Thailand Residential Market – Top Developers to Keep Up Investment Next Year
Despite the domestic political turbulence and uncertainty, most listed property firms are continuing to expand their investment next year, with plans to launch new residential projects worth more than Bt272 billion combined.
A survey by The Nation found that the top listed developers plan to launch 235 projects in Bangkok and the provinces during the course of the year, covering the whole spectrum of condominiums, detached housing, townhouses and twin-houses.
Pruksa Real Estate has the biggest plans, intending to launch 50 projects worth Bt50 billion, which is almost the same level as this year.
Sansiri is the next most ambitious player, with plans for 40 new projects worth about Bt40 billion. This is lower than this year’s level, as the company has changed its business strategy and will now get an environment impact assessment (EIA) permit before introducing each new project.
Land and Houses and Supalai, meanwhile, each plans to launch 24 projects – nearly the same as this year – while other listed developers’ plans are summarised in the accompanying graphic.
“Despite the ongoing political turmoil, we believe it will be a short-term issue in relation to the demand in the market, which is still growing both in Bangkok and the provinces. As a result, we plan to launch 50 new residential projects in Bangkok and upcountry,” said Pruksa Real Estate chief operating officer Lersuk Chuladesa.
Outside of greater Bangkok, the company will expand beyond the four provinces in which it is currently active – Phuket, Khon Kaen, Chon Buri (Pattaya) and Chiang Mai – during the year. The new provincial focus will be in the Northeast and tourist destinations, he said.
Meanwhile, the company targets revenue growth of 10 per cent next year, he said, adding, “We believe housing demand will continue to grow in 2014, and especially real demand among buyers purchasing a home in which they will live.”
Property Perfect chief executive officer Chainid Adhyanasakul said about 40 per cent of the company’s 15 new projects next year would be condominiums.
It will concentrate on relatively low-rise condo designs of only eight storeys, because these will require less labour than high-rises and also take less time to construct, at 12-18 months. This will generate income faster than a high-rise condominium project, he said.
The company expects home prices next year to rise by at least 10 per cent, partly due to higher land prices, while the cost of labour will also increase because of the shortage of workers.
This year saw more than Bt100 billion worth of condominium projects launched, swelling the demand for construction labour, he added.
Supalai president Prateep Tangmatitham said the company would spend Bt5 billion to buy land for the development of 24 projects next year, while Bt1 billion would be for expanding overseas investment, especially in land in Melbourne, Australia, for the development of a residential project for sale.
The company targets revenue growth of more than 15 per cent next year, from targeted revenue of Bt14 billion this year.
Eight of the 24 projects to be launched by Supalai next year will be condos, and the remainder will be detached-housing and townhouse projects.
At least seven projects will be in the provinces, including one each in Ubon Ratchathani and Nakhon Ratchasima.
“We are continuing to launch more projects in 2014 after seeing residential demand both in Bangkok and the provinces. The country’s political problems are a short-term issue that will have less impact on real demand in the market,” Prateep said.
Fewer high-rise projects
Around half of the new residential projects to be launched by the end of next year will be condominiums, well below the 70-per-cent level this year.
This is to a large extent because property firms launched a higher-than-normal number of condominium projects in 2012 and during the course of this year, and these take time to build and deliver to customers from 2014 through 2016.
Sansiri president Srettha Thavisin said the company would reduce the number of condominium projects to be introduced in 2014, now that it has a condo backlog of more than Bt40 billion that will be delivered to customers through to the end of 2017.
“We will focus on low-rise condominiums of about eight stories, rather than high-rises. We will also only launch projects when they have been granted an EIA permit. This will build customer confidence when it comes to buying in one of our projects,” he said.
Property Perfect CEO Chainid Adhyanasakul also said his company’s condominium projects to be introduced next year would be eight-storey buildings, as it would take no longer than 12 months to construct each one.
This will reduce construction costs and also speed up income generation for the company.
However, the number of Property Perfect projects due to be launched in the next 12 months will be lower than this year, as condos launched in 2011 and 2012 will be completed and transferred to customers from next year through to the end of 2016, he said.
Research by the Government Housing Bank’s Real Estate Information Centre confirms that next year should see fewer condominium projects than this year’s total of up to 75,000 units, because of an oversupply amid higher construction costs.
The centre’s director-general, Samma Kitsin, said a persistent labour shortage meant property developers could not construct and deliver homes to their customers on time, forcing them to limit their 2014 project launches.
He added that housing prices also looked like increasing by 10-15 per cent next year, driven by rising costs of construction materials, land and labour.
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Source | The Nation 18 December 2013