Bangkok--13 Feb--CB Richard Ellis (Thailand)
Property funds also known as Real Estate Investment Trusts (REITs) are growing in popularity across Asia including Thailand, according to international property consultants CB Richard Ellis.
There are now thirteen publicly listed property funds in Thailand with a market capitalization of Baht 41.1 billion.
“Public listed property funds are popular because they are tax efficient and provide liquidity for assets that historically have been illiquid,” according to Mr. Annop Sangprasit, Executive Director — Head of Valuation & Advisory Services at CB Richard Ellis Thailand.
Developers like listed property funds because they can maintain an equity stake whilst realizing some capital from projects. In addition, they can continue to manage the properties.
Investors like property funds because it is much easier to trade units in a fund than it is to trade whole properties and they can gain access to a direct property investment without huge sums of capital.
Property funds in Thailand are subject to restrictions in that they are not allowed to borrow money, additional capital must be raised through a right’s issue. This makes the acquisition of property more difficult.
It is not possible for an existing fund to quickly purchase a property when it comes onto the market because they cannot raise capital quickly.
In Thailand, one of the best models is a fund in which a developer has significant asset stake and management. This fund can purchase additional assets from the developer when they are completed. These types of fund structures are the ones that are most likely to grow. Examples are TICON Property Fund and CPN Retail Growth Property Fund.
Funds offer investors a steady income stream depending on the rental levels and expenses of managing the properties. They also offer investors capital growth if the capital values of the properties increase.
The role of the valuer is critical to property funds because each year property funds must get an independent valuation of their property assets.
CB Richard Ellis is one of the world’s largest property valuation companies providing valuations to listed and non-listed Property Funds and REITs across the world.
“Valuation of property assets is very complex because each asset is different and there is limited trading of properties and access to transaction data,” added Mr. Annop who has managed the CB Richard Ellis Thailand valuation team for 15 years. “The task becomes more complex when the property is leasehold rather than freehold and therefore has a different capitalization rate.”
Currently, many funds contain only a single asset and the potential market for larger multi-asset funds has been restricted by capital control requirements on foreign investors wishing to buy shares in public listed property funds.
If investors wish to diversify risk, they should select larger funds with multiple properties, in this way risk is spread.
CB Richard Ellis believes that investors in property funds will become more sophisticated looking more carefully at the property assets the potential for rental and capital appreciation.
About CB Richard Ellis
CB Richard Ellis (NYSE:CBG), a FORTUNE 1000 company headquartered in Los Angeles, is the world's leading commercial real estate services firm (in terms of 2004 revenue). The company serves real estate owners, investors and occupiers by offering strategic advice and execution for property leasing and sales; property, facilities and project management; corporate services; debt and equity financing; investment management; valuation and appraisal; research and investment strategy; and consulting. Including partners and affiliates, the company has over 300 offices in more than 50 countries around the world.
CB Richard Ellis established an office in Bangkok in 1988 and in Phuket in 2004. CB Richard Ellis (Thailand) Co., Ltd. has grown to be a leading real estate services provider, offering a full range of services including sales and leasing for all types of property, property and facilities management, valuation and advisory, and research and consulting. For more information, visit the company's website at www.cbre.co.th .
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For further information:
Mr. Annop SangprasitExecutive Director — Head of Valuation & Advisory Services02 654 1111 Ext. 601
Ms. Ngamjai Jearrajarat Corporate Communications Manager02 654 1111 Ext. 522
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