiatives is AP Development currently involved in?

ASSAVABHOKHIN: The property market in Thailand is quite intense right now. We have all kinds of property offerings in the market right now. We are one of the countries in this region that has a very wide variety of product offerings. In the past, there have been single detached houses, town houses, condos, etc. What we are trying to do at AP is introduce new things into the market. For example, 3 or 4 years ago if you talked about a single detached house, you would imagine it is outside the city. When you talk about town houses, they would be in the middle ring, you could drive, but you could not use the mass transit. In condos, you would be able to use mass transit. What we are trying to do right now is the new concept of a single detached house in the city center. So we are going for the high-end with this. Another thing we are looking at is a new condo. When you come to Thailand now what you will find is condos that are quite small in size. So we introduced a condo that has quite big rooms, over 100sq meters per room and in the center of Bangkok close to Emporium. This is the new thing we are involved in right now, introducing new things to the market.

What is your outlook for Bangkok’s office market?

ASSAVABHOKHIN: We have a very low return on office space. I do not know exactly why this is, but for example, the office you are in right now has a rental rate of about $10 per meter per month, which is normally not feasible. If you look around Bangkok, you will almost always see office developments as part of a mixed use development in order to make it feasible. The yield on the office side has not been good for a long time, since the crisis in 1997. At the same time, if you look at the rental rate of serviced apartments, it is practically higher than office space. Also, with all of the construction requirements, requirements from the government, doing a residential for rent is always giving better yields than office space. At the same time, the selling price of condos has gone up like crazy. In the city center, it has doubled in 6 years. So economically, it is more feasible for us to buy a higher priced piece of land to do condos because the end price makes it feasible to do it.

Do you see a bubble forming in Bangkok’s property market?

ASSAVABHOKHIN: Take a look at the mass transit that we have today. The first phase of the mass transit that we developed is only serving the inner circle. We have only 70km of mass transit which is quite small when compared to the size of the city. All of the developments for the past 10 or 20 years have been congested in this ring. So the land price, the price of serviced apartments, and the price of condos in this ring have gone up like crazy. Take a look 2 or 3 years from now, we are going to have double the mass transit. The pink line is going to be complete in 2 years. The blue line is going to be complete in 2 or 3 years. We are going to have double the stations in 2 or 3 years. You are going to have a choice to go out a little bit further, just like if you stay in Hong Kong or you stay in New York.

Normally people who work in New York live in New Jersey and the price in New Jersey is much less than New York. It is the same thing, if you want to stay in the city center, it is going to be expensive. Right now all of the foreigners are looking at the city center only. The development in the city center is also going to continue. There are going to be 3 more big department stores on a very short route between Ploenchit and Thonglor. You can imagine this area compared to Hong Kong will be like Tsim sha Tsui, and if you go to Tsim sha Tsui and rent something there it is going to cost you a fortune. But if you go a little bit further out it will be a cheaper apartment and the same thing will happen in Bangkok. In 3 years from now you are going to be able to find an apartment a little bit further away, that is still in a developed area, and the rental rate will not be that high. When you say that Bangkok is as expensive as other big cities, it is only in the city center, and that area is so small. Right now foreigners do not want to leave the city center, that’s all.

How have the new BMA zoning regulations impacted business for you?

ASSAVABHOKHIN: For me it’s just a part of my life. I have been in this business for over 20 years now and they change every 5 years. I think the zoning in Thailand is not as restricted as what we see in the States or in Europe. I remember one architect that came to me years ago to do some work in Thailand. They were very proud that they had done work in England in the past and they were very proud that it only took them 2 years to get approval. Here in Thailand, it only takes about 6 months to get approval.

The new BMA code only changes a little bit for us. Normally, we know about their plans years in advance, they are very open. For example, the new BMA code allows for high-rise buildings around the mass transit stations even though they are in the zone that high-rises are not permitted in. But within the radius of the stations, you can build high-rises, so this is giving us more opportunities. In some zones, you cannot build high-rises anymore. This is all normal, and normally before they announce anything, we know in advance as there will be public hearings and other ways to know the issues. So this is just a part of life.

One thing that is different, and something that many people do not understand, is that land acquisition in Thailand is not a big problem. As a real estate developer in Thailand, we do not have a land bank. When you stay in Hong Kong and Singapore, you have to bid with the government in order to acquire land. In many cities around the world, acquiring land is very difficult and is a long process. In Thailand, we buy land every quarter. Sometimes we buy land every month. I think the land system in Thailand is one of the most advanced in the world. The title deeds are quite strict and there are millions of landlords. In my 20 years of doing business, I have never bought land from the same owner. So acquiring land is not that difficult and we do not stock a land bank. So anytime the BMA code changes, we can adjust. This way, anytime the BMA code changes, we are not hurt as we already have approval for projects in development.