STORY: KANANA KATHARANGSIPORN

          With a sluggish market outlook, real estate developers are looking to other segments such as of  ce towers, hotels and even in vitro fertilisation to maintain growth

          Diversication and adjustment are key strategies for property developers to apply to sustain their growth in the long run as the residential market continues to decelerate this year.

          "Both demand and new supply in the housing market will drop as sentiment is weakened by the new lending curbs and an economic slowdown," said Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC).

          the centre forecasts the number of housing transfers in 2019 to decline by 18% to 161,457 units worth 480 billion baht. New home loans will decrease by 2.8% to 697 billion baht.

          New supply being launched this year is projected to drop by 5.3% from 2018. The key driver is condos, which will decline by 10%, from 73,208 units to 66,034, the REIC reckons. But new supply of single houses and townhouses will grow slightly, from 45,063 units to 46,010.

          Suphin Mechuchep, managing director of property consultant JLL  ailand, said demand in the residential sector remains strong but many factors are challenging the market, including an increasing glut of unsold supply.

          "The market environment has changed, so developers need to adjust strategies to maintain business growth," she said.

          After learning that the Bank of Thailand would impose stricter mortgage rules starting in April 2019, condo developers slowed new launches starting in late 2018, continuing into the  rst quarter this year.

          They focused on clearing completed condo inventory because sales would be more di  cult once the new lending curbs took e ect.

          "Developers should limit new condo launches this year, or it could lead to a huge oversupply in three years," said Phattarachai Taweewong, associate director of research for Colliers International  ailand.

          Colliers reports that the number of new condo launches in the  rst quarter this year fell by 40% year-on-year to 8,443 units worth 45.4 billion baht, down from 86 billion.

          Of this amount, 2,400 units were under the Baan Pracha Rat low-cost housing scheme, meaning developers released just 6,000 units.

          Mr Phattarachai said developers are planning more condo launches in the second half, with many listed  rms determined to record business growth.

          Some developers have diversi ed into non-residential business for new sources of income, eschewing the housing sector as the main income driver.

          Ananda Development is investing to develop six serviced apartment complexes in  ong Lor, Sathon, Rama IX, Sukhumvit Soi 8 and Pattaya through joint ventures with Japanese developer Mitsui Fudosan.

          The developer also expanded its strategic partnership with SET-listed hotelier Dusit Plc, purchasing a 5% stake in the latter with an investment of 510 million baht in the  rst quarter.

          LPN Development Plc weathered the condo market slowdown, stricter mortgage requirements and fierce competition by jumping into the office sector last year with the development of office towers in the Chatuchak area.

          In the first quarter, LPN joined developer Nye Estate Co to develop a Grade B office tower with a lettable area of 22,600 square metres on Rama IV Road in Khlong Toey district, mustering an investment of 3.8 billion baht.

          "The office market is robust, particularly in central business district areas like Rama IV, which saw a leap in growth the past few years," said Opas Sripayak, managing director of LPN.

          High-end condo developer Raimon Land Plc also jumped into the office sector, following its entry into food and drinks last year as the residential market slowed.

          Raimon Land is developing One City Center, a new Grade A office building on a leasehold plot in Ploenchit Road with a lettable area of 65,000 sq m.

          The company will also invest in a hotel and the in vitro fertilisation (IVF) business to capitalise on strong demand from Chinese couples. The hotel in Khao Yai will partly support IVF customers in their recuperation.

          "Diversi cation is our plan to create a stable recurring income stream," said Raimon Land chief executive Lionel Lee. "Luxury property demand depends largely on the macro situation, as our buyers are from around the globe. We forecast a market slowdown for the next few years because China and Europe are sluggish."

          Other residential developers diversifying into the office sector include Sena Development Plc, which has a joint venture with Aira Capital and contractor Sangfah Construction to develop an office tower near the Ratchathewi intersection.

          Major Development Plc plans to develop Major Tower Rama 9 on Ramkhamhaeng Road with a lettable area of 10,000 sq m, while Origin Property Plc will construct 4,000 sq m of office space in Sukhumvit Soi 24.

          Meanwhile, SC Asset Corporation Plc looked to the US for diversi cation, planning to spend 1 billion baht to buy rental apartments in Boston because the market there has rapid growth.

          The office market is robust, particularly in central business district areas like Rama IV, which saw a leap in growth the past few years.