REITs to boost Thailand’s property sector

Published

9 years ago

August 7, 2012

A new investment stream is set to pour into Thailand’s property sector with the upcoming release of real estate investment trusts (REITs), bringing the country into line with many of its regional neighbours. Details are still unclear, however, on when exactly investors will be able to take advantage of the new tool.

Nevertheless, analysts are anticipating a development surge in the market when REITs launch. Nukarn Suwanikul, associate director for investment at Colliers International Thailand, said she believes the introduction of REITs will be a game changer for the real estate sector.

“REITs will help stimulate the property market by creating an environment for continuous investment, thus raising the bar for the market in Thailand and signalling its entry onto the international stage as a more mature investment destination,” Nukarn told local media in late July. “Due to improved transparency and liquidity, REITs should create more confidence among both local and foreign funds and investors.”

Suttipan Kreemaha, the executive vice-president for property funds at ING Funds Thailand, agreed, saying that REITs will change developers’ investment outlook, as they will shift from just building and selling on projects to developing income-generating assets for long-term holding. “REITs should be considered a favourable vehicle for property investment. They’ll benefit not only unit holders but also the market as a whole,” Suttipan said in June.

It is still unclear exactly when investors will be able to take advantage of REITs

since regulations for the trusts have been in the process of being drafted for five years so far. It was in 2007 that the Securities and Exchange Commission (SEC) began to lay the groundwork for the fund-raising schemes, at a time when many of Thailand’s neighbours were seeking to unlock the asset potential held within their own property markets.

Though REITs were set to be launched at the beginning of June, there are still some procedural measures that have to be undertaken before the trusts become available as financing tools. On July 11, the Stock Exchange of Thailand (SET) issued a statement saying that a number of initiatives would be rolled out in the third quarter to boost attractiveness of the Thai stock market and facilitate fundraising for business. Among these would be rules to “support the listing of infrastructure funds and real estate investment trusts”.

As set out by the existing rules, those establishing REITs will be able to use trusts as investment vehicles and list trust certificates on the SET, granting them the ability to leverage debt of up to 50% of net asset value of the property or properties bundled together for the trust. Once the trust is set up, it must be listed on the SET within 60 days, with a minimum capital of at least $16m.

Taxation of REITs earning is yet to be decided

While REITs may be able to unlock value, some investors could be reluctant to turn the key if the government imposed an exorbitant level of taxation on earnings, some analysts have warned. According to Sorachon Boonsong, a partner at international law firm Baker & McKenzie, REITs may have to be made more attractive before they attract large-scale investment.

“The new property investment product may not be sexy among investors, particularly for foreigners who have a huge amount of capital to invest in Asia, if factors such as taxes collected by the Revenue Department and the land lease period fail to meet the expectations,” Sorachon told local media on July 18.

If tax rates on REIT earnings were set at around 10%, similar to those in other countries, and if the terms for land leases was extended beyond the current 30 years to anywhere between 70 and 90 years, there would be a greater incentive for investors, he said.

“If the new REIT regulations can come onstream soon, while the government imposes taxes on profits gained from REITs at the same international standard, investment in Thailand’s REITs will be attractive enough to draw foreign institutional investors to Thailand,” said Sorachon.

While a number of developers and companies have indicated they would be interested in forming REITs to advance their own property portfolios, any such moves still await the drafting of the final details by the authorities, leaving willing investors waiting just a little bit longer.

Oxford Business Group

Note: This article was published on behalf of Oxford Business Group, the views and opinions expressed in this article are those of the authors and do not necessarily state or reflect the views of Thailand Business News

Asean

COVID-19 Vaccine Roll Outs in ASEAN Live Updates by Country

Thailand is currently expecting vaccines to be delivered in mid-2021. The doses would cover 13 million people in a population of about 69 million. Thailand’s National Vaccine Institute signed a non-refundable advance market commitment contract worth 2.38 billion baht (US$79 million) with AstraZeneca to reserve the supplies

Published

21 hours ago

May 10, 2021

ASEAN Briefing

ASEAN coronavirus Covid-19 live updates by country

Brunei

Brunei has joined the global Covax scheme and is expecting to have the COVID-19 vaccine in Q1 2021, having sourced enough supplies to cover 50% of the population. Discussions are on-going with other suppliers.

Brunei recorded one new case on May 8, bringing the total to 330 cases amid three deaths.
Brunei saw one new case on May 7, taking the total to 229 cases amid three deaths.
Brunei recorded one new case on May 4, taking the total to 228 amid three deaths.

Read more on Brunei

Cambodia

Cambodia is expected to import vaccines from both China and Russia. China’s vaccines are still undergoing clinical trials while Russia has already commenced production. Australia has offered financial support to aid vaccine coverage in several southeast Asia countries including Cambodia.

Cambodia recorded 538 new cases on May 8, bringing the total to 18,717 cases amid 114 deaths.
Cambodia recorded 558 new cases on May 7, taking the total to 18,179 cases and 114 deaths.
Cambodia reported 650 new cases and four deaths on May 6, bringing the tallies to 17,621 cases and 114 deaths.

Read more on Cambodia

Indonesia

Indonesia has commenced vaccinations with just over nine million doses being given to front line workers from last month. China’s Sinovac is in discussions with Indonesia to provide supplies, however, the Government faces difficulties with a large population of 268 million and price sensitivity at Sinovac’s estimated costs at 200,000 rupiah (US$20) a dose.

Indonesia’s Health Ministry’s Disease Control and Prevention Director-General Achmad Yurianto said that vaccinations would only be provided to citizens aged 18-59. The vaccine has also been required to pass halal certification prior to use and it is uncertain how the country can source enough vaccines to reach a sizeable part of its population. Australia has stated it will also provide financial support to solve these issues.

Indonesia recorded 6,130 new cases and 179 deaths on May 8, bringing the totals to 1,709,762 cases and 46,842 deaths.
Indonesia saw 6,327 new cases and 167 deaths on May 7, bringing the tallies to 1,703,632 cases and 46,663 deaths.
Indonesia reported 5,647 new cases and 147 deaths on May 6, bringing the totals to 1,697,305 cases and 46,496 deaths.

Read more on Indonesia

Laos

Laos has been trialing the Russian Sputnik V vaccine and is also in discussions with China about acquiring supplies.

Laos recorded 28 new cases on May 8, bringing the total to 1,233.
Laos saw 28 new cases on May 7, taking the total to 1,205.
Laos saw 105 new cases on May 6, taking the total to 1,177.

Read more on Laos

Malaysia

Malaysia is to provide vaccines free of charge to its nationals, but foreigners will need to pay for the treatment, according to the Malaysian Minister of Health, Tan Sri Muhyiddin Yassin, who has signed a deal with Pfizer for 12.8 million doses.

These will be administered in two stages of 6.4 million people each, with the program to commence in Q1 2021. The country aims to inoculate between 80-100% of its citizens.

Malaysia reported 4,519 new cases and 25 deaths on May 8, taking the tallies to 436,944 cases and 1,657 deaths.
Malaysia saw 4,498 new cases and 22 deaths on May 7, bringing the tallies to 432,425 cases and 1,632 deaths.
Malaysia recorded 3,551 new cases and 19 deaths on May 6, taking the totals to 427,927 cases and 1,610 deaths.

Read more on Malaysia

Myanmar

Myanmar is seeking assistance from the Gavi and Covax programs to acquire vaccines, while Australia is also providing financial relief. At present, the Government aims to treat 20 percent of the ‘most at risk’ in the country with vaccines. The Government is struggling with finances and logistics and is also under US sanctions, while cases are surging. The Government has banned the celebration of Christmas and other seasonal celebrations.

Myanmar recorded 31 new cases on May 8, taking the total to 142,934 amid 3,210 deaths.
Myanmar saw 29 new cases on May 7, taking the total to 142,903 amid 3,210 deaths.
Myanmar recorded 16 new cases and one death on May 5, bringing the total to 142,874 amid 3,210 deaths.

Read more on Myanmar

Philippines

The Philippines aims to commence vaccinations from June 2021 and expects to inoculate about 25 million people (about 25 percent of its population) over the course of the year. The country has been badly affected by the virus and has the second-highest rate in Southeast Asia.

The business community has reacted, more than 30 local companies signed an agreement to purchase at least 2.6 million vaccine doses from AstraZeneca in the country’s first such deal to secure coronavirus vaccines, ten days ago. They plan to donate a large part of the doses to the government for its planned vaccination program and use the rest to inoculate their employees.

The country saw 6,979 new cases and 170 deaths on May 8, taking the totals to 1,094,849 cases and 18,269 deaths.
The Philippines reported 7,733 new cases and 108 deaths on May 7, bringing the tallies to 1,087,885 cases and 18,099 deaths.
The Philippines saw 6,637 new cases and 191 deaths on May 6, bringing the totals to 1,080,172 cases and 17,991 deaths.

Read more on Philippines

Singapore

Singapore has been working on producing its own ‘Lunar’ vaccine, in a joint venture between the US company Arcturus together with the Duke-NUS medical school. It is a single dose, mRNA shot, developed from genetically engineering COVID-19 genes into an otherwise harmless virus. This technique is marginally safer than other vaccines which rely on dead Covid-19 material to provoke an immune response. The vaccine is expected to be available from Q1 2021. High-risk personnel will receive the vaccine first in a process to be determined by the government.

Singapore recorded 20 new cases on May 8, taking the total to 61,331 cases amid 31 deaths.
Singapore saw 25 new cases on May 7, taking the total to 61,311 cases amid 31 deaths.
Singapore saw 18 new cases on May 6, bringing the total to 61,286 cases amid 31 deaths.

Read more on Singapore

Thailand

Thailand is currently expecting vaccines to be delivered in mid-2021. The doses would cover 13 million people in a population of about 69 million.

Thailand’s National Vaccine Institute signed a non-refundable advance market commitment contract worth 2.38 billion baht (US$79 million) with AstraZeneca to reserve the supplies. Discussions are also on-going with Oxford University in the UK to secure a vaccine that could be available in Q1 if trials are completed in time.

Thailand reported 2,419 new cases and 19 deaths on May 8, taking the tallies to 81,274 cases and 382 deaths.
Thailand recorded 2,044 new cases and 27 deaths on May 7, taking the totals to 78,855 cases and 363 deaths.
Thailand reported 1,911 new cases and 18 deaths on May 6, taking the tallies to 76,811 cases and 336 deaths.

Read more on Thailand

Vietnam

Vietnam’s National Institute of Hygiene and Epidemiology (NIHE), a division of Vietnam’s Ministry of Health, has signed an agreement with Medigen Vaccine, a Taipei, Taiwan-based vaccine company to secure the supply of 3 million to 10 million COVID-19 vaccine doses in 2021. Medigen is currently conducting Phase II studies of the vaccine, co-developed with the USA’s National Institutes of Health (NIH), in Taiwan and Vietnam with a view to a Q1 2021 rollout.

Vietnam is also working on producing its own vaccine, with the Institute of Vaccines and Medical Biologicals (IVAC) in Nha Trang City, partnering with New York City-based Icahn School of Medicine and the global health non-profit organization PATH. Phase 1 trials are already underway in Vietnam, while Phases 2 & 3 will be conducted at the beginning of 2021. The institute plans to submit documents for approval to the health ministry as early as April next year and claims to be capable of producing 30 million doses a year, expecting that a national vaccine could be distributed to the general population in October 2021.

Vietnam saw 15 new cases on May 8, taking the total to 3,152 cases amid 35 deaths.
As of May 7, 2021, Vietnam’s Ministry of Health confirmed a total of 3,091 cases of COVID-19. However, 2,560 of the affected patients have recovered and been discharged from hospitals. Vietnam has also recorded 35 deaths due to the pandemic. The latest community transmission cases have been reported from Hanoi, Vinh Phuc, Thai Binh, Bac Ninh, and Da Nang among others. 16 local cases are linked to the National Hospital of Tropical Diseases in Hanoi’s Dong Anh district.
As of May 6, 2021, Vietnam’s Ministry of Health confirmed a total of 3,030 cases of COVID-19. However, 2,560 of the affected patients have recovered and been discharged from hospitals. Vietnam has also recorded 35 deaths due to the pandemic. The latest community transmission cases have been reported from Hanoi’s outskirts district of Dong Anh.

Economics

Thailand’s Consumer Confidence Drops to Record Low in April

The University of the Thai Chamber of Commerce (UTTC) estimated an economic loss of 400-600 billion baht if the outbreak continues beyond this month

Published

2 days ago

May 9, 2021

National News Bureau of Thailand and Headline Editor

BANGKOK (NNT) – The University of the Thai Chamber of Commerce (UTTC) said consumer confidence hit a record low in April, dropping to 46.0 from 48.5 in March, dented by a new wave of COVID-19 infections.

(more…)

Investment

Thailand Q1 Investment Applications Soar 80% as FDI More Than Double says BOI

The top three source countries of FDI applications during the first quarter were South Korea, China, and Singapore, with similar levels of investment. Korean investment soared due to a large-scale joint venture in the medical sector, Ms Duangjai said.

Published

4 days ago

May 7, 2021

Pr News and BOI

The Thailand Board of Investment (BOI) said today that in the first quarter of 2021, investment applications rose 80% from the year earlier period to a total value of 123.4 billion baht (USD3.9 billion), led by projects in the medical and electric and electronics (E&E) sectors, as foreign direct investment (FDI) applications more than doubled.

(more…)