Local Supalai unit eyes good growth amid flat Hat Yai residential market

"When agricultural prices fell, especially for rubber, which dropped below Bt100 per kilogram, it impacted on housing demand in Hat Yai, cutting it by more than a half since [the beginning of] last year," Pheera Hongchayangkool, director and general manager of Hatyai Nakarin, said during an interview with The Nation last week.

Hatyai Nakarin is 49 per cent-owned by Supalai, a listed residential developer.

The company recorded revenue of Bt800 million in 2013, but the figure slumped to just Bt450 million last year – a fall of some 43.75 per cent.

However, the company expects its revenue to come in at Bt850 million this year, 88 per cent above last year’s level, by focusing on low-rise projects, and especially detached housing.

"Although [overall] residential demand in Hat Yai is only showing signs of flat growth this year, the country’s political situation is more stable and the company plans to launch two detached-housing projects together worth Bt800 million this year.

"When combined with our six existing projects, two of which are condominiums that will transfer to customers this year, they [two new projects] will drive us to our total-revenue target for the year," he said.

Pheera added that local residential demand in Hat Yai was largely from buyers in a number of southern provinces, namely, Songkhla itself and Narathiwat, Pattani and Yala.

Local demand in Hat Yai started to grow strongly in 2011, when home-buyers from Narathiwat, Pattani and Yala started to purchase units in the district.

This boosted land prices, which soon rose from an average of Bt1 million per rai (0.16 hectare) to Bt2 million.

However, recent slower residential demand have meant a levelling off of land prices at roughly the 2011 level, he explained.

Most property developers with a presence in Hat Yai are locally based operators, with only Supalai – via its Hatyai Nakarin unit – and Sansiri, another listed developer, being based in Bangkok.

Thanawat Poonsilp, adviser to the Songkhla Real Estate Association, said residential sales in Hat Yai this year were so far not as good as they had been three years ago.

Real-estate firms have been delaying the launch of new projects since the beginning of last year because of waning purchasing power.

He estimated that purchasing power had dropped by 50 per cent, and sales in Hat Yai had declined accordingly.

He believes this is due to ebbing confidence in the economy and declining incomes.

The falling rubber price has had an impact on the incomes of people in Songkhla province, while the banks are also being much more cautious in providing mortgages, he added.