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Property companies turn to low-rise homes as condo market cools

May 05. 2019
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By SOMLUCK SRIMALEE
THE NATION

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DEMAND for detached houses and townhouses are expected to rising despite the loan-to-value (LTV) measure coming into effect, as this market sector experiences real demand, according to a survey by property agency Plus Property Co Ltd.

The survey found the rise in demand for low-rise property, including single detached houses and townhouses during the second half of 2018. Demand and supply are growing for both detached houses and townhouses, and sales are expanding from the previous year.

The supply of detached houses has increased by 13 per cent from the same period of the previous year, whereas demand increased by 46 per cent; the sales tally stood at 44 per cent of supply. Meanwhile, the supply of townhouses increased by 21 per cent and demand expanded by 26 per cent; sales were 47 per cent of supply.

Detached houses and townhouses in the suburban areas serviced by transportation linkages received a warm response from buyers. As for the direction of the low-rise market in 2019, PLUS expects the real demand for residency and momentum resulting from developers’ campaigns to expand the market at a similar level to 2018, despite the implementation of the LTV mortgage measures by the Bank of Thailand (BOT).

The company’s deputy managing director, Suwannee Mahanarongchai, said prices in the Bt3 million to Bt5 million bracket remain the market’s primary selling group and are able to generate decent sales in the suburbs and peripheral provinces of Bangkok. Development sites of property projects at this price level have increasingly expanded towards those areas. Meanwhile, improvement in transportation such as the construction of roads and several mass rapid transit lines to serve these areas is allowing for easier commutes to the downtown area.

The townhouse market has been found to be equally attractive. The townhouse market continually expanded in the second half of 2018, and supply on offer rose by 21 per cent over the previous year to 36,200 units – the majority of the units were priced within Bt5 million. Compared to the same period of the previous year, new supply within the townhouse market grew by 24 per cent at 16,000 units in the latter half of 2018. Demand response reached about 17,200 units, translating into a sales ratio of 47 per cent. Total demand in the latter part of the second half of 2018 rose by 26 per cent year on year and by 66 per cent over the first half of 2018. 

According to the market trend, most property firms plan this year to launch low-rise residential projects, including townhouses and single detached houses.

“We revised our business model to focus on single detached houses and townhouses when we saw strong demand in this market segment,” LPN Development Plc chief executive and managing director, Opas Sripayak, said in a recent interview with The Nation. 

 “The demand to buy condominiums by both local and foreign investors, especially from China, was expected to drop in the second half of the last year till now,” he added.

 Prasert Taedullayasatit, chief executive officer for the premium market at Pruksa Real Estate Plc, said the company had revised its business model to focus on low-rise residences – townhouses and single detached houses – because that is where the real demand is within the domestic market.

 “For our premium market, we had to select the location and also design the products to match specific demand in the market. This year will be tough for property developers, but we continue to have confidence the market will maintain at least last year’s [level],” Prasert said. 

 Naporn Sunthornchitcharoen, who chairs Land and Houses Plc’s board, said earlier this year that the company had revised its business model to focus on low-rise residential projects for 2019 when they saw the demand for condominiums was going to drop. 

 This year, the company plans to start 16 projects with a total value of Bt26.96 billion, with 14 projects in and around Bangkok and two elsewhere in the country. All projects are single detached houses, twin-houses or townhouses.

 Of the total sales for this year, 72 per cent are expected to come from single detached houses and twin-houses, 8 per cent from townhouses, and 20 per cent from condominiums, he said.

 With regard to the BOT’s new measures to tighten credit underwriting standards for mortgages, Land and Houses has adopted a wait-and-see approach, Naporn added. 

 

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