Developers to push projects in Q3 in pursuit of targets
RESIDENTIAL developers will continue to launch projects in the second half of this year, especially in the third quarter, to achieve their sales target after growth in the first half was lower than estimated.
According to a survey by The Nation last week, most listed and non-listed property firms will roll out single family home, townhouse and condominium developments to boost their sales in the rest of this year.
The property market in the first half expanded less than 5 per cent from the same half last year.
Most of them will bring up their sales openings to the third quarter as demand for residences in the last quarter is expected to cool off.
“We will speed up our sales in the third quarter of this year because the market has signs of growing slightly or maybe dropping in the last quarter of this year,” Wongsakorn Prasitwipat, chief of business development at Property Perfect Plc, said recently.
Atip Bichanond, president of the Business Housing Association, said the real estate market in the first half was slower than earlier estimated, following the country’s tepid economic performance, as homebuyers delayed their decision-making.
Commercial banks also restricted mortgage loans to customers. This directly impacted the demand to buy residences in the market, he said.
Low-rise homes such as single family homes and townhouses still maintained growth on average of 5 per cent, but the condominium market dropped in the first half, especially for condos priced lower than Bt2 million, when most of them faced a high rejection rate for mortgage loans from banks.
The Real Estate Information Centre of the Government Housing Bank forecasts the worst case for property market in Greater Bangkok at only Bt387.9 billion in the value of new residential transfers.
This decline of 12.7 per cent is based on the market still growing slightly and some segments contracting in the second half, especially condo projects.
However, if the property market recovers in the second half, it may show strong growth of 6.8 per cent to Bt474.1 billion compared with last year.
With the market trend, most property firms have initiated special marketing campaigns.
For example, Chawathai Plc is discounting prices by up to Bt200,000 for Chewathai Residence Bang Po from Bt4.1 million to Bt3.9 million per unit.
Ananda Development Plc is offering one price of Bt3.59 million for all units of Ideo Mobi Bang Sue Grand Interchange, and cutting prices for Ideo Mobi Wong Sawang by Bt500,000. Most property firms are also moving away from the lower income market, with residences priced below Bt1.5 million per unit, toward the middle market with prices over Bt2 million, as banks are wary of lending to the lower income market.
“We have to shift our customer target from the lower- to the middle-income market when most of our condo projects at prices lower than Bt2 million per unit were hit by banks rejecting more than half of our customers. We could not transfer our projects to our customers.”
This affected financial results in the first quarter of this year, Opas Sripayak, managing director of LPN Development Plc, said after unveiling its new condo brand, The Select Kaset Nawa Min, last week. This is its new condo project focusing on the middle- to upper-income market.
Piya Prayong, chief executive officer of Pruksa Real Estate Plc, said the company has to pre-approve its customers before signing sales contracts for its residential projects since banks are restricting mortgages to middle- and lower-income earners who don’t meet the banks’ requirements.