Leading players forge ahead despite gloom

Land and Houses

Land and Houses

Housing projects next year will have a collective value of nearly Bt100 billion

Despite the economic gloom, leading property firms are approaching 2009 in a mood of cautious optimism, with plans to launch new residential projects with a collective market value of nearly Bt100 billion, according to a survey by The Nation.

They include Land and Houses, which has plans for 12 new residential projects worth about Bt12 billion; Preuksa Real Estate, which will launch 15 new projects worth Bt15 billion; Supalai, with expectations of launching 12 projects valued at Bt16 billion; Sansiri, which says it will kick off eight or ten projects worth between Bt8 billion and Bt10 billion; LPN Development, which has plans for four new city condominiums worth Bt8 billion; and Tanayong, which says it will launch six or ten property projects worth nearly Bt40 billion in 2009.

Meanwhile, other property firms are playing a waiting game, to see whether the country’s economic and political problems will improve or deteriorate, before deciding on new projects. Most of them have undeveloped land plots waiting for the green light.

Asian Property Development says it will make a decision on new projects in the second quarter of next year. Quality Houses has also opted to wait and see.

Some small and medium-sized property developers have decided to go ahead with modestly-sized residential projects next year. Bangkok Development CMS plans to launch its latest luxury detached-house project, with only 46 units worth Bt600 million, in Nawamin Road. It will be called The Primary Prestige. Major Development plans to go ahead with two or three new residential projects next year, worth between Bt9 billion and Bt10 billion.

Land and Houses senior executive vice president Naporn Soonthornchitcharoen said his company would continue to launch new projects next year to replace existing projects that would sell out by the end of 2008.

Supalai continues to be optimistic about the property market next year and plans to launch 12 residential projects in 2009Despite the expectation of meager economic growth, Land and Houses is aiming for sales of between Bt16 billion and Bt18 billion in 2009, nearly the same as this year. Earlier this year, it revised downwards its sales target for 2008, from Bt21 billion to between Bt16 billion and Bt18 billion.

Preuksa Real Estate president and CEO Thongma Vijitpongpun said his company would launch 15 residential projects with a market value of nearly Bt15 billion next year. It has set aside between Bt1.5 billion and Bt2 billion for land acquisition.

Amid Thailand’s political uncertainty and the global economic crisis, the country’s economy may grow only marginally in 2009 or shrink compared with this year, Thongma said.

However, the company believes that demand for residences will continue and it will make sales if it develops residential projects to match customer demand. Consequently, it will go ahead with investments, but at a lower level than this year.

In 2008, Preuksa Real Estate launched 46 new residential projects with a collective value of more than Bt20 billion.

Supalai continues to be optimistic about the property market next year and plans to launch 12 residential projects in 2009 with a market value of nearly Bt16 billion, its president, Prateep Tangmatitham, said.

“Although Thailand’s economy will get a negative impact from the global economic crisis next year, I believe that domestic demand for residential property will continue to grow because some economic factors are helping homebuyers to save their money. These include lower interest rates, a fall in construction costs and the government’s tax incentives for home-buyers,” he said.

Sansiri

Sansiri

However, Supalai will change its product mix by increasing its number of low-rise projects. At present the company generates 68 per cent of its revenue from condominium projects and 32 per cent from lowrise projects, including townhouses and detached houses. Next year, the percentages will change to 50 per cent from each.

Prateep said the company had to change its product mix because of the construction process and market demand. When building condominiums, the construction period takes one and a half to two years, which means the company has to inject money into a project for that time before expecting any returns.

Sansiri president Srettha Thavisin said his company continued to plan for the launch of new residential projects worth between Bt8 billion and Bt10 billion in 2009.

“We cannot say how many new projects we will launch next year because we have to monitor the country’s economy and demand in the market. However, we will continue to launch new projects because other property firms have suspended projects. This will reduce our competitors in the market, at a time when we see strong demand for residences.” he said.

LPN Development plans to launch four new city condominium projects worth between Bt8 million and Bt10 billion in 2009, but they will be smaller projects and will open phase by phase. This will help the company speed up sales, managing director Opas Sripayak said.

Tanayong managing director Kavin Karnjanapas said his company would go ahead with new projects around Skytrain routes with a market value of about Bt40 billion in 2009. They will include residential sections, serviced apartments and luxury hotels.

“Although Thailand’s economy will suffer a negative impact from the global economic crisis and the country’s political turmoil, we’ll proceed with our business plans for next year, because we believe there is strong demand for city condominiums, and the location of our new projects will make them more competitive than those of other property developers,” he 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 ( 37 )
Website: http://www.nationmultimedia.com

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