Developers look to Southeast Asia

PUBLISHED : Wednesday, 30 January, 2008, 12:00am
UPDATED : Wednesday, 30 January, 2008, 12:00am

Beijing moves to cool soaring property prices encourage HK investors to diversify risk

With the outlook for the mainland property market clouded by policy measures aimed at putting the brakes on excessive price rises, Hong Kong developers have begun exploring alternative investment opportunities in Southeast Asian markets.

'Asia provides an investment alternative for Hong Kong developers, considering the city's scarce land supply,' said Vivian Sze, an assistant general manager of HKR International, the developer of Discovery Bay.

HKR is developing a 63,000 square metre site on Nanjing Road in Shanghai's Jingan district in conjunction with Swire Properties.

However, Ms Sze said Beijing's austerity measures to curb rising property prices were likely to increase investor uncertainties about the mainland market.

'Developers have to diversify their risk. As a listed company, we have to make money and be responsible to shareholders,' she said.

Citing Singapore's well-established legal framework and lower land costs in Thailand, Ms Sze said both markets were becoming popular alternatives among Hong Kong developers.

Land value in Thailand accounted for only about 20 per cent of the total investment cost with construction costs accounting for the remainder, she said.

HKR itself is in talks with a fellow Hong Kong developer about jointly developing a villa project on a 1,000-hectare site in Phuket.

Last week, the company sold the largest penthouse at its uncompleted HK$1 billion luxury residential development in Bangkok, Sukhothai Residences, for a record 408.74 million baht (HK$102.76 million) or 343,798 baht per square metre.

Meanwhile, Pacific Century Premium Developments, a unit of PCCW, said it had acquired a 17.3 million square foot site on Thai Muang Beach in Phuket and would turn it into a mixed-used luxury development.

The development will include hotels, villas, an international-standard golf course and recreational and retail facilities.

Executive director Wendy Gan Kim-see said the company acquired the existing golf course and nearby sites. She refused to reveal the acquisition price, but property watchers believe it was about two billion baht.

Ms Gan said the investment was prompted by Pacific Century's view that there was a growing demand for luxury accommodation in the area, rather than by concerns over the mainland's austerity measures.

The company had been looking for projects suitable for the development of resorts and investing in the wider Asia-Pacific marketplace was an ongoing strategy, she said.

The site it has acquired is within 35 minutes of travelling time from the Phuket International Airport, and has a white sand beach frontage of 2.5 kilometres along the Thai Muang Beach.

Beachfront land prices in the three key resort destinations - Phuket, Samui and Phangnga - were expected to rise at least 15 to 20 per cent this year, mainly due to increasing demand from well-heeled tourists, said a CB Richard Ellis report.

Entrepreneur Allan Zeman, who has houses and property developments in Thailand, said it was time developers and investors looked at other Asian cities such as Phuket and Bali and in Vietnam as the mainland property market was slowing. Mr Zeman's Phuket development, Chava, at Surin beach, has 43 units and 5,000 sq metres of tropical garden.

Meanwhile, scaffolding services provider WLS Holdings said it would make its first property investment in Angola on the west coast of Africa, instead of China, citing lower investment costs.