Thai developers haven’t been afraid to diversify their interests over the years. However, they have rarely left their comfort zones. Residential firms in the Kingdom have dipped their toes into hospitality or commercial real estate during the past decade in a bid to be less reliant on housing.
For example, Sansiri began investing in hotel-brand The Standard five years ago and has since become the leading shareholder. Major Development has an entire business unit dedicated to hotels and resorts. Ultimately though, most developers were hesitant to venture beyond the realm of real estate until recently. And even then, those plans were put on hold due to the COVID-19 pandemic.
“In the past, residential developers have diversified their strategy to cover all range of development projects, with some venturing into the condominium market, hospitality and retail,” Khun Rathawat Kuvijitrsuwan, Head of Research and Consulting, CBRE Thailand, said. “The impact of the pandemic on the real estate sector has been significant and to survive, residential developers have made huge efforts to clear their unsold inventory, put development projects on hold and reevaluate their strategies going forward. Many have decided the time is right to diversify into other industries outside of real estate.”
Khun Rathawat notes there are risks to this either way. Firms relying too heavily on property alone are at the mercy of the market while expanding into new areas comes with a massive set of challenges. For Many Thai developers, diversification is the better option.
“Now, real estate developers are once again extending their diversification strategies beyond their comfort zones, adding more offerings to their core businesses while lowering the risks of being too dependent on the real estate industry alone. They are adding the lifestyle components of real estate, such as health and wellness, food, and services to their portfolios,” Khun Rathawat reported.
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Singha Estate targets power generation and other unique areas
Singha Estate announced that it plans to integrate industrial estates, power generation, engineering services and other related businesses into its property operations as it looks to triple annual revenues over the next three years. The firm believes the strategic broadening of business will allow it to better capture new opportunities.
“The emergence of many extra-large-scale development projects in Thailand and Singha Estate’s integrated approach that combines hospitality, residential, commercial and industrial property development with power generation and related innovative services and businesses will give Singha Estate unrivalled advantages in capturing some of these huge, new opportunities,” Khun Thitima Rungkwansiriroj, Singha Estate Chief Executive Officer, said.
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