Sales recover after a slow second half last year

IN DEMAND: Baan Charn Talay in Hua Hin has received a good sales response, second only to Sri Panwa among CI’s properties

IN DEMAND: Baan Charn Talay in Hua Hin has received a good sales response, second only to Sri Panwa among CI’s properties

Political battles and gamesmanship have had a far-reaching impact on every economic sector, including large property developers such as Charn Issara Development (CI).

The company only started seeing sales pick from February after almost no activity from June last year until January this year, according to managing director Songkran Issara. Sales also slipped back during the turbulent Songkran period but are now reviving, he added.

In his view, CI’s generally up-market clients are more worried about possible new activity by the red shirted supporters of former prime minister Thaksin Shinawatra. The prolonged protests of the yellow shirted PAD last year certainly had an impact as well, and any unrest triggered by either group is extremely detrimental for the country.

“The red shirts’ action was brief. When they emerged people thought they were not strong and so weren’t afraid, and Prime Minister Abhisit Vejjajiva had also just taken the helm,” says Mr Songkran. “But in a little while they built up momentum and became strong, leading to the situation deteriorating. After one or two months it turned bad again, but the second half of last year was awful.”

Just as the market seems to have perked up a little again, the country has suffered another setback with fears about the H1N1 strain of influenza leading to a further slowdown in the money-spinning Thai tourism sector. As tourism revenue dwindles, more workers are losing their jobs with hotels too up for sale. Chiang Mai has been very badly hit, followed by Bangkok, but Pattaya and Phuket are a little better off with occupancy down by about 30%.

However, Mr Songkran said his company’s Sri Panwa resort in Phuket was not much affected by the plunge in tourism. At the luxury development, 40 pool villas have been sold and another 18 large four- to five-bedroom villas have been retained for rental, attracting high-end Thai and foreign visitors. It is Europeans travelling on budget package tours who are staying away, but they are not among the resort’s clients.

CRUISING: Charn Issara Development managing director Songkran Issara, left, and friends cruise on a boat with Sri Panwa Resort in Phuket in the background.

CRUISING: Charn Issara Development managing director Songkran Issara, left, and friends cruise on a boat with Sri Panwa Resort in Phuket in the background.

CI’s revenue stream is set to flow steadily from now, though, because it has completed the Issara@42 condominium in Sukhumvit Soi 42 with buyers expected to move in within two months. Buyers have already begun moving into the fully finished Ban Charn Talay seaside condominium in Cha-am.

Construction of its high-rise condominium tower, The Issara Lat Phrao, is well under way with the foundation finished. “Many of our projects are at the completion stage and we have sold 60% so now we are pushing the sales of the remaining 40%,” said Mr Songkran.

Of all CI’s projects, Sri Panwa in Phuket is doing the best followed by Ban Charn Talay. Bangkok is seen to be a very competitive market with many hurdles needing to be cleared to build any sort of project at all.

While Mr Songkran is always looking around for good land plots, he said he would do so more actively in the third and the fourth quarters of this year, with a focus on single-house and condominium projects.

He says condominiums near the Skytrain and underground stations are still selling as are others in the inner city. Less successful are single-house developments and large condominiums nowhere near train routes. The fact that many buyers are finding it tougher to get financing from cautious banks also hurts. “I think middle- to low-level condominiums will be hit as will single houses in the suburbs.”

The trouble with suburban houses in Bangkok is that they are often difficult to sell at a good price in the secondary market because Thais prefer buying new property. While there is a market for second-hand condominiums in good locations, buying power has been sapped with foreign buyers no longer active.

Prices vary from segment to segment but while Mr Songkran has noticed that the international property market seems to have bottomed out, he is uncertain whether the local market has done so.

“It might dip a little before it stabilises in about six months’ time and then slowly rises. It trails the overseas market a little; the impact on our market is slightly slower.”

Mr Songkran praised the government’s move to extend Bangkok’s mass-transit rail network with the BTS now crossing the Chao Phraya River to Wong Wian Yai. He also believes that the Airport Rail Link, which is due to start trial runs on Aug 12, should be extended all the way to the eastern seaboard. This would be easy to do because a rail line already exists and the only investment would be in new trains and some stations.

“After reaching the airport, change trains and this would take you to the eastern seaboard passing through Chon Buri. Now, as Chon Buri is heavily populated it should be worthwhile implementing this project and of course, taking it further to Pattaya.”

While economic conditions are uncertain right now, Mr Songkran advised those who have money in the bank and have not invested in anything at all to consider diversifying and invest some of their savings in stocks and property.

“This is a good opportunity to buy - at good prices - after this crisis good land plots will be used up. And the situation right now, with construction costs not at all high, means the market is in your hands so it’s a good opportunity.”

About the author

Nina Suebsukcharoen Nina Suebsukcharoen
Nina Suebsukcharoen is a senior journalist with The Bangkok Post, Thailand's first English language newspaper and specialises in the property and real estate sector.
Other posts by Nina Suebsukcharoen ( 28 )
Website: http://www.bangkokpost.com/

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