The limited amount of land available in Penang, Malaysia is driving a local property developer and his colleagues to seek opportunities in other Asean countries, particularly Thailand, Myanmar and Laos.
Show DC, located on Jaturatit Road near Rama IX Road in Bangkok, is AEC’s first venture in Thailand. An integrated distribution centre for small businesses, it could be a prototype for more such buildings to serve Thailand’s huge retail sector.
Steven Ong, a director and shareholder of AEC Property Development, said land in Penang was fully developed and he had decided to seek more opportunities elsewhere. He views Thailand as a good centre from which to expand, especially to Myanmar, which is embarking on a new era of economic development.
Six individual developers from Malaysia and one from Thailand, Thanongsak Hutanuwat, who has connections with local investors in Myanmar, have formed AEC to invest in the property business in Thailand, Myanmar and Laos.
“We expect to have the first project in Myanmar within the next six to 12 months. It might be a small-scale project with investment size of not over US$100 million,” said Mr Ong.
He said the reasons for entering the property markets in Thailand and Myanmar were different, given their vastly different levels of economic development. In Thailand, he and his Malaysian partners first explored an opportunity five years ago, but the political climate at that time did not support their investment. This year, amid brighter prospects, they have returned.
AEC Property Development has embarked on its first project – Show DC – which has been designed as an integrated distribution centre for various kinds of businesses ranging from furniture and home decoration to fashion and foods.
The company foresees a bright outlook for the tourism industry in Thailand as a strong supporting factor for the growth of the retail business. As the retail market gets bigger, small and medium-sized companies will grow with it, resulting in increasing demand for distribution centres or even showrooms for them.
Show DC, located on Jaturatit Road, close to Rama IX Road in Bangkok, is the first of its kind in Thailand. AEC expects to create more integrated distribution centres in Thailand before it expands to residential property.
“We actually would like to develop residential and commercial projects in Thailand. However, the existing property developers in the market, most of them local firms, are very strong. This is the challenge in developing projects in other Asean countries,” said Mr Ong.
“We have to build our brand first before moving into the sectors we really want to. This is a different strategy we’re employing if we want to have more of a presence in Asean.”
In Myanmar, the company is conducting a feasibility study and seeking the right local partner. The property model it is looking for is mixed-used buildings, combining residential and commercial activities.
Mr Ong is confident that Myanmar people are ready for more modern building concepts, as the country is opening up. He says the transition that China’s economy and property development industry underwent in a relatively short time is something that formerly isolated Myanmar could emulate.
Some of the shareholders in AEC Property Development have experience in residential, commercial and office building investments in Abu Dhabi, Vietnam and China.
He added that Laos would be the site of future projects but that currently, limited financing is the main drawback to the investment climate.
To invest in Myanmar, the company has to start by seeking partners and land. AEC must carefully study Myanmar’s investment law, which is still being fine tuned, said Mr Ong. As for financing, using its own cash is the best choice for now as Myanmar’s financial system is just starting to evolve.
“We want to grow in these three countries, but it is not that easy to survive in Thailand, where the local developers are very strong, while Myanmar is very new for the property business. Different strategies will be employed to ensure success,” he said.