Profile: Songkran Issara
Managing Director of Charn Issara Development Public Company Limited
Established in 1989 Charn Issara Development has built office
blocks and shopping centres in Bangkok including Charn Issara
Towers 1 & 2 and Royal City Avenue. The company has also
developed the Lad Kra Bang industrial park and residential projects
in Bangkok and Cha am. Mr. Songkran, the son of company chairman
Charn, is currently taking a leading role in the company's luxury
Sri Panwa villa project and resort on Phuket.
You've built office towers in the Royal City Avenue
entertainment complex in Bangkok, condos in Cha am and villas
in Phuket. Which was the most challenging?
RCA was a very difficult project. Sri Panwa is also very difficult - it's
a very beautiful site and it's not a question of money, but how we make our
project match nature. Each villa has its own private view, which is very
difficult to do. So we basically have the contours of the land control our
architecture and that's also difficult. The whole piece of land is 80 rai,
the challenge is to decide how to go about the development and create a good
product in a beautiful location.
With RCA, it's 1.4 km long and we had about 400 squatters on
the land, to start off with. At 80 rai it is also a very big
piece of land for the city and very complicated to develop. We
are still shareholders of RCA and I'm still a director but not
the managing director anymore. My original plan wasn't to have
nightclubs on the site - I wanted to create a walking retail
area, because I don't think you can find other land that's so
close to four roads and has very good access and car parking
for 1500 cars.
There's also easy access for shophouse style property. My idea
was to attract department stores and a bowling arcade like we
have now, but also with retail, so in the evening time there
wouldn't be air-conditioning inside the buildings, they would
open onto the street and be a tourist attraction. We could also
have night time activity, but with the pubs and bars supporting
rather than leading the business. That's my idea, but since I'm
not managing it, I leave it to the present group.
You're aiming at the high end of the villa market in
Phuket. Did you ever consider this a risk?
Yes, that's why I think planning is very important. I did only nine villas
in my first group, with three to five bedrooms and then I did eleven smaller
two bedroom ones. But at the moment, we are past that stage and have sold
eight villas out of nine and we plan to keep the eleven villas to operate
as a hotel and we've only used 35 per cent of the land. The first phase was
successful because I built and then sold - I didn't wait for the buyer to
come to me. So when people come to the site now they are shocked, because
in many places in Phuket construction moves very slowly - for me, I just
make it happen. So, confidence is very important when you do this kind of
thing.
Was the resort part of the plan from the beginning?
No, we decided as we went along. I didn't want to sell them all - they are
so beautiful I decided to keep them for myself and for the company. The
key to the success of the whole project is starting with a good product
- you cannot fool this kind of buyer because they are not a first time
buyer. They maybe have a house in Spain and another one somewhere else
in the world. So maybe this is their third place - they know what they
want in terms of location, quality and architecture. You have to have all
this first and marketing is additional. If you base your sales on marketing
alone, you may get away with one or two units, but you cannot fool everyone
all the time.
You are one of the pioneering developers in the Panwa
area. Why there?
I considered the east coast, but didn't think it was ready, and the south,
but it's a still a little bit isolated. Panwa is secluded, but not isolated.
It's only 10 minutes from Phuket Town and Chalong Bay. Cape Panwa now has
the Bel Air development and the Conrad is coming, Novotel is already established
and there will be more activity in the area. Plus the infrastructure is already
good - we have telephone lines and electricity and water pipelines. On the
west coast you have to buy water for around 80 Baht per cubic metre, here
you pay 3 or 4 Baht, because it's part of the city. Water is one of the most
difficult things, because consumption is very important - it was a critical
factor in my decision to buy in the area.
Was having a wide portfolio of different types of properties
planned?
When we did Charn Issara Tower we were the first ones to build a project
like that because the condominium law had just passed. We were a pioneer
of that idea. Then we developed an industrial estate and were the first ones
to do it again. Then we moved to Cha am and were the first to build a condominium
there. After that, we did RCA and because Rama 9 was not finished, nobody
saw the potential. So we are pioneers and always look to build a new product
or in a new location. We don't stick to a normal plan because Thailand has
a lot of copycats, so we have to keep moving along. First we have a mission,
second we have a good team - because of this, even during the financial crisis
we were able to finish all of our projects, with or without the bank. Our
organisation is not that big and we are quick to respond. We do not have
a lot of bureaucracy and we can change as we go along.
Do you think more Bangkok based developers will follow
CID and Raimon Land into Phuket?
No - it's not easy. First the land is difficult to find, unless you look
in Krabi or Phang Nga - in Phuket there's not much left. Unless you do the
normal housing and I wouldn't do that. I go to Phuket and my target is the
foreign buyer. The market environment is different and the execution of work
is not easy down there. They may want to follow, but it won't be easy.
The company owns 1,400 rai of land in the vicinity of
Suwannaphoom Airport. How will this be developed?
We have already developed part of it to be a polo club, which will open in
two or three years. We'll also do a golf course, but I'll wait until the
airport opens before deciding what to do with the rest of it. The airport
will have an effect on building trends but perhaps in a different way from
what people think. Bangkok, the eastern seaboard, Pattaya and Chon Buri is
going to be one city with the airport in the middle. The eastern seaboard
will become a suburb of Bangkok like Bang Sue. So this area will develop
very quickly with low end housing.
Why did CID decide to go public in 2002? Has it turned
out as expected?
Yes, we are very happy. I want to move away from a family business. I prefer
a shareholder structure and its image. I tell my shareholders that we don't
only look short term but medium term also. I think there's value in our company.
Do you see Thai developers like CID becoming active
overseas?
It would be very difficult because of the need for local expertise. When
Thailand collapsed all the fund managers were looking for property in Thailand.
There were no competitors and they had all the money but how many of those
purchases went through? Very few - only five in fact - because it wasn't
easy. They had all the chances in the world and it was cheap but they still
couldn't do it. If you are the owner of a fund and you do not understand
the market, you're not going to put money in. So think of us going into another
country - if they had a strong base already it would be very difficult. We've
already seen some big companies in Thailand going abroad and they haven't
been successful.
As a developer, how do you view the increased availability,
from Bangkok Bank for example, of loans for foreigners to buy
property here?
We're very supportive of the idea, but it won't have much effect on us, since
our clients generally speaking do not have any problem finding the money.
It helps the mid-range, but we concentrate on the upper end anyway.
Is there a risk of another bubble developing?
Yes I think there is. There was already an oversupply last year. I can see
a lot more supply coming to the market - too many developers and less purchasing
power. With the oil price increasing, consumer purchasing power is less,
interest rates are high and materials are expensive. But I like it this
way. I like it better than too many people coming in and destroying the
market - this will scare them off a bit.
Should the Government be doing more to alleviate the
risk?
They should have implemented energy saving a long time ago. They should also
be looking be for alternative sources of energy. Secondly, they should control
the supply into the market and say how much land can be developed in certain
areas. I don't think it's likely to happen, though I hope it will, otherwise
the vicious cycle will come back.
What are CID's plans for the future?
The hotel in Cape Panwa will keep us busy for a while and then we'll maybe
do another project in Cha am and another one in Bangkok, which will be
mid-range housing. We've also bought additional land in Phuket, so we control
the whole cape now, which will be developed.
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