Daiwa House Industry Co, one of Japan's largest homebuilders, will spend US$50-100 million on residential developments in Thailand over the next 5-10 years through joint ventures with SET-listed property firm Singha Estate Plc and its subsidiary.
Nobuya Ichiki, Daiwa's senior executive officer for the overseas division, said the company aims to generate an internal rate of return about 9-10% from investing in Thailand's housing sector in 5-10 years.
"The residential sector in Bangkok is attractive for investment as the city is expanding," he said. "We will invest in both low-rise [single house and townhouse] and condo developments to tap into real demand."
Daiwa last month signed with Singha Estate and Nirvana Daii Plc, one of Singha Estate's subsidiaries, in two joint venture agreements.
With Singha Estate, Daiwa expects to buy a 49% stake in S Residential Development Co, a subsidiary of Singha Estate.
S Residential Development plans to develop Eyse Sukhumvit 43, a luxury low-rise condominium project worth 2 billion baht, on nearly two rai on Sukhumvit Soi 43. It was launched in July this year.
With Nirvana, Daiwa is to have a joint venture in a newly established firm, Nirvana Daiwa Development, in which Daiwa holds a 49% stake. The firm is scheduled to be established this month with registered capital of 421 million baht.
The joint venture will launch Nirvana Beyond Krungthep Kreetha, worth 2.6 billion baht on a 27-rai plot on Krungthep Kritha Road. It is expected to have 85 three-storey single detached houses priced 20-50 million baht by the end of this year.
"We will transfer prefabricated construction know-how to the project, but have no plan to set up a prefabricated factory in Thailand as that requires sufficient production volume," said Mr Ichiki.
Daiwa has invested in overseas markets since 2011, when Japan's economy was sluggish. Overseas investment totalled $2.1 billion, comprising $1.5 billion in property development and $600 million in mergers and acquisitions.
Malaysia was the first country in Southeast Asia in which Daiwa invested, followed by Vietnam in 2014 in the logistics, industrial and residential sectors, then Thailand in 2016 with SET-listed industrial estate WHA Corporation Plc for logistics and Indonesia last year for logistics and residential.
Daiwa has spent $35 million for logistics and two residential joint venture projects, and aims to launch two more residential projects next year.
This amount accounted for 10% of its total investment in Southeast Asia since 2012.
Sornsak Somwattana, chief executive of Nirvana Daii, said the Daiwa joint venture will be one of nine residential projects it plans to develop into a smart city on 250 rai on Krungthep Kritha Road.