Kiatnakin Bank eases some loan criteria as property market set to grow

However, the bank has maintained restrictions on loans for projects it considers risky because of their locations or heavy competition. These include condominiums close to the mass-transit extension from Bang Sue to Bang Yai, as a lot of property firms plan launches along that route, Sarawut Charuchinda, head of the commercial lending group of Kiatnakin Bank, said at a seminar it hosted yesterday. 

“We have to monitor whether the condominiums near the Purple Line that will be complete this year can transfer to customers or not. We have to wait and see whether the demand for condominiums in this location is real demand by people who actually want to live there or is driven by speculators. If there are a lot of speculators, that means the project cannot transfer to customers. This would pose a risk for the bank that provided the project loan,” he said.

But overall, Sarawut believes that the property market this year will be better than in 2014, especially for low-rise homes such as detached houses and townhouses. Condominium sales should also improve thanks to government investment in new mass-transit routes in Greater Bangkok.

Pruksa Real Estate’s managing director for condominiums, Prasert Taedullayasatit, who is also president of the Thai Condominium Association, agreed that the property market should grow by 10-15 per cent this year. Last year the Greater Bangkok market dropped by 16 per cent in terms of value and 22 per cent in volume, recording a total market value of Bt293 billion for 91,177 units.

But while the market this year will grow in terms of value, volume growth may be the same as last year or even decline, because some property firms have moved their target markets upscale, he said. 

 

Middle to upper market in focus 

“Many property firms are focusing on the middle to upper market after the mortgage rejection rate for middle-to-lower-income people, those wanting to buy homes costing less than Bt3 million, was more than 40 per cent last year. Because many potential home-buyers in that segment are already carrying high debts, they have lost their ability to get a mortgage from the banks,” Prasert said.

Meanwhile, rental businesses such as hotels, office buildings, and serviced and unserviced apartments look like growing by 2-4per cent this year, said Dr Piyasak Manason, vice president for industrial and economic research at Kiatnakin Bank.

Once the government’s infrastructure projects start in earnest this year, it will drive the demand for apartments as both Thai workers and foreign employees of multinational firms require accommodation.

According to the bank’s research, the demand for serviced apartments will increase by 4 per cent this year, demand for dormitories for manufacturing staff will increase 2 per cent nationwide, and demand for ordinary apartments for middle-ranking staff will increase by 3 per cent.

TCC Land Co vice president Aegatip Rattana-Ari said demand for office space was still growing, the hotel business was holding its own as Chinese tourists replaced those from economically disadvantaged Europe and Russia, but the picture was still unclear for industrial estates.

“Following the market trends, our company’s business strategy this year is to renovate its existing projects rather than to invest in new projects,” he said.