Property developer V.M.P.C. Co, will spend 6 billion baht to develop a serviced apartment and hotel development in Chon Buri's Si Racha district to tap rising demand, particularly among Japanese expats.
Chief executive Prinya Tieanworn said there would be growing residential demand from Japanese working for manufacturing, auto parts and electronics industry along the Eastern Seaboard in the coming years as the industrial sector expanded.
"Many industrial estates in the eastern region are expanding after the 2011 floods hit Ayutthaya, where a lot of Japanese factories were located. Many of them are relocating to the East," he said.
There is a sizeable Japanese community in Si Racha, known as Little Tokyo, mostly executives working for industrial estates along the Eastern Seaboard. Most of them hold middle-management positions and have high purchasing power.
The occupancy rate of apartments, serviced apartments and condos is above 90%.
Wason Khongchantr, managing director of Modern Property Consultants Co, said condos for rent in Si Racha saw an attractive yield of higher than 10% per year, driven by strong demand from Japanese expats.
Mr Prinya said the company planned to develop a 7-billion-baht residential project with a mix of serviced apartments and a hotel, expecting to break even in 10 years.
Land prices in Si Racha more than doubled to between 300,000 and 400,000 baht a square wah this year due to strong demand from property developers seeking land to develop condos or apartments for rent.
The project will be located on 11 rai in Si Racha that the company acquired from the Khunpluem family early this year.
It will comprise four phases with four high-rise buildings housing a total of 1,000 units.
Construction will start next year after the environmental impact assessment is approved. It will be completed in 2018, with monthly rental rates set at 30,000 to 60,000 baht.
V.M.P.C. has two apartments in Bangkok worth a combined 1 billion baht. In the first half, the company saw occupancy decline to 30% from the usual 70% due to the political impasse.
This year's rental business is expected to decline by 20% to 80 million baht in revenue from 100 million as the overall hotel industry decreases by 30%. However, the sector will pick up next year.
V.M.P.C. began buying non-performing property assets from banks in 2003 and renovating them into rental apartments.
Understanding that apartment rentals are a slow-growth business, Mr Prinya five years ago decided to expand into the hotel business, starting with the 130-room Astera Sathorn.
With registered capital of 300 million baht, V.M.P.C. later moved into housing development, launching its first single-house project — the Astera Residence @ Phutthabucha — on Rama II Road a couple of years ago.
The company this year expects to record 400 million baht in sales from its housing development business for the first time.
Next year it plans to launch a townhouse project in the upper-end segment worth 2.2 billion baht due to strong demand from entrepreneurs and business owners.
It will be located on 28 rai on Rama II Road, comprising 200 units priced from 10 million baht.
"Housing demand in the Rama II area has high purchasing power. About 70% of those buying a townhouse priced over 15 million baht use cash," Mr Prinya added.