Government Complex won't secure interest costs
Securitisation to lock in development costs for Zone C at the Chaeng Watthana Government Complex is not in the pipeline for Dhanarak Asset Development amid the low interest rate cycle, its head says.
The Public Debt Management Office (PDMO) does not plan to raise funds through securitisation to finance construction worth 20 billion baht for Zone C, unlike for zones A and B, said Nalikatibhag Sangsnit, Dhanarak Development's managing director.
Amid the low interest rate cycle, borrowing from financial institutions might have cheaper financial costs than securitisation, he said. Periods of rising interest rates are the appropriate time to issue securitised bonds to lock in financial costs at a low level.
Securitisation is a financial instrument that pools together contractual debt or assets and transforms them into a security.
The Government Complex, with zones A and B on Chaeng Watthana Road, is the country's largest commercial office complex, with 1.1 million square metres of space servicing dozens of state agencies and more than 30,000 administrators.
Last year, the cabinet approved a Finance Ministry proposal to allow Dhanarak Asset Development, a state enterprise under the Treasury Department, to develop Zone C.
Zone C, which covers 660,000 sq m, will be turned into office space for government agencies.
Mr Nalikatibhag said Dhanarak Development has borrowed millions of baht from the state-owned Government Savings Bank to fund the development of Zone C.
GSB charges Dhanarak Development 2.48% per year, well below the 3% estimated by the state enterprise under the Treasury Department, he said.
Zone C is scheduled to complete construction by 2023 and 12 state agencies that have already signed rental deals will start moving in to Zone C by October 2023, said Mr Nalikatibhag.
The project's pile foundation will begin installation next year.
The rental rate for Zone C is fixed at 390 baht per sq m a month, and Dhanarak Development must pass on the new land and buildings tax once it is implemented to tenants, he said.
The land and building tax will cost tenants 15.61 baht per sq m, said Mr Nalikatibhag.
Regarding the persistent traffic congestion around the Government Complex, he said the Budget Bureau demanded each state agency that is a tenant allocate their own budget to solve the problem, but they have all insisted they cannot afford it.