Frasers Property Limited, controlled by Thailand's richest man, is banking on US-China tensions to help reduce an oversupply of office space that has plagued the country's capital.
The Singapore-based developer expects a jump in demand for offices and industrial real estate in Southeast Asia, especially its 120 billion baht (US$3.6 billion) ‘One Bangkok’ project in the city centre, said Chief Executive Officer Panote Sirivadhanabhakdi.
Foreign direct investment will also boost demand for warehouses, storage and other industrial properties in Vietnam and Thailand, the markets with the biggest growth potential for Frasers, he said in an interview Thursday, without giving specific figures.
Southeast Asia is benefiting from an influx of global trade and investment following years of deteriorating commercial relations between the United States and China. President Joe Biden's administration approved tariff increases on billions of dollars in Chinese goods last week, while Donald Trump has touted even deeper trade barriers during the US election campaign.
"There should be strong momentum for foreign direct investments in Thailand and the region," said Mr Panote, the son of Thai billionaire Charoen Sirivadhanabhakdi. "Southeast Asia will be our main growth driver with most governments’ efforts to attract foreign investors in the region."
Panote Sirivadhanabhakdi, Group Chief Executive Officer, Frasers Property Limited. (Photo: Pattarapong Chatpattarasill)
The Thai government approved investment applications worth more than $13 billion in the first half of the year, up 35% from the same period in 2023, led by Chinese and Singaporean investors, according to the Board of Investment (BOI).
Despite Mr Panote's optimism, Thailand has yet to significantly benefit from company relocations from China, largely due to a glut of office and industrial space.
Vacancy rates for so-called Grade A prime offices in Bangkok’s central business district rose to 26.3% in the second quarter, compared to 25.4% three months earlier, according to data from property consultancy Cushman & Wakefield. Ready-built warehouse vacancies in Thailand exceeded 21%.
At One Bangkok, one of the office buildings that has begun operating is about half-occupied, said Mr Panote. Frasers Property will officially open the project, its biggest-ever property investment, on Oct 6. The initial phase will have three office buildings and two retail zones, he said.
Frasers, like other real estate firms in the region, has been under pressure from high interest rates and a global property downturn. Shares of the company are down about 2% this year, versus a 12% gain in Singapore’s benchmark stock index.
Mr Charoen has expanded his property, beer and whiskey business through Frasers Property, Fraser & Neave Ltd and Thai Beverage Public Company Limited. He has a net worth of $13.4 billion, according to the Bloomberg Billionaires Index.