Thailand, 24March2021
NOONProperty ManagementCoLtd
79/95 Moo 10, ChalongSub-district
MueangPhuketDistrict
83130Phuket, Thailand
Dear owners,
With this message I would like to give you a market and a project update fromThailand. Market
▪ Thailand has been very virtuous in controlling the number of COVID-19 cases duringthe whole 2020, with less than 4,000 total cases as of mid-December 2020. However, on19December 2020, Thailand reported more than 500 COVID-19 cases amongmigrant workers at the center of its seafood industry in Samut Sakhon province, by far thebiggest one-dayrise in a country that had previously brought the epidemic largely under control. Theprovince was immediately ordered closed and put under a 10amto 5pmcurfew.
▪ The Disease Control Department has so far reported almost 20,000 cases of COVID-19in44 provinces with links to the outbreak in Samut Sakhon. In Phuket, as in manyother provinces, schools were closed, and a 14-day mandatory quarantine was introducedfor incoming domestic travelers. The number of new cases per day has nowreturnedtocontrollablelevels, with an average of 70 cases/day in the last 7 days.
▪ Thai Government continues to study various schemes to allowinternational visitorsintothe country to provide some relief for its battered tourismindustry, balancingarrivalswiththe infection risk that comes from open borders. The latest plan being consideredistoscrapthe two-week quarantine period for vaccinated tourists. While this could provideamajor boostto the economy, if approved, it is very likely that the government will ultimatelytakeacautious approach and only reopen borders more fully once there is greater progress inthedomestic COVID-19 vaccination programme.
▪ The Government kicked off its COVID-19 vaccination campaign on 28 February, with ministers,health officials and medical professionals among the first in the queue toreceive vaccinations.A mass campaign to administer 10 million doses a month is set to begininJune, with61million shots of AstraZeneca vaccines produced by local firmSiamBioscience.
▪ Thailand received 7,694 foreign arrivals in January (-99.8%y/y), only slightlymorethanthe6,560 in December. The government now expects only 3.2mn tourists in2021(6.7mnin2020), compared with ~40mn in 2019, and hopes to ease international travel curbsinH221.
▪ Despite the COVID-19 outbreak, the THB remained stable vs. USD, close toits highest level since 2013. The Bank of Thailand (BoT) left its policy rate unchanged at 0.50%but remains concerned about the THB strength. The consensus is that the BoT will leaveits policyrate unchanged over the next 12 months, preserving its limited policy space.
▪ BoT also upgraded its 2020 GDP forecast slightly, though its 2021 forecast was downgraded as hopes for a tourism revival have dimmed. The BoT nowexpects GDPtocontract bya smaller 6.6% in 2020 compared with its previous forecast of a 7.8%decline.
▪ According to Nexus Property Marketing, after having decreased by 11%in2021, theaverage prices for new and resale condo supply in Bangkok are projected to fall by 5%thisyear before picking up in 2022.
Project
▪ Chalong, like the rest of Phuket, is almost a ghost town. Most of our tenants havelost their employment and have returned to their home countries (the foreigners) or movedbackto their provinces (the Thai).
▪ During the second semester of 2020, our occupancy rate decreased to thecurrent level of10%, and we had to offer heavily discounted rates to the fewtenants that decidedtostay.
▪ We have taken the strategic decision not to let go of anybody fromthe staff of NOON Property Management, but we have reduced their working hours to 50%. Our management company is using our equity capital to subsidize the operating losses, but weareconfident that having the team in place will position us very favorably when the market picksup compared to most of our competitors that have ceased operations.
▪ We are using this period of downtime as an opportunity to carry out maintenanceand improvement works in both buildings: for example, we have repainted therailingsof Tower1 rooftop, and installed a shelter for the motorbike parking in Tower 2.
▪ Due to the near-zero revenues that our rental business has being producing, on15July2020, we have suspended the coupon payment to your portfolio of unit in bothTowe1andTower2.
▪ Once the tourism market restarts, we will pay you the accrued coupons fromJuly2020toFebruary 2021 plus an interest of 5% per annum.
▪ The lack of visibility on the time and shape of the recovery, and the prolongeddepression that the Phuket rental market will likely experience in the months ahead, will not allowusto accrue any additional coupon. We seek your cooperation to move froma fixedmonthly payment agreement to a revenue sharing model fromMarch 2021 onwards. Therevenue sharing model will align our interests, permitting to safeguard the financial stabilityof our management company and share with you any potential upside that the rental market will offer once it is fully recovered.
Should you have any questions or comments, please do not hesitate to contact me.
Thank you for your continued support.
Luca Dotti,
Director
good news.
