The Associated Press, February 28, 2000
Big foreign investors who bailed out of Thailand and its neighbors during the Asian currency crisis are back and looking for bargains in the depressed real estate market. Among them is George Soros, the American financier vilified by many Thais as Public Enemy No. 1 after currency speculators like him pulled the rug from under Thailand's baht in 1997, setting off an economic slump that swept over much of Asia and on to Russia and Brazil.
Few Thais seem to care, or even know, that Soros -- whom a senior politician once said deserved to be killed for his role in the currency crash -- has joined in recent real estate deals involving foreigners. After 2 1/2 years of economic retrenchment required by the International Monetary Fund and refrains that foreign investment is crucial to revive the economy, most Thais seem dulled to attempts by opposition leaders to whip up anger with cries that the country is being sold to foreigners.
"The severity of the regional economic crisis has led to an overhaul of attitudes to foreign investment, bankruptcy provisions and market transparency," said Mana Jiranapakul, senior association director of research at Jones Lang LaSalle, an international property firm. The budding return of foreign investment is part of the painful adjustments going on in many Asian nations, which are finally seeing fitful signs of recovery in their economies.
Rather than going it alone, the foreigners are putting their money into Thai real estate firms that were strong enough to survive the Asian crisis and are snapping up stalled developments of weak competitors. As was the case in much of Southeast Asia, Thailand's real estate market had been overbuilt during the boom years before the currency crash. Property values slid 30 percent to 50 percent in Bangkok. Building cranes that once spiked the capital's skyline are gone, leaving a glut of vacant space as well as unfinished projects.
In Bangkok's central business district, which has fewer problems than other parts of the city of 10 million people, a third of the office space is still likely to be vacant in June, property consultant Colliers Jardine estimates. Longlom Bunnag, regional director for Jones Lang LaSalle, expects many of the new investors will take over loans from the Financial Restructuring Authority, which ended up with the assets of 56 failed finance companies mostly tied to the property sector.
"They'll probably only be here for three to five years, after which they'll pull out," Longlom said of the foreign investors, which are primarily U.S.- and Singapore-based groups.
Five local companies have been fattened up with fresh capital from foreign partners and have begun buying projects and other assets from weaker competitors. Soros' Quantum Fund, the Sloan Robinson Fund, Morgan Stanley and New World Group acquired a 47 percent stake in the Thai development firm Golden Land LC last year. Lehman Brothers has a 30 percent stake in Nobel Development PLC, and Starwood Capital bought a majority stake in Sansiri PLC.
In deals involving Singapore investors, GIC Real Estate now owns 20 percent of Land and Houses PLC, Thailand's largest developer, and Keppel Land Ltd. took a 51 percent stake in Five Star Property PLC. Golden Land concluded seven deals in five months last year worth $80 billion. The firm says it wants to become the biggest apartment company in Thailand and will also focus on building single-family homes and develop and run choice retail and luxury residential sites. Golden Land once boasted as a major shareholder, Sasima Srivikorn, whose husband, Chalermbhand, is a former deputy prime minister. The Srivikorn family's business empire is still sizable, though reduced with the sale of its Golden Land stake and a failed finance company.
Outside experts say one of the reasons for the Asian crisis was the proliferation of bloated enterprises built on cozy relationships between government elites and favored friends, but some analysts think the crash has convinced people of an economy's need for open business dealings.
"Although much remains to be done, there are grounds for optimism that in many places a more mature, transparent and therefore stable property market will emerge," said Mana, the research director at Jones Lang LaSalle.
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