SET-listed LPN Development has teamed up with Nye Estate to develop an office tower on a leasehold plot on Rama IV Road in the Kluay Nam Thai area with an investment of 3.79 billion baht.
Launched in 1989, Lumpini Tower on Rama IV Road was LPN's first project and the first office condominium in Thailand.
Opas Sripayak, managing director of LPN, said the potential of Rama IV locations is on the rise because there are many upscale and mixed-use projects under development along the road.
"The Rama IV area will be a key central business district, as it connects the current CBD in inner-city areas like Silom, Sathon and Rama III with prime areas such as Ratchaprasong, Ploenchit and Sukhumvit," Mr Opas said.
Mixed-use projects under development on Rama IV Road include One Bangkok developed by TCC Group and Samyan Mitrtown by Golden Land Property Development.
New high-end condo projects will be developed by Land & Houses Plc, Ananda Development and Chulalongkorn University under both freehold and leased ownership structures.
Grade A office supply in the area has an average rental rate of 1,000 baht per square metre per month, while that of Grade B is 600 baht per sq m per month.
"Our new venture aims to increase recurring income from rental properties to diversify revenue and avoid risks from the condo market, which has high competition and is hit by many negative factors," Mr Opas said.
On Thursday, LPN reported that it would set up the joint venture Dolsiri Development Co, with registered capital of 1 million baht, within the first quarter of this year.
LPN and Nye Estate will each hold a 49% stake in the joint venture. The remaining 2% stake will be held by Apichart Kasemkulsiri, LPN's chief financial officer, and Ornruedi Na-Ranong, Nye Estate's chief executive.
Dolsiri will develop a new office building with a total investment of 3.79 billion baht, which will include 2.34 billion baht for 55 years' rent and 1.5 billion baht for construction costs. The funding will come from LPN, Nye and project loans.
The project will occupy three rai on Rama IV Road in the Kluay Nam Thai area leased from Treekacha Co, owned by the Kunjara Na Ayudhya family.
The development will have a total lettable area of 22,600 sq m -- 21,000 sq m of office space and 1,600 sq m of retail space.
Mr Opas said the project will be the second partnership with Nye Estate, following a high-end senior living project worth 3.5 billion baht in Phuket under Kamala Senior Living Co.
Kamala Senior Living is a consortium of LPN, Nye Estate, MAI-listed developer Chewathai and SET-listed contractor Ch.Karnchang.
LPN shares closed Friday on the Stock Exchange of Thailand at 7.20 baht, down 10 satang, in trade worth 220 million baht.
