Thai sibling rivalry generates deals

Brother Bee's AC Milan strike has grabbed the headlines but Ben Taechaubol's Bangkok waterfront property scheme may yet have greater success.
Artist's impression of the completed project on the Chao Phraya River in Bangkok
Artist's impression of the completed project on the Chao Phraya River in Bangkok

A Thai businessman’s rumoured bid for Serie A football club AC Milan received media attention throughout the world last month. Bee Taechaubol, executive director of Thai Prime, a private equity firm, reportedly offered to pay the former Italian prime minister Silvio Berlusconi €1 billion ($1.1 billion) for a controlling stake in the seven-time European champions.

Taechaubol’s younger brother Ben has attracted fewer headlines but his recent deal-making activities, although similarly glamorous, are probably built on more solid foundations and with more reliable expectations of success.

Earlier this year, his Country Group Development (CGD) unveiled a THB32 billion ($980 million) property project on the north bank of the Chao Phraya River in Bangkok. It will consist of an up-market residential block and two 5-star hotels, occupying 350 metres of prime waterfront and 5.8 hectares along the Charoen Krung Road acquired from the Crown Property Bureau.

“After undertaking extensive relocation efforts [for about 300 existing tenants] and securing one of Bangkok’s last remaining, undeveloped, large parcels of riverside land in the central business district, our aim is to create a meaningful, luxury experience that is unmatched in the market,” the younger Taechaubol told FinanceAsia in an on-site interview.

CGD is the real estate arm of Country Group which is controlled by family patriarch Sadawut who has close mainland China business and state connections. In October 2013, CGD signed a financial framework agreement with China Export-Import (Exim) Bank for THB11.6 billion to help fund the project.

The development costs will be covered by apartment sales in the Four Seasons Private Residences; so far more than a quarter have been pre-sold, and we are targeting both domestic and overseas investors,” Taechaubol said.   

The project is scheduled for completion in the fourth quarter of 2018 and is made up of the Four Seasons Private Residences, the Four Seasons Hotel Bangkok, and the Capella Hotel Bangkok.Taechaubol (pictured) wouldn’t reveal the interest rate payable on the loan but it is likely to be generous to the borrower. In other parts of the world, China Exim ties concessional lending to contracting Chinese firms, and one of the country’s largest, Beijing Construction Engineering Group, was awarded a turnkey contract to build the three properties in Taechaubol's Chao Phraya scheme.

The average price is THB300,000 per square metre, equivalent to about THB20 million for the smallest units, and up to about THB300 million for the penthouse flats.

Ben Taechaubol

The 73-storey tower, which will be managed by Four Seasons Hotels and Resorts, will be a leasehold property on a 25-year contract. CGD hired architects Hamiltons International, responsible for the Troika condominiums in Kuala Lumpur, and San Francisco-based interior designers BAMO for the project.

“The low density private residences are targeted at high net worth individuals across the world who are attracted by a waterfront lifestyle, Thai culture, and world class architecture and design,” Taechaubol said.

Nevertheless, the Chao Phraya riverside area is a competitive market where several large developers have also announced plans to develop luxury hotels and residences, despite faltering tourist arrivals and flat property prices since the military coup in May last year.

Magnolia Quality Development, part of the DT Group, is already building the vast high-end IconSiam shopping mall, which will include apartments managed by the Mandarin Oriental. In addition, the Manam Hotel is developing a residential tower complex and Riverside Masterplan, a property arm of Charoen Sirivadhanabhakdi’s business empire, plans to build another shopping mall called Asiatique 2.

"Despite many projects in the area, ours is unique and has strong prospects,” Taechaubol said. “And any future political or economic issues will be considered if they arise.”

Not Reit now but soon

On a separate note, CGD also looks set to issue its first real estate investment trust (Reit) within the next few months. 

The company will transfer the assets of its UK-based data centre to the trust, in which it will own a 30% stake. The THB1.3 billion publicly listed Reit is expected to offer a yield of at least 7%, Taechaubol said.

The success of Thailand’s first Reit launched by Bangkok Land in August last year has encouraged more developers to follow suit.

Golden Land, another property company controlled by Charoen Sirivadhanabhakdi, plans to list its Reit worth up to THB10 billion later this year, according to the Bangkok Post.

¬ Haymarket Media Limited. All rights reserved.
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