Skeletal Building Coming Back To Life

[eric1000]

S-E Asia resurrects unfinished buildings

Abandoned building projects in Thailand and Indonesia are now being completedas developers emerge from debt

BANGKOK - Skeletal buildings abandoned across South-east Asia during the 1997-98 economic crisis are coming to life again as developers emerge from debt restructuring and investors look for cut-price deals.

But one of the hurdles to completing the unfinished projects is the legal responsibility for the safety of structures lashed by monsoon rains and baked by the sun for seven years.

While in Singapore some en bloc deals suffered and sale of government land was held back, Thailand and Indonesia came to be littered with incomplete building sites when heavily indebted developers ran out of cash and buyers for their projects.

In Jakarta, mosquito-ridden derelict sites have been blamed for deadly outbreaks of dengue fever and thousands of swallows are 'squatting' in one half-finished block in Thailand.

But with many developers rejuvenated by injections of fresh capital, some sites are rumbling again. In Bangkok, seven out of 48 suspended projects have been restarted, says property consultant Jones Lang LaSalle.

British, Singapore and US investors are also sniffing around properties in Bangkok, said Mr Mark Fraser, a partner in law firm Johnson Stokes & Master in Bangkok.

Contractors brought in to finish the buildings but unaware of previous mistakes or short-cuts should hammer out deals with developers to share risk and responsibility, he said.

Although the Thai economy is humming again, the rampant demand for offices envisaged a decade ago still appears a mirage. So developers are changing tack and tapping into demand for plush homes.

Golden Land bought the shell of an office block and turned it into apartments. Raimon Land is doing the same with a 60-per-cent finished building, with a fund involving Singapore developer CapitaLand and ING Real Estate.

Raimon Land bought a 40-per-cent completed building in Pattaya for 260 million baht (S$11 million) and aims to spend an extra 520 million baht before selling it for one billion baht. Buying the skeleton project will save it two years of development time.

'It sold out in five days,' Raimon Land chief executive Nigel Cornick said. 'It's much more viable as a residential project than an office project.'

The apartments sold for around a fifth more than office units would have.

Central Jakarta's 40-odd unfinished projects are attracting the interest of some foreign investors lured by the promise of 8-per-cent rental yields.

In comparison, Singapore is offering 6-per-cent yields and Hong Kong 3 per cent to 4 per cent.

But with political and security concerns drying foreign investment to a trickle, around 20 per cent or 700,000 sq m of Jakarta's existing office space is empty.

'There are regional investors looking for offices because they know this is the right time to buy because property is very cheap,' said Mr Anton Sitorus, head of research at Jones Lang LaSalle in Jakarta.

'They're interested in half-finished projects probably because they are easier to redesign.'

But among the grander projects put on hold are the 60-storey BDNI Tower, which was originally to cost the Gadjah Tunggal conglomerate US$400 million (S$680 million), and the Menara Sahid office and shopping mall complex started by Sahid Jaya International.

'Companies arranged with creditors or the authorities to try to keep their properties, so what we see is most of the suspended projects still owned by old owners,' Mr Sitorus said of efforts to deal with bad loans by the defunct Indonesian Bank Restructuring Agency. -- Reuters

REVIVED: Old projects

AMONG the buildings that have been recently revived or are being revived in Bangkok, after restructuring deals are:

# The Central World Tower - an office building in downtown Bangkok near World Trade Centre, which is owned by the Centralgroup.

# The Lakes condominium that was formerly known as Raimon Tower.