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Bangkok Condominium Residential Developers Face Challenging Year

By on Jan 06, 2014 in Property News, Residential

A WORSENING labour shortage, rising land and construction-material prices and the economic slowdown are major challenges for Bangkok condominium property firms seeking to boost sales next year, having achieved record sales value of nearly Bt800 billion this year. Thongma Vijitpongpun, president and chief executive of market leader Pruksa Real Estate, said 2014 would be a challenging year for residential developers, as the market would face a serious labour shortage when the government’s Bt2-trillion mega infrastructure programme gets under way.

The property market has already been grappling with a shortage of workers after the sector’s huge investment in condominium construction over the past two years.  Many developers have had to change their construction process from the traditional to the ready-to-build concept, especially the prefabrication system, and this has helped them reduce the number of labourers needed to build their homes, he said.  However, when the government’s mega-project starts to kick in, it will hugely increase the demand for construction labour across the country, absorbing workers from the property sector in the process, Thongma said.

Meanwhile, property firms are having to expand their new residential projects far from Bangkok’s central business districts (CBDs), where land prices are too high for development purposes and homes would cost more than the market could bear.  These price levels have forced property firms to seek new locations close to the mass-transit system, but in areas where the cost of land is still reasonable enough to develop residential projects. Construction is under way in many of these locations.  For example, roads close to the Purple Line rail route from Bang Sue to Bang Yai, which is scheduled for completion in 2016, and the Red Line from Bang Sue to Taling Chan and Bang Sue to Tha Pra are the most popular new locations for developers launching projects outside the costly CBDs.

Provinces outside of Greater Bangkok are also new locations for property firms planning to expand their residential coverage next year, with many developers especially cashing in on demand in tourist destinations, as well as in provinces close to neighbouring countries ahead of the launch of the Asean Economic Community in 2015.

While developers face a host of negative factors impacting their business in 2014, there is one factor that should benefit the sector – lower interest rates.  “Low interest rates will help customers reduce their costs by paying lower monthly instalments. This may help property firms to drive their sales growth next year, although the market will expand by less 10 per cent,” said Supalai CEO Prateep Tangmatitham.

Despite the generally negative outlook hanging over the residential sector next year, the top 10 listed developers are continuing to launch new projects, with nearly 200 worth more than Bt300 billion already announced for 2014 – and located in Greater Bangkok and the provinces.

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