What types of projects does Jones Lang LaSalle Thailand pursue most actively?
MECHUCHEP: Going forward, all of our initiatives, and our focus, are based on providing our clients better service. We see a lot of potential for investors, especially in our core business, which is commercial real estate development. We advise clients from the consultancy stage until delivery of a project. There are a lot of new retail developers that are trying to break into the market and it is a very competitive market. We help these developers that are new to the market. We help them from the due diligence stage of market research, to securing the right site, and also help them to come up with the concept. We work alongside the architects to come up with the right design. We also do the market test to identify the right target group and the right retailers. If the retailers are happy and eager to lease the space, that indicates to us that the chances that the development will be a success are high. We then help with the marketing for leasing throughout the completion of the development. We also continue with marketing and promotion in order to help the sustainability of the development. We are a one stop shop for all real estate needs, whilst at all times being mindful of any conflict of interest that may arise.
The potential of the ASEAN Economic Community (AEC) is strong, and Thailand could be considered the most strategic location, it could be the gateway between the East and the West, or the North and the South. This could be an opportunity for us to cover beyond the borders of Thailand. When the AEC takes place, the barriers will be diminished and this will create a lot of opportunity for all services. This will bring many new initiatives in the frontier markets like Myanmar, Laos, and Cambodia. So we will provide the consultancy services to those markets and we believe that once the AEC comes together and there are less barriers, there will be a great deal of opportunity in the real estate sector.
Where do you see demand for real estate services and investment coming from?
MECHUCHEP: Even though in the past Thailand has been suffering from a lot of turmoil, we still have continuing growth. Although this may not be the best time for many potential foreign investors due to the economic situations of their own countries, there is still a great deal of opportunity for them here, so we have a lot of interest and see a lot of business coming from foreign investors who want to be involved in Thailand. We also see a great deal of potential from the local Thai investors.
What is the appetite for project finance in Thailand today?
MECHUCHEP: I still believe banks have a high appetite to finance developers. Even private investors have a strong appetite for buying condominiums or even commercial developments. Consumer confidence may have dropped a little bit due to the amount of private debt in the market, but I believe this will not have an impact on the overall market provided that the companies listed on the Stock Exchange of Thailand (SET) remain in a strong financial position. It is not only banks that provide loans, other reputable companies have experience in development and have been successful in this market and can find financing, either by their own debenture or by securing financing from the banking sector. I still believe there is a lot of cash in the domestic market that is willing to invest either through private investments or through debentures. Even though foreign investors have a strong appetite and will provide loans, the opportunity to provide that financing is still less than that of the domestic financiers. All foreign investors will be tempered by ownership restrictions.
What role do you see property funds and ETFs playing in the market going forward?
MECHUCHEP: Property funds have been very attractive and have been a strong vehicle for developers to secure cash flow and reinvest in the development or further projects. So it is a good vehicle where the developer still has the rights of even 1/3 of the ownership, so they still have a high level of control over the management of the development. I think the challenge for the property funds is that there will be a tightening in the supply in the market that will be available to turn into the property fund vehicle.
How would you describe demand for ‘A’ grade office space in Bangkok?
There is still much appetite for grade ‘A’ office supply in the central business district of Bangkok. However, there is limited supply in the market. From the research that Jones Lang LaSalle conducted, from the first half of this year compared to the first half of last year, the demand in the first half of this year alone is more than the demand for the whole of 2012. So we see the demand as very resilient.
MECHUCHEP: There is still much appetite for grade ‘A’ office supply in the central business district of Bangkok. However, there is limited supply in the market. From the research that Jones Lang LaSalle conducted, from the first half of this year compared to the first half of last year, the demand in the first half of this year alone is more than the demand for the whole of 2012. So we see the demand as very resilient. The challenge for the development of office buildings in Bangkok is securing the land with the implementation of the new town plan. The new town plan will create more constraints for the developers which will mean the costs will be higher for the developments.
How are you positioning Jones Lang LaSalle Thailand to take advantage of opportunities in Myanmar?
MECHUCHEP: Myanmar seems to be quite a promising market, however it is time for the developers or even businessmen or business practices to evolve. The evolution of the banking and financial institutions would need to take place to make the market more liberal. Liberalization of banking and financial services are the key to bringing in overseas funding into the country. I would say that it might take some time and everyone has a role to play to help the Myanmar market develop at the level that would make it ready for real estate development. In the context of Jones Lang LaSalle, it would have to be a big enough size development, even though we have been involved in providing consultancy services to the landlords and the potential overseas investors that are interested in the market. I still think that the Myanmar market is a lucrative opportunity for overseas investors including Thai investors. The population is similar to Thailand and the riches of their natural resources open opportunity for investment, either real estate investment or non-real estate investment.
What is your future outlook for Thailand’s real estate and development market?
MECHUCHEP: Our GDP growth this year may be slightly disappointing, but with political stability and the resilience we have seen, I still see a positive outlook for Thailand. In the context of Jones Land LaSalle Thailand as the real estate service provider or the real estate adviser, I do see the potential for growth. Also, I see opportunity beyond Thailand in Indochina after the AEC has taken place in 2015. However, the challenge will be how to retain talent in this business because there is a very limited amount of real estate professionals in the country. When the market is more liberalized or more open, the migration of these professionals would be limited in terms of the number of experienced professionals in the field. People would need to be trained up, but the time for training up will have a hard time keeping pace with the growth in the market. This will be a big challenge for us and also for every company that is working in the real estate services field.
Where do you see the best opportunity for foreign investors in Thailand’s real estate market?
MECHUCHEP: If you are thinking about investing in real estate in Thailand or in Indochina, you need to make sure that you talk with Jones Lang LaSalle, who can assist with your planning and the implementation of development plans to ensure a successful investment. I would think the key for investment in ASEAN countries is to find the right adviser. Our door is open for investors as we provide the solutions to investment issues. We want to make sure that investors achieve success throughout Asia Pacific.