Struggling to Continue: 2 Real Estate Projects Shut Down in Early 2019

           The real estate business in Thailand is not easy. It seems that joint ventures with foreign investors have become a strategy that many entrepreneurs choose to create new investment themes in Thailand. This statement does not only refer to residential real estate like condominiums, but TerraBKK is also discussing other types of real estate businesses that are currently trending towards project closures. The main issues leading to these closures are primarily related to financial liquidity and operational losses, where the more they operate, the more they lose. Ultimately, shutting down the project may be the best solution for these entrepreneurs at this time. Here are the details:

Quick to Rise, Quick to Fall: The Marvel Experience Thailand Closed on January 29, 2019

• Operator: Hero Experience Co., Ltd. (Demeter Corporation Public Company Limited holds 37.5% of the shares)
• Registered Capital: 268 million baht, with an investment value of 1 billion baht, occupying over 20,000 square meters (located in Mega Bangna shopping center)
• 2018: Opened for the first time in Thailand in June, becoming the first in Southeast Asia and the third in the world, following the USA and South Korea (Busan)
• After more than 6 months of operation, in addition to the grandeur and excitement, there were many online comments regarding various criticisms of this project, such as ticket prices, location not near the BTS, and the quality of character models not meeting expectations, etc.
• 2019: Announced the closure of The Marvel Experience Thailand: Theme Entertainment Attraction (TMX Thailand) primarily due to the project not proceeding as planned and financial liquidity issues, with the last day of operation on January 29, 2019.

Japanese Theme Park Can't Continue: Tokyu Paradise Park Srinakarin Closed on January 31, 2019

• Operator: PT Retail Corporation Limited, a 50:50 joint venture between Bangkok-Tokyu Department Store Co., Ltd. and Paradise Retail Co., Ltd. (part of MBK Public Company Limited)
• Registered Capital: Approximately 400 million baht, covering over 13,000 square meters, divided into 2 floors, featuring a distinctive Japanese department store style
• 2015: Opened for the first time in Thailand in June
• 2016: Opened a new zone called Japan Scramble, showcasing food/products/services from across Japan, such as instant ramen, cheesecake, green tea, etc., as well as famous Japanese fruits like melons (Ibaraki), peaches (Fukushima), and sweet potatoes (Chiba)
• 2017: Held the Japan Village event, showcasing authentic Japanese culture through performances and products from Japan, such as demonstrations of slicing tuna, Yosakoi dance, and traditional taiko drum performances
• Annual revenue in the hundreds of millions began to decline in 2017, but the business has been operating at a loss for three consecutive years, with losses increasing, reporting revenues of 188 million baht (2017), 213 million baht (2016), and 109 million baht (2015), with losses of -154 million baht (2017), -89 million baht (2016), and -65 million baht (2015)
• 2018: Announced permanent closure in November, with the last day of operation on January 31, 2019, thanking customers without providing details about the closure.

               One observation regarding this round of project closures is that both projects are joint ventures with foreign investors, with registered capital in the hundreds of millions, and are highly specialized projects that closed primarily due to financial issues. Entrepreneurs may need to do their homework thoroughly before addressing financial problems, focusing on whether their unique offerings meet the needs of Thai customers, who are likely the main clientele of the projects. If not, the projects may be seen as options for activities that, due to high costs, could be overlooked, leading to financial issues if they cannot adapt quickly. Ultimately, this could result in project closures as well. --- TerraBKK

Article by: TerraBKK Investment Tips
TerraBKK: Find good, valuable, and affordable homes