Amid a recovery in the UK property market, Sansiri Plc will launch its first project in London this year – six apartment units worth a combined 600 million baht.The company is looking at New York as its next destination, with a net profit target of 15%.
President Srettha Thavisin said the UK property market had been reviving ever since the economy began picking up in mid-2010, with prices returning to normal and financial institutions approving mortgages again.
Property prices in the country had dropped by 15-20% after the global financial crisis started in the third quarter of 2008. Post-crisis, financial institutions stopped extending loans to homebuyers, effectively freezing property transactions.
The property market is finally recovering now that the banks have regained their strength, said Mr Srettha.
“London is a financial centre. It attracts high net worth people from Russia, the Middle East, China and India, as having a house in London connotes social status,” he said.
Sansiri’s London property is targeted at wealthy Thai investors buying for rental purposes or use as a second home for themselves or their children. It will hold a focus group session before the launch.
Sansiri acquired 9 Elvaston Place in the upscale Kensington neighbourhood in 2008 and renovated and refurnished the six units to fit a Thai lifestyle.
UK developers may not be able to satisfy Thai property buyers’ needs, said Mr Srettha.
He said the UK rental market had also picked up amid the huge bonuses paid by the banking sector last year. However, the yield for rental properties is only 3-4%.
Mr Srettha is not worried about the baht exchange rate, as gains from the London project will be used for new investments abroad, possibly with New York City as the next stop.
The recovery of the New York property market is similar to that in the UK, with a vacancy rate of only 2%.
Mr Srettha said the gross yield for a rental unit was 6% and the net yield 4.35%.
“We’ll invest only in existing properties and renovate them, as the strategy is to buy below investment cost. We’re interested only in developed countries, where financial independence and strict construction rules predominate. We don’t want to develop from scratch,” he said.
If the 600-million-baht British venture can sell out, then this will be the first year for Sansiri to generate revenue from a foreign investment.
It would account for 2.72% of the company’s overall revenue target of 22 billion baht.
Meanwhile, Sansiri will start construction of a new luxury condominium on Wireless Road this year, with a net sellable area of 15,000 square metres. Sales will start in three years, with an expected market-topping price of 400,000 baht per sq m.
Sansiri shares (SIRI) closed yesterday at on the SET at 5.75 baht, unchanged, in trade worth 4.59 million baht.
Source: Bangkok Post