Ratchaprasong to stay prime site _ Colliers
Published: 21/04/2010 at 12:00 AM
Newspaper section: Business
The Ratchaprasong intersection area will remain the prime Bangkok location despite the risk of future protests in the area, says Patima Jeerapaet, managing director of the property consultant Colliers International Thailand.
''The central business district [CBD] remains the central business district but to future risks, there should be preventive measures to prevent a second blockage,'' he said.
Protests are often held in the centre of cities like London and Tokyo, he said.
Bangkok's CBD is continuing to expand and the demonstrations will have no significant impact on the rents as real estate is valued on a long-term basis while political problems tend to be shorter term, he added.
The appraisal of commercial real estate income is based on annual turnover. Income at department stores located in the Ratchaprasong area has dropped to zero since start of the rally. If the stores remain shut for 30 days this would cut 10% from the yearly projection.
But the appraisal method includes discount factors and business risks _ which cover negative factors such as inflation and business instability _ which account for about 5% of annual income.
''Offering rents will not drop as commercial property takes a long-term view,'' he said. ''Normally, when there's anything happening, landlords will help tenants by not charging rents for a certain period to help compensate disappearing revenue.''
With a situation like the rally at Ratchaprasong intersection, landlords must make sacrifices to help their tenants survive. But a landlord may ask for a higher increase in rents when contracts are renewed. Mr Patima said the government and Bank of Thailand should introduce financial measures to help business owners who suffer from the demonstration at Ratchaprasong, such as assisting debt negotiations or restructuring.
''Once everything settles down, the government should introduce a quick economic recovery plan or it might be too late to revive the worsening economy,'' he said.
He said the government should work in a parallel way with a contingency plan to cope with the political turmoil and the economic impact. The people in charge with the plan are civil servants, not government.
''We must be ready to face every kind of change, not only politics. There's also another critical change -disaster,'' he said.
Meanwhile, landlords and building owners should take preventive measures, such as building double entrances or reducing the potential for damage.
