SME developers reluctant to invest in prefab systems despite bank's urging
MOST small and medium-sized property developers remain reluctant to produce prefabricated components on the site of their projects as they are worried about the cost of investing in such a system, says Kiatnakin Bank (KKP), the major provider of project f
Over the past year, KKP has recommended to developers that they use prefab systems instead of contractors to avoid problems related to labour shortages, but about 90 per cent of their 300 customers opted against such an investment, said Vissarut Panyapinyopon, vice president for real-estate lending.
“The value of such an investment is a worry for these customers. Therefore, we have to provide comprehensive information and invite developers who do use prefab components to share their experiences with the undecided at our seminars,” he said.
He said the investment in a prefab system for a residential project would be no more than Bt10 million, which could be covered by sales of five housing units a month.
KKP will not only provide a credit line to developers who set up a prefab system but also offers to improve their bargaining power by getting cement manufacturers to charge reasonable prices for the materials needed to build the components.
“The increased volumes of cement required by these property developers will attract manufacturers to reduce prices, which is our solution to help small property developers,” Vissarut said.
Currently, 10 companies provide prefabricated components but they are unable to supply small and medium-sized developers because most of these firms’ output is snapped up by large developers. Therefore, the smaller developers should make their own parts and components to ensure their projects are constructed quickly, he said.
“Prefabricated components can reduce construction time from eight months to just two. Small and medium-sized property developers will eventually have to adopt this model because of the ongoing labour shortage and the trend of rising wages,” he said.
KKP offers credit lines of Bt20 million to Bt1 billion to this segment.
Vissarut said that despite rising costs and lower consumption, its customers this year launched 130 new housing projects, which was a healthy growth rate. He said about 60 per cent of these new projects were in and near Bangkok and 40 per cent upcountry.
The bank currently has outstanding loans in this segment of Bt30 billion from 400 housing projects, while new loans this year are expected to rise to Bt30 billion from Bt28 billion last year.
About 75 per cent of its customers’ projects are low-rise, which don’t take long to build, making for quick repayment of their loans, he added.
