As part of our global tour HiP, talked to many territories about the need for HiP in different countries. The fruits of these discussions are now coming through.
We are therefore extremely proud to announce our first territory deal – with Thailand – opening up the huge Asia market.
HIP’S DEBT AND EQUITY EXCHANGE SOLVES A VARIETY OF ISSUES WITHIN THE THAILAND LENDING AND REAL ESTATE MARKET
HiP Thailand will offer an alternative to the current model of non-bank loans (Kai-fak) to fund property-related term loans with following benefits:
- Reduced transaction fees for borrowers (currently 6.3%) by not requiring a transfer of the property from borrower to lender.
- Build a solution which increase LTV from 50% to 75%
- Provide Longer terms loans up to 3 years rather than 6-12 months
- Lower interest rates for borrowers (max 1.5% per month)
- Multi-lender option rather than just single lenders
- Loan investments open to domestic and foreign investors
HiP Thailand is a separate entity with interests in HiP Gibraltar and with its own management team.
DR. HONGTHAI TAN
Hongthai is a seasoned property developer with countless large-scale real estate projects in progress and completed, including the Thananan Village housing project (924 units), Bangkok, and the Crystal Patong, Phuket. Hongthai holds a Doctorate in Hydrology from the University of Cambridge UK and is a guest lecturer at Thammasat University Bangkok. He is also honorary consul of Djibouti to Thailand. Hongthaiheads up the HiP Thailand operation.
MR. JATURONT JAMIGRANONT
Jaturont is an experienced operator in the field of credit in Thailand. Currently sitting as the chief operation offer of multiple credit institutions across Bangkok, Jaturonthas been slowly modernizing these businesses by digitizing their daily operations. With background in information design and data visualization, Jaturont seeks to revolutionise Asia’s real estate and credit markets using HiP as a foundation.
Stage 1 pilot is for non bank loans
A select group of assets (commercial and new development real estate) are being proposed for loan funding:
- Total value of initial pilot portfolio: 1.677m Thai Bhat / £38.56m GBP
- A further portfolio value of £60m already pledged for Phase 2 onwards
- Products will initially be offered in a primary marketplace
- Investors will be sourced from the UK and Europe, China and Asia, and Thailand itself.
- End to end transactions and user journeys
- Market discovery and feedback
- Demonstrate user trust in the product and ecosystem
- Generate investor and partner interest
- The pilot will be deemed a success upon the completion of this end to end process.
- Estimate profit from month 9 (HiPThailand / HiPGibraltar)
Sample Site 1
Thananan Village (Rangsit, Bangkok, Thailand)
- Purpose of Loan: Owner requires capital to start Phase II
- Total Land: 49,920 SQM
- Property Description: 624 plots of vacant land (80 SQM per plot; 49,920 SQM in total) with construction permit for 132 SQM terrace houses; part of existing project with 300 units completed and sold – Approximate Market Value: 312 million baht (7.43 million pounds)
- Proposed Terms by Applicant: 160 million baht (3.81 million pounds); 1.2% interests per month; 24-month contract; deducting 6 months interests in advance
Sample Site 2
The Crystal Patong (Patong, Phuket, Thailand)
- Purpose of Loan: Owner requires overdraft, and capital to complete the project
- Total Land: 1,558 SQM
- Property description: Land with 113-unit condominium block (90% completed); 4,740.75 SQM of sellable area; 31 car-parking space; all permits and individual strata obtained
- Approximate Market Value: 302 million baht (7.19 million pounds) (Appraised by Knight Frank Thailand)
- Proposed Terms by Applicant: 220 million baht (5.24 million pounds); 1.5% interests per month; 24-month contract; deducting 3 months interests in advance
HIP THAILAND PROBLEM: KAI FAK
Non-bank credit takes many forms in Thailand. One that takes property as collateral is commonly known as ‘Kai-fak’, or sale with right of redemption. Kai-fakis a short-term loan (six months to one year) with very high monthly interest rate (1.5% to 3% per month depending on the size of the loan). Recent government crackdown has been relatively successful in keeping the interest rate at 1.5% per month in many Kai-fakdeals (1.5% per month is the legally permissible rate for non-licensed lenders in Thailand), but many lenders still get away with charging 2% to 3% per month through various fee structures, as these high interest rates remain acceptable by borrowers in the Kai-fakmarket.
A typical Kai-fakdeal offers a LTV of 50% with half the total interests deductible in advance. Moreover, the borrower will be required to undertake a full transfer of the property to the lender, so the latter can avoid any complications that may come with enforcing collateral agreement, should the borrower default. Thai Government Land Offices fully recognisethe concept of Kai-fak; and though the property may have been transferred to the lender, the borrower retains full right to redeeming the property as long as the terms of the Kai-fakcontract are obeyed. All fees with regards to the transfer of the property (totaling 6.6% of the transaction value) are also deductible from the loan.
Although the terms described above may seem illogical to many, Kai-fakremains a very active mechanism in the Thai credit market due to its accessibility and that it guarantees access to credit.
There is no shortage of demand for credit in this market, and the quality of the properties on offer remains high.
HiP.T has identified this as a sound market for a pilot. By entering into the Kai-fak market, HiP.T can choose to introduce fairer terms to potential borrowers such as:
- Charging lower interest rate,
- Allowing borrower to mortgage their property rather than undergoing a transfer, in effect subjecting them to lower governmental fees (1.1% rather than 6.6% of the transaction value),
- Allowing higher LTV’s, and
- Allowing longer terms.
A HiP product with an 8% annual return is recommended.