Patcharee Lueng-uthai

          The Nation

          Some big players shift to build in outer suburbs Property developers are more cautious on new project investment in 2019 after the market outlook is showing signs of slowdown especially the condominium segment.

          The LTV limits due to take effect from April 1, 2019, the potential rise in loan interest rates and downward trend for foreign demand especially Chinese buyers as well as the global economic uncertainty, are posing challenges for developers. The property market is anticipated to soften in terms of demand, value of transfers and new project launches.

          Due to a lot of unsold units and weakening demand, the developers reduced their investment in condo projects turning a focus on single deteched house and twonhouse development projects. Further, the new supply launches are to tap middle-income to high-end segments. Lending curbs and rising interest rates would dampen the purchasing power of low-income homebuyers, while banks' mortgage loan rejection rate would be higher.

          The Real Estate Information Center (REIC) expected that the overall property market this year would decline by 5.3 per cent from last year. Significantly, the new condo supply in Bangkok and greater Bangkok was expected to drop by 10 per cent from 66,000 units launched last year.

          Economic Intelligence Centre (EIC), Siam Commercial Bank forecasted that in 2019 the number of property ownership transfers would drop by 10 per cent to Bt760 billion as the total presales of housing projects in Bangkok and greater Bangkok would decline by 14 per cent to Bt510 billion compared to the same period last year. The condominium market was anticipated to be the biggest drop causing property developers to suspend the launch of new condo projects this year.

          According to the Bank of Thailand, Chinese investors played a crucial role in the property market through the purchase of condos, office rents and joint ventures with Thai developers.

          In 2018, Chinese buyers represented 43 per cent of overall foreign buyers in condo market with transactions jumping by 69.5 per cent from the year before to Bt39.2 Billion.

          TURNING A FOCUS ON LOW-RISE DEVELOPMENT

          With the growing fears of stagnant demand in condominiums, the property developers revised their business plans in 2019 shifting investment to penetrate the low-rise residential market both in Bangkok and provincial areas.

          Land and Houses (LH) decided to suspend condo investment this year to only focus on low-rise market. This year, LH would launch 11 single detached house projects and 5 townhouse projects.

          AP has placed an emphasis on low-rise development with a plan to launch 34 signle detached house and townhouse projects in 2019 and only 5 condo projects.

          Sansiri revised its business plan by reducing condo investment to focus more on low-rise development. The company planned to launch 28 new projects this year worth Bt46.6 billion which are 9 single detached house projects, 7 townhouse projects and 12 condo projects.

          LPN Development also shifted its investment to the low-rise residential segment in order to avoid risk of condo market. LPN planned to launch 16 new projects 10 of which would be low-rise developments.

          Property Perfect has turned to low-rise residential developemtn with a target on upper middle to high-end markets. During the first quarter of this year, PF would launch 4 projects under the joint venture with Sekisui Chemical, a Japanese home construction and real estate development firm. They all are single detached house projects located on Krungthep Kreetha Road, Modular homes will be developed in the new phases of Perfect Masterpieces, starting in 4 locations Krungthep Kreetha, Ramkhamhaeng, Chaeng Wttana and Rattanathibet.

          Based on the Modular home concept, a Japanese construction innovation, the new projects aim to make life more comfortable with air factory system and air tightness technology to prevent dust.

          Songkran Issara, CEO and president of Charn Issara Development, previously commented that the LTV limits would have on impact on customers in the high-end housing market especially the projects in CBDs because of limited supply. About 60-70 per cent of customers in the luxury housing segment would buy the properties in cash.

          Last month, Charn Issara launched a super luxury single detached house project "Issara Residence Rama 9 Worth Bt2 billion. Located on a 9-rai plot on Rama 9 Soi 13, the project has only 20 units with unit prices between Bt100-Bt70 million.

          MBK Real Estate has planned to launch a lusury gome project Quarits Rama 9 in the third quarter of this year. It has only 14 single deteched houses with the price range between Bt50-90 million.

          Cheewathai is buiding a luxury townhome Heart Sukhumvit 36 Thonglor Station due for completion at the end of this year. There are only 10 units with prices starting from Bt29.9 million.

          Atip Bijanonda, president of the Housing Business Association, said that the twonhouse/townhome market has bright prospects resulting from the progress of new mass transit routes. So, people don't have to concentrate in downtown condominiums where unit prices are much higher than townhouses.

          The developer Supalai was successful in its duplex and townhome projects launched last year. It is in Lat Phrao Soi 107 accessible to a yellow mass transit line. Golden Property has also eyed the potential market with the launch of townhome projects in Sathorn and Baring.

          All Inspire Development introduced The Vision townhome in Navamin 85 as its first low-rise project. Pruksa Real Estate also plans more investment in townhouse and townhome projects along the mass transit routes in suburban areas.

          AP (Thailand), the leader of the townhome market in Bangkok, has a plan to launch 11 townhome projects during the first half of 2019 which will be located along the mass transit routes.

          In addition, the three-storey townhome with a 5 to 5.5-metre wide frontage is becoming a popular type for homebuyers.
          Prateep Tangmatitham, board chairman and CEO of Supalai, said that due to the property market slow-down in Bangkok and greater Bangkok and high land prices, the company would gear up its investment in the provincial areas. Supalai set a target the the provincial projects sales this year would represent 27 per cent of Bt35 billion in total sales and increase to 30 per cent in the next few years.

          MJ One Group, a subsidiary of Major Development, planned to detached house projects this year. Now, MJ One is introducing Mavista Prestige Village on Krungthep Kreetha road worth Bt1.4 billion. Located on a 12-rai plot, the 3-storey home project has only 14 units with unit prices from Bt90 to Bt170 million. The second project would be launched in the second half of the year. Moreover, MJ One would sell a fully-furnished low-rise concominium Mieler Sukhumvit 40 in June. The 7-storey building has only 24 units with unit prices starting from Bt20 million.

          Grand Unity will launch it first super luxury condominium "Anil Sthorn 12" in the third quarter of this year. The 42-storey building will house 222 units with unit prices starting from Bt11 million.

          Chaopraya Mahanakorn or CMC Group has changed its business plan to reduce business risks. The company is now negotiating with potential strategic partners from Japan, China and Singapore. The planned joint ventures are to develop real estate and new business.

          At present, 99% of total revenue came from the properties for sale. CMC set a target that in the next five years, a half of  its revenue would be contributed by property projects for rent including hotels, office buildings, apartments as well as new business such as startups, IT and Fintech.