Green light for luxury projects despite gloom

Quattro Condominium

Quattro Condominium Thonglor

Developers decide upper-market customers have secure jobs and money

A number of Thai property developers have such confidence in continued upper-income demand for luxury homes that they are planning to launch big-budget residential projects catering to the higher end of the market.

Contrary to the advice of some analysts, they believe the economic crisis will result in a significant drop in demand for homes in the middle to lower-income market. Other developers are pinning their hopes on continued demand from the middle-income market.

Their plans were buoyed by the new government’s stimulus package for the property market which extends tax allowances for home purchases to principal repayments of Bt300,000 and interest payments of Bt100,000. They believe the package will drive demand for residences priced up to Bt5 million per unit.

TCC Capital Land, a joint venture between TCC Land - the property arm of beverage tycoon Charoen Sirivadhanabhakdi - and Singapore-based CapitaLand, plans to launch two luxury condominium projects this year, each worth Bt2 billion.

Sansiri has already launched one luxury condominium, Quattro, at Thonglor, which has a market value of Bt5 billion. Just three weeks after its launch, sales have already reached more than half of the project’s value.

Just three weeks after its launch, sales have already reached more than half of the project’s value.Thai Contractors’ Asset Company, a joint venture between the Ital-Thai Group and the Thai Contractors’ Association under the Royal Patronage of His Majesty the King, will launch pre-sales from its first luxury serviced-apartment and condominium project this month. The development has a market value of Bt3.8 billion.

Noble Development also plans to launch a Bt2-billion townhouse project, with units priced at about Bt5 million each, later this year.

Noble’s president Thongchai Busrapan said he believed the global downturn would impact on Thailand’s economy and purchasing power would fall. However, demand for residences priced up to Bt5 million would continue, so the company was planning to match home-buyers’ demands.

“We don’t believe that we should turn to developing lower- or middle-income residences because we believe that home-buyers who have purchasing power now are in the upper-middle and upper markets. They feel secure enough about their jobs to buy a residence,” he said.

TCC Land’s deputy chief executive Soammaphat Traisorat said that although demand for residential projects may fall this year, his company believed that demand for luxury residences would continue at nearly the same level as last year. Buyers in the upper-income market have more savings, and if they believe they are getting lower returns from bank deposits, they will shift their money to invest in property, he said.

Besides, luxury residences are now reasonably priced, compared with last year, following the drop in prices for construction materials. Consequently, TCC Capital Land has decided to launch two new luxury condominium projects this year, to generate revenue over the next two or three years, he said.

Thai Contractors’ Asset Company managing director Valaithip Charanachitta said her company had decided to invest in a luxury serviced-apartment and condominium project because it had a good location on Wireless road, which was a popular location for new offices and expatriate residences.

The company also believes that demand for luxury residences will suffer less from the economic crisis because the target customers are secure in their jobs and have more savings, she said.

About the author

Somluck Srimalee Somluck Srimalee
Somluck Srimalee is a journalist with The Nation, Bangkok's independent English language newspaper and specialises in the property and real estate sectors.
Other posts by Somluck Srimalee ( 49 )

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