Floods likely to renew interest in condos

Home-buyers are likely to shift their focus to condominiums and ensure housing projects in the provinces are in flood-free zones, according to bank executives.

There will be a renewal of interest in condominium projects after the recent slowdown due to concerns of a bubble.

Residents have seen that low-rise detached houses and townhouses became vulnerable during the recent flooding and hence there is likely to be a surge in demand for condominiums. Developers are expected to focus on this segment while they must rebuild their ongoing projects to ensure they can withstand floods, several bankers said.

Thakorn Piyapan, executive vice president at Bank of Ayudhya (BAY), said he expected banks to move into the condominium market taking into account the scope, but they will have to wait and see the strategy of developers involved in some 50,000-60,000 ongoing projects in flood-hit areas. 

Most of the ongoing projects are detached houses and townhouses.

Thakorn said construction of a condominium project took about 10-18 months, longer than a low-rise project.

Also, the amount of loans that banks grant for condominiums as project financing and post-construction financing is lower than that for low-rise homes. Hence mortgage growth in 2012 will be a challenge for banks, Thakorn said.

Tinnakorn Boonyakalin, senior vice president at Krung Thai Bank (KTB), said he expected the market for condominiums to improve again, and this could help maintain mortgage growth.

Condominium projects along the mass-transit lines will have a bright outlook. KTB is financing several such projects.

He said KTB would try to maintain its new-home-loan target of Bt40 billion next year, the same amount as this year.

Praphan Anupongongarch, executive vice president at Thanachart Bank, said it still saw an opportunity in the flood crisis, especially in the unaffected areas, including the provincial housing market. 

TBank has lowered its target for new home loans for the year to reflect the impact of the floods.

BAY expects the flood crisis to hit buyer sentiment, hence the target of Bt30 billion for new home loans this year will not be achievable, Thakorn said. New home loans are expected to be in the range of Bt25 billion to Bt27 billion.

In 2012, BAY projects new home loans might be lower than Bt25 billion as flood-affected people focus on repairing their houses, while new buyers who prefer detached houses or townhouses would take more time to make their decision to ensure they are in areas safe from floods.

The government must launch aggressive packages to stimulate the housing market and mortgages, the BAY executive said.