Nippon Steel Kowa Real Estate to invest in 2 residential projects

Nippon Steel Kowa Real Estate to invest in 2 residential projects

Ishihara: Keen on affordable segment
Ishihara: Keen on affordable segment

Japanese developer Nippon Steel Kowa Real Estate Co (NSKRE) is planning to invest 600-800 million baht per year in the Thai property market via two residential projects in the affordable price segment through a joint venture with MAI-listed developer Chewathai.

Itaru Ishihara, managing executive officer of NSKRE, said the company is interested in the affordable price segment as this segment is in demand.

"Our focus is residential units priced 3 million baht and lower, which could be condos or low-rise houses, as we believe this segment in Bangkok is experiencing a shortage of quality houses," he said.

NSKRE has set an investment budget of 300-400 million baht per project for the venture. It plans to develop two residential projects per year through the joint venture with Chewathai, in which NSKRE holds a 49% stake and Chewathai a 51% stake.

Mr Ishihara, who also heads NSKRE's corporate business division & international business division, said Thailand was the third country the company has invested in, following Myanmar in 2019 and the US in 2022, following the merger of Nippon Steel City Produce and Kowa Real Estate in October 2012.

"Thailand has been on our radar since 2018. Many Japanese peers were rushing to partner with Thai counterparts, while we tried to set a deal but could not," he said.

Last year, NSKRE held talks with Chewathai and after a period of 10 months deliberating, the companies decided to proceed with the joint venture.

On Feb 2, 2024, both parties signed a joint venture agreement for their first project -- Chewathai Hallmark Ekkamai-Raminthra.

"Chewathai is not a top 10 company, but their development attracts us," he said. "We partner with them because of their management team, their focus on real demand, and major shareholders -- the Panichewa family. The family's background comforts us."

With a sales value of 1 billion baht, the project will comprise two eight-storey condo towers with a total of 415 units starting from 25.4 square metres and priced from 1.89 million baht per unit.

Scheduled to launch in May 2024, it is expected to have 30-40% of units sold by September this year or before construction starts.

"Thailand's economy is not as strong as expected, but it has a strong manufacturing sector and a robust tourism sector," he said. "Bangkok is also growing with urbanisation."

Established in 2002, Nippon Steel City Produce was a subsidiary of Japan's largest steel maker Nippon Steel, focusing on condo and housing development, while Kowa Real Estate, founded in 1952, developed office buildings for rent.

In Myanmar, NSKRE invested in developing The Golden Terrace in Yangon, which are serviced appartments mainly catering to employees of Japanese firms on temporary assignments. However, the project is currently pending.

In the US, NSKRE spent US$100 million to acquire two apartment complexes in two states via joint ventures with local real estate firms.

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