FRIDAY, March 29, 2024
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Residential prices to rise 5-10 per cent

Residential prices to rise 5-10 per cent

LPN changes its target customers as lower-income segment declines

Residential prices will rise by at least five per cent during the rest of this year when the minimum daily wage will increase by 5 per cent with effect from tomorrow, as the land price was also increasing by more than 10 per cent, a property developer said.
LPN Development Plc’s chief executive officer and managing director Opas Sripayak told The Nation recently that when minimum daily wage increases by 5 per cent it will have an impact on the property sector as labour makes up about 25 per cent of total construction cost.
“When the minimum daily wage increases by 5 per cent, it will affect construction cost by about one per cent. Land price has also increased more than 10 per cent this year compared with last year following the government’s planned infrastructure projects. It will boost land prices around the new mass transit routes which are in the construction process,” he said.
The combined impact of the increase in minimum daily wage and land prices will hike residential prices by 5-10 per cent this year, depending on the location, Opas said.
The property market in the first quarter of this year has seen slight growth over the previous year when the demand for residences was limited in the middle and upper segment, while the lower-income market dropped as commercial banks restricted approval of mortgages for those who have the ability to buy residences whose cost did not exceed Bt1 million per unit.
“Normally the demand for residences priced at not more than Bt1 million account for an average of 30 per cent of total residential projects in the market a year. But since last year, the demand for loweri-ncome market has dropped by more than a half. As a result the property market cannot register growth even though the demand in the middle and upper-income market – those who buy residences priced at more than Bt2 million per unit – still exists. But it is limited,” Opas said.
Due to the current market trend, Opas said the company had changed its target customers from lower-income to the middle- and upper-income market by launching residences priced at over Bt2 million per unit. By the first quarter of this year, the company had launched two new condominium projects at Sukhumvit Soi 76 and Cha-Am in Phetchaburi province worth a combined Bt1.4 billion. 

Successful projects
Both projects have been successful with 50 per cent of total project value sold out. Both the projects and existing projects have generated pre-sales for the company of Bt1.8 billion in the first quarter of this year.
In the second quarter of this year, the company also plans to launch three new projects worth a combined Bt7.4 billion. The first project was launched last weekend at Suthisarn under the brand Lumpini Selected Suthisarn-Saphankwan worth Bt1.2 billion with more than 50 per cent sales. The next project will be a mixed-use project combining office, retail, and residential worth Bt5 billion located on Vibhavadi Road. The project after that, worth Bt1.2 billion, will be located on Pinklao district.
The company expects pre-sales from its three new projects and its existing projects in the second quarter of this year of more than Bt4 billion. This is a part of its pre-sales target of Bt18 billion at the end of this year, he said.

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