Thailand top destination for investment, property firm says

Thailand tops the list of Asian countries where property firm Jones Lang LaSalle will park a portion of its US$23 billion (Bt900 billion) investment fund.

"The top three destinations this year are Thailand, Hong Kong and Kuala Lumpur," the firm's CEO for Asia Pacific, Peter Barge, told The Nation. "And Thailand is number one," Barge said.

The firm is looking to buy industrial, commercial and hotel properties but not residential properties, a sector that Barge said was becoming "overheated".

The bulk of Jones Lang's holdings has been in the United States and Europe, but the shift now will be towards Asia, following US companies that are moving offshore to employ cheaper labour in India and China.

"About three million new jobs are coming to Asia over 12 years because of outsourcing," he said. "We think the figure will be much higher than that."

At the same time Jones Lang has landed contracts from more multinational giants such as Shell, Microsoft, Bank of America and Procter & Gamble to manage their real estate portfolios.

Cities in India that Jones Lang is targeting include outsourcing and tech hubs Bangalore and Hyderabaad.

With global firms moving in and jobs booming, the ballooning affluence of these areas will drive up demand for high-grade real estate in all segments.

China is another high-growth area. "Investors who for years were apprehensive about China, are now beginning to seek opportunities there," Barge said.

The investments in Asia are expected to boost the firm's earnings by 17 per cent this year, up from 9 per cent last year. Its profit last year was US$172 million (Bt6.8 billion)

A main reason for optimism comes from the positive business outlook in the US, China and Japan. Improved sentiment in Hong Kong, for instance, pushed up property prices by 10 per cent last week, Barge said.

Despite the extremely "bullish" outlook in Asia, the company is concerned about pitfalls such as the possibility of losing skilled employees. Other fears include a resurgence of terrorism or Sars.

Barge admits that even with a massive "presence on the ground" - over 7,900 employees in 45 markets and 67 million square metres in assets under management - the firm is not always able to anticipate a property meltdown.

The firm did not see the Thai real estate crash coming in 1997. "The currency collapse in 1997 was followed by the property slump. Nobody predicted that," he said.

The September 11 terror attacks and the Bali bombing were also unexpected, but markets today have quickly adapted to the new scenarios and can bounce back quicker with every new disaster, he said.

--2004-03-12

The firm is looking to buy industrial, commercial and hotel properties but not residential properties, a sector that Barge said was becoming "overheated".

I guess some hotel owners will be pleased to hear that