Raimon Land Units At Half Price!

[HAPPYCHAPPIE]

FROM TODAYS BANGKOK POST.

Raimon Land Plc will raise funds of one billion baht by issuing non-voting depository receipts (NVDRs) if it fails to draw funds under the Thai quota being raised from Thai partners, according to chief operating officer Kitti Tungsriwong.

He said the NVDR plan would be handled by its major shareholder IFA Hotels & Resorts 3 Ltd, which would seek new investors from overseas to invest through Thai NVDR, the Stock Exchange of Thailand subsidiary that deals with such placements.

IFA would also be one of the investors in the fundraising.

Of the estimated 1.11 billion shares at one baht apiece, 49% would be acquired by two overseas investors. One would be a Kuwaiti investor planning to buy 204 million shares. IFA agreed to buy 340 million shares worth 340 million baht through the offering of convertible loans on July 31.

Both overseas investors agreed to buy new shares at one baht although Raimon's share price was 0.70 baht or lower on average, said Mr Kitti.

''They [iFA and the Kuwaiti investor] are confident in an upward trend in our performance from our existing and future projects,'' he said.

''We are in talks in details about our strategy with Thai partners who are in well-known families. The deal will be finalised within the year. If they agree, Thai partners will hold 13.78%.''

Currently, Raimon has registered capital of 2.99 billion baht and has used its full foreign shareholding quota. IFA holds 26.17%, which would increase to around 28% if the plan to raise registered capital to 4.1 billion baht succeeds.

Besides the fund-raising, selling condominiums is another foreign-quota issue at two of the company's four existing projects on sale now. At the mid-priced development The Lofts Yennakart, which has been completed, the 49% foreign quota is full. At The River, with a total project value worth 13.5 billion baht, 56% has been sold _70% to foreigners and 30% to Thais. This means less than 10% of the foreign quota is now available for new take-up at the luxury condo.

Mr Kitti said the company planned to draw more Thai buyers by offering lower-priced units at around 10-15 million baht. Though this price would be almost half less than that offered to foreigners, the units at this price would have less desirable locations or views.

''Foreigners buying The River buy a river view and normally river-view units have higher prices than those without or with limited views,'' he said.

Next month Raimon will acquire a new plot of seven rai in the central business district where it plans to develop a luxury condominium in 2009.

Raimon shares closed yesterday on the Stock Exchange of Thailand at 0.60 baht, up one satang, in trade worth 720,000 baht.

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[bkkjames]

Just a wild guess but I would say Khun Kitti is implying that the units being purchased by farangs were the more expensive ones high up, better views and those without great views (ie facing Tonburi) are cheaper, up to 50% percent less per sqm than the top top units.

[HAPPYCHAPPIE]

Just a wild guess but I would say Khun Kitti is implying that the units being purchased by farangs were the more expensive ones high up, better views and those without great views (ie facing Tonburi) are cheaper, up to 50% percent less per sqm than the top top units.

Leaving aside the fact that Raimon Land seem to announce good sales in all their projects and then soon after seek to raise more capital.

My question is whether it is normal for developers to sell off less attractive units at half price or less. Half price conjures up images of a fire sale.

If sales which are not in foreign names are at half price or less does this mean that foreign purchasers actually contribute two thirds of the revenue earned from sales and Thais only one third?

Are Thai units sold at this sort of discount elsewhere?

Certain developments take on a whole new attractiveness if they can be bought at half the foreign price. That level of discount more than compensates for the risk factor of the other ownership methods.

Am I missing something here? Wise words and advice from Old Hands will be much appreciated.

[bkkjames]

Just a wild guess but I would say Khun Kitti is implying that the units being purchased by farangs were the more expensive ones high up, better views and those without great views (ie facing Tonburi) are cheaper, up to 50% percent less per sqm than the top top units.

Leaving aside the fact that Raimon Land seem to announce good sales in all their projects and then soon after seek to raise more capital.

My question is whether it is normal for developers to sell off less attractive units at half price or less. Half price conjures up images of a fire sale.

If sales which are not in foreign names are at half price or less does this mean that foreign purchasers actually contribute two thirds of the revenue earned from sales and Thais only one third?

Are Thai units sold at this sort of discount elsewhere?

Certain developments take on a whole new attractiveness if they can be bought at half the foreign price. That level of discount more than compensates for the risk factor of the other ownership methods.

Am I missing something here? Wise words and advice from Old Hands will be much appreciated.

As a property company that targets the higher end and with that farangs, its not suprising that they will offer less attractive units at lower prices to make up the Thai quota.

As this is their constant challenge (and those at other resort areas such as pattaya), it is somewhat limited to developers like Raimon.

[NotNew2You]

I would tend to agree with one posted who "clarified" the Raimon land spokesman's remarks. It's more likely that she is not comparing like with like in her price comparisons...I don't think she meant to say that identical units are sold at up to 50% discounts to Thais vs. foreigners. More likely that less desirable units are what's left and they are always less expensive and since the fereng quota is almost filled-up that naturally, the less desirable (and cheaper) units left will naturally be sold to Thais.

In general, I have heard that in many condos, equilivent condos in Thai names sell for around 20-30% less than the same or like unit in a ferang name. This is a great deal for ferangs is long-term stable relationships with their Thai partners or wives!

Edited August 29, 2008 by NotNew2You

[PattayaParent]

...Are Thai units sold at this sort of discount elsewhere?

YES

[pkrv]

From a personal perspective I am no longer/not happy with the 49% rule at all - it is IMO is not good for Thais.

[russ222215]

It is very unusual for developers to sell off units at such discounted prices,it has been known for some time that raimon land had reached its foreign quota on the majority of their developments and was finding it very difficult to offoad into the thai market.

they have in the past relied upon thai investors to take on the balance of these units, understandably those investors are not confident of investing in the current climate and therefore these units will remain unsold until the price is low enough for those investors out there to be tempted.

this is really bad news for foreign investors in these developments, it provides a large spread in what is already a two tier market but as importantly will substantially reduce returns through rental as the units will mostly be relet into the market and therefore put downward pressure on rents

raimon land themselves are restructuring there finances after the downfall of lehman brothers who have in part funded many of there developments in recent years, all in all times are hard and needs must

with foreign investors in the coming years having a hard time at home they perhaps in the interim will not necessarily be as ready and confident to look east, and as with everywhere else the market is contracting,because of the longer transaction times in thailand this contraction will take longer to appreciate but i am convinced within 6 months will become very evident, hold on tight!!!

[fidelio]

In cruder words, just another proof, that the Thai propert market is deeply fuc_ked up

[glyph]

"In cruder words, just another proof, that the Thai propert market is deeply fuc_ked up"

At least your perspective of the market is. Both you and the OP believe that the developer has dropped the price of unold units by 50%, and that's not true. The developer simply stated that farangs have bought the most expensive units and the remaining units are substantially cheaper.

[fidelio]

"In cruder words, just another proof, that the Thai propert market is deeply fuc_ked up"

At least your perspective of the market is. Both you and the OP believe that the developer has dropped the price of unold units by 50%, and that's not true. The developer simply stated that farangs have bought the most expensive units and the remaining units are substantially cheaper.

Liar Liar.

You know better than me that developers will sell a lower price to thais .

In most countries , the mere fact of having different prices for foreigners and locals would get the developer straight to jail.

It's called racial discrimination.

[glyph]

Liar? Clearly your post is based on ignorance, rather than knowledge. I accurately summarized the newspaper article. I accurately mentioned when the project will be completed. I never said that a developer would never sell a condo cheaper to a Thai buyer. You think that the developer is going to sell identical units to a Thai for half the selling price to a farang? You are wrong.

[bkkjames]

"In cruder words, just another proof, that the Thai propert market is deeply fuc_ked up"

At least your perspective of the market is. Both you and the OP believe that the developer has dropped the price of unold units by 50%, and that's not true. The developer simply stated that farangs have bought the most expensive units and the remaining units are substantially cheaper.

did i not say this before??? More likely that less desirable units are what's left and they are always less expensive and since the fereng quota is almost filled-up that naturally, the less desirable (and cheaper) units left will naturally be sold to Thais

[Marvo]

...the less desirable (and cheaper) units left will naturally be sold to Thais

Judging by the sales so far, it looks like the Thais don't want neither the expensive premium units, nor the "less desirable" units with the crappy views. Claiming that half of the units are now (50% &lt;deleted&gt;!) cheaper just because of the inferior aspect is just a cover up.

[bkkjames]

I can't argue with that logic...so why try.

[Pdaz]

Well I'd have to say that thinking unit prices are the same for Thai name and Foreign name is somewhat naive.. I myself have looked at many many developements and more often than not ( there are some exceptions) I have been given one price to buy in foreign name and then offered a substantial discount to purchace in a Thai name/ Ltd Company.. . The more of the 'Thai' percentage that they can shift the better.. They figure it's easier to sell the 'farang' name units.. So while there may be 'one' price on the list. There would be much more chance of negotiating a discount if you are willing to buy with a Thai name.. I'm pretty certain that costings are done on only selling 50% of the units anyhow.. If they sell more so much the better... As for Raimon.. Well from the rental prices quoted for their block on Beach Rd I can't see much of a return for buyers in the short term... Gonna be a huge oversupply of units in the very near future..

[glyph]

The project won't be finished for a couple years or so, and it's not clear why anyone thinks that the developer is panicing...except for the OP and fidelio.

[ThaiHawk]

just wait and watch Raimon Land prices go WAYYYYY down. This company is failing

[Marvo]

just wait and watch Raimon Land prices go WAYYYYY down. This company is failing

Source of information????

[clausewitz]

just wait and watch Raimon Land prices go WAYYYYY down. This company is failing

Source of information????

It certainly looks that way from the article. I guess there will be many 'purchasers' who will now walk away from the deposits they put down.

[bkkjames]

just wait and watch Raimon Land prices go WAYYYYY down. This company is failing

Source of information????

It certainly looks that way from the article. I guess there will be many 'purchasers' who will now walk away from the deposits they put down.

Get real.

[ray08]

Well I'd have to say that thinking unit prices are the same for Thai name and Foreign name is somewhat naive.. I myself have looked at many many developements and more often than not ( there are some exceptions) I have been given one price to buy in foreign name and then offered a substantial discount to purchace in a Thai name/ Ltd Company.. . The more of the 'Thai' percentage that they can shift the better.. They figure it's easier to sell the 'farang' name units..

Just proves that the locals ,do not beleive themselves in the asking price of units ,if a local won,t pay the asking price ,why does a foreigner pay more ,defies logic

[thaiwanderer]

Some extra value arises from a foreign freehold condo being registerable in a foreigners name.

However, they and any property offered to foreigners are always over priced but foreigners still buy them so why not

Discounts from fantasy are not real discounts.

As regards the OP - half price units.....I wonder what that could possibly mean...?

[whatsoever]

Just watch this trend. Pattaya eg. has many projects which are struggling to fill the 49% farang quota. When the quota is met, which obviously accounts for the more desirable parts of a building, then the rest will be sold off to Thais at huge discounts.

Your potential next door neighbour will have paid half = big devaluation of your unit

[shochu]

i've been traveling quite a bit lately.

AND you would not believe the empty buildings - both residential and commercial everywhere in major cites.

ALSO, am hearing major projects in major cities being put on hold indefitnitely as they can not get funding. i am not talking about just any projects, but MAJOR PROJECTS with big names attached. am seeing almost complete buildings standing still. unbelievable!

this is only going to get worse.

and if the mayor of london is begging the chinese to give them money in lieu of better educational ties (not to be paid back) for the olympics projects - one has to go uhmmmm...

edited to make it thai related - i can not believe some posters here in LOS are saying things are going well still!

Edited October 13, 2008 by shochu

[moomee]

I would like to buy a unit at Northpoint. What is your opinion on th ecompletion of this project. Will they e many price cut in the future.

Thanks,

[bkkjames]

I would like to buy a unit at Northpoint. What is your opinion on th ecompletion of this project. Will they e many price cut in the future.

Thanks,

I think if you are Thai you stand a better chance of negotiating as they try to fill up their thai quota.

[glyph]

"try to fill up their thai quota..."

Hmmm, Thais are allowed to own 100% of the building...

[bkkjames]

"try to fill up their thai quota..."

Hmmm, Thais are allowed to own 100% of the building...

Ok smartipants, if the 49% allowed for foreigners is sold, I guess the remaining 51% would have to be Thais or are you suggesting that Northpoint has such demand from locals that only 1% will be made up of farangs?

[glyph]

I have no idea of the Thai/farang buyer ratio, and it does not make any difference. Any prudent buyer would not pay any more than (s)he thinks the property is worth, Thai or farang. But, as many people have found out, the Northpoint project pricing has been adjusted upwards several times, and downwards zero number of times.