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Winds of change for realty

By on Jan 02, 2013 in Property News

The government’s policy to splurge more than Bt1.1 trillion from 2013-19 on infrastructure is redrawing the landscape for the real estate market.

“This is a time to change the property market to urbanisation rather than focus on Bangkok only,” Naporn Sunthornchitcharoen, senior executive vice president of Land & Houses Plc, said yesterday.

Urbanisation means the market will expand from Bangkok’s central business districts (CBDs) to the outskirts of the capital and beyond the border as well as to major provincial cities.

Building techniques will be developed to speed up the construction process so that supply can meet the surging demand for residences both in Bangkok and upcountry.

Following the market shift, residential demand will shift from condominiums, which accounted for half of total market value in the past couple years, to townhouses and single family homes when the mass transit system extends from Bangkok’s CBDs to fringe communities.

According to the mass transit master plan of the Transport Ministry, the ministry will develop 10 mass transit routes worth Bt370 billion. Six routes will be completed by 2015 and the remaining four by 2019.

They include the 65-kilometre Red Line from Rangsit-Mahachai, 30km Red Line from Taling Chan-Suvarnabhumi and 19km extension of the Green Line from Mo Chit-Saphan Mai and Taksin Bridge-Bang Wa.

Next are the 24km extension of the Green Line from Pran Nok-Samut Prakan, 27.2km extension of the Blue Line from Tha Phra-Bang Kae and Bang Sue-Hua Lampong, 23.8km Orange Line from Bang Kapi-Bang Bum Ru, 43km Purple Line from Bang Yai-Ratchburana and 32km Yellow Line from Lat Prond-Ratchadaphisek-Bang Kapi-Srinakarin-Thepparak-Sam Rong.

The others are the 41km Pink Line from Pak Kred-Chaeng Wattana-Lak Si-Ramindra-Suvinthawong and the 9.5km Brown Line from Bang Kapi-Suvinthawong. The total length is 338.3km.

The Transport Ministry is also planning four high-speed train routes with a combined length of 767km worth Bt780 billion – Bangkok-Chiang Mai, Bangkok-Nakhon Ratchasima, Bangkok-Hua Hin and the extension of the Airport Rail Link from Suvarnabhumi-Rayong.

The ministry has also budgeted Bt179 billion to build five motorways next year with a combined length of 707km. The government’s infrastructure master plan opens business opportunities for property developers to expand to outer Bangkok and also creates new markets along the mass transit tracks.

Srettha Thavisin, president of Sansiri Plc, which moved aggressively into the provincial market this year and targets strong growth next year, said the mass transit system has influenced developers into turning their sights from Bangkok to the provinces. The mass transit links between the CBDs and upcountry will make it easier to commute and gives homebuyers alternative locations with convenient transport access.

“Up to 30 per cent of our pre-sales worth Bt42 billion this year came from the provinces that we entered this year. This is also a challenge for our expansion next year, as it creates a new market segment,” he said.

The new market segment for property firms next year are low-rise residences such as townhouses and single family homes in suburbs that are located close to the new and extended mass transit routes such as Bang Yai, Samut Prakan, Rangsit and Suvinthawong.

Condo projects become part of the mix in areas located close to the CBDs of a province, or to a university, or to new tourist destinations located close to Bangkok such as Khao Yai, Rayong and Hua Hin.

The Asean Economic Community (AEC) is another factor that will drive property firms to provinces located close to neighbouring countries such as Nong Kai, Udon Thani, Ubon Ratchathani and Kanchanaburi.

“We see demand for homes in Udon Thani especially from investors who expand in Vientiane, Laos because Udon Thani has infrastructure and better facilities than Vientiane.

“Most of them buy a place in Udon and work in Vientiane, which is only one and a half or two hours away by car,” said Porntip Thanasriwanitchai, president of the Udon Thani Property Club.

“Land & Houses was also interested in buying land in Udon early this year,” she added.

Thongma Vijitphonphun, managing director and CEO of Pruksa Real Estate Plc, said the AEC would open opportunities for Thai property firms to expand both locally and in AEC countries. Except Vietnam, Pruksa is studying the potential of countries in the AEC, especially Indonesia.

Although property prospects look bright for 2013, the market continues to be dominated by the top 10 firms, which control nearly 70per cent of the market valued at Bt150 billion-Bt200 billion a year.

These firms can react quickly to new investment opportunities because they can raise capital from the market and get project loans from banks. They also have the technology to speed up their construction to deliver their residential projects to their customers on time. Shorter construction times also mean savings in financing costs.

“In 2012, listed property firms showing strong pre-sales growth covered more than 70 per cent of total market value. Their results did not come only from growth in the property market but also from them taking share away from small and medium property firms that have less capital to compete with the market leaders till they have to drop out of the market,” said Naporn Sunthornchitcharoen, senior executive vice president of L&H.

Local residential developers will face fierce competition when the big Bangkok players move into their provinces. This is the reason that 2013 will break ground on a new era of the property market with a transformed business environment.

Source : The Nation 26 December 2012

Nora has been in the Corporate Communications arena for a number of years. Nora's role is to communicate all newsworthy items that are of a PR nature.

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