Thai and overseas private equity funds are looking for property projects whose developers are financially strapped, keen to take over with a target yield of 5% annually for at least seven years, according to property consultancy Phoenix 1010 Holding Co.
The firm's chairman, Patima Jeerapaet, said an overseas fund based in Singapore set an initial budget of S$400 million (10 billion baht) and was interested in recurring-income assets.
"The fund is looking for offices, hotels, hospitals and high-tech factories that generate income, where the owner is facing financial problems," Mr Patima said.
The Singaporean fund will offer a reasonable price or no less than 40-50% of asset value, plus a buyback option after a five-year acquisition if the project owners want the assets back.
The annual target yield of 5% will be an average rate for holding at least seven years, as the annual yield during years with the coronavirus will likely be lower than usual.
Mr Patima, a property veteran of over 30 years, said the Bangkok office sector, which has been robust the past several years, should slow the next two years as a large amount of new supply is completed.
"The global and domestic economies will face persistent problems from the virus, affecting many businesses that rent office space," he said.
According to Phoenix Property Development and Consultancy Co, one of the firm's subsidiaries, at least 2 million square metres of new office space, or 22% of the current supply (9.17 million sq m), will be completed in the next few years.
Mr Patima said retail spaces have been heavily hit by the virus. Even after reopening, there was not as much activity as expected.
Some industrial estates saw space returned from factory tenants, even those that just completed construction, because of the global economic slump.
He said Thai investors in a private equity fund were interested in taking over condo projects that either had construction completed or were under construction, yet with a large number of units remaining unsold.
"To quickly increase their liquidity, many developers offered a discount of 30-50% for their condo units," Mr Patima said. "With the discount, they can sell the whole project to investors."
Phoenix 1010 Holding plans to convert three towers on a six-rai plot owned and used by Thai Business Administration Technological College on Phahon Yothin Road opposite the 11th Infantry Regiment into office space for rent.
The number of students at the college has fallen to 200 from a peak of 3,000 many years ago.