22 | FORBES ASIA JULY 2016
smile that belies a white-knuckled ride these past sev-
eral years. The baht is at a six-year low, annual economic
growth is below 3%, and exports are down, as are ag-
ricultural prices—all compounded by last August’s ter-
rorist bombing and two years of martial law that’s set to
continue indefinitely. Pace’s market capitalization is just
$315 million, a mere 40% of the value of its assets, and
profits are scarce. “It’s not yet a solid company in terms
of earnings, though it should do fine,” says Avin Sony of
Asia Plus Securities, the Thai firm that managed Pace’s
initial public offering in 2013. He predicts that as buyers
take possession of their units in MahaNakhon this year,
Pace will post a small profit, followed by much bigger
earnings in 2017.
Political and economic woes affect the flailing lower
end of the property market, but they don’t appear to hurt
the top. “This is the seventh coup in my lifetime,” sighs
Techakraisri, who hails from a family of developers.
“Long-term players are waiting out the political instabil-
ity. They believe in Thailand’s future. That’s what they
bet on.” Tim Skevington, managing director of property
firm Landscope Thailand, agrees: “Political and eco-
nomic problems do affect some high-end buyers, but in
spite of the problems, demand has been high, and once
we come through the current situation, demand should
be even higher.”
Indeed, the superluxury segment of Bangkok’s prop-
erty market appears to be booming. Several competi-
tors—including Four Seasons, Sansiri, Mandarin Orien-
tal and St. Regis—are following Pace’s lead with condos
in broadly the same price range of $8,400 to $9,900
a square meter. Property agents estimate that 2,400
superluxury units will hit the Bangkok market by 2019.
Aliwassa Pathnadabutr, managing director at property
company CBRE Thailand, says most buyers are actually
locals, many from a young generation of Thais attracted
to new freehold condos (as opposed to ones with renew-
able 30-year leases) with two or three bedrooms, which
they regard as more desirable than the types of houses
they grew up in.
But from the start Pace took its sales pitch abroad,
initially snubbing the services of outside realtors. During
road shows in Singapore, Hong Kong and Dubai they
found property investors eager to escape local cooling
measures, including bigger down payments and higher
stamp duties. Pace has now sold 70% of MahaNakhon—
one-third to locals and the remainder to buyers from
Singapore, Hong Kong, Europe and, to a lesser extent,
the Middle East, North America and Taiwan. The
company says it’s holding back the remainder until the
building is finished so it can fetch higher prices. (Pace is
also building two superluxury condo developments and
a resort in Hokkaido, Japan.)FORBES ASIA
THAI REAL ESTATE PLAY
Why would a Thai property tycoon, in the middle of building a sky-
scraper in Bangkok plagued with delays, buy a little-known chain of
upmarket food shops that started in New York? Sorapoj Techakraisri
had his reasons. He paid $140 million in November 2014 with an
ambitious plan in mind—to build a global brand that would cater to
foodies everywhere and boost the bottom line of his company, Pace
Development.
So far the chain, Dean & DeLuca, has done the opposite. It’s still
producing operating profits, but debt service and the high cost of
opening new stores are keeping it in the red overall. It doesn’t expect
to stop losing money until 2018.
Techakraisri was well acquainted with Dean & DeLuca when he
made the purchase. In 2010 he had signed a licensing agreement
to operate multiple stores and cafes in Thailand. The local flagship
opened in 2014 on the ground floor of MahaNakhon Cube, a collec-
tion of shops and restaurants next to the skyscraper MahaNakhon.
It offers a sleek decor and smart-looking staff for patrons who fill
dining tables or stock up on gourmet staples, wines and prepared
foods for dining at home. For Techakraisri it will provide MahaNakhon
residents with a chic luxury environment where, as he puts it, “they
feel good about living.”
The purchase came with 42 outlets—some owned by Dean &
DeLuca, but most licensed—in eight countries. Now that’s up to 50,
including 6 in Thailand, 25 in Japan, 3 in Seoul, 2 in Singapore and
one in the Philippines. Growth has been slower than Techakraisri ex-
pected, but come 2018 he envisions 95 outlets in at least 15 countries,
another 100 U.S. delis in large- and small-store formats, a thriving
e-commerce site and a listing on the New York Stock Exchange.
To raise the brand’s profile in the U.S. he signed on to spon-
sor a PGA golf tournament for six years—the first Dean & DeLuca
Invitational was held in May in Fort Worth, Texas. And Techakraisri
just launched “Prince Street: a Fresh Podcast with a Culinary Heart,”
named after Dean & DeLuca’s first location in the SoHo section of
Manhattan—which retailers Joel Dean and Giorgio DeLuca opened in
- In the long term Techakraisri wants Pace’s earnings split 50-50
between property development and food-and-beverage interests.
“It’s a good idea because property is volatile,” says Avin Sony of Asia
Plus Securities in Bangkok. “Pace needs recurring earnings.” —J.P.
FROM SOHO TO BANGKOK
Shoppers at Dean & DeLuca’s store in Tokyo’s Shibuya district.
ROBERT ALEXANDER/GETTY IMAGES