|
|
| • EXCH RATES |
|
Baht/$ 33.68/71
Bid/Ask
|
GOLD |
14,900
+ 200
|
|
Property Insights
NIGEL CORNICK
No one can dispute that costs have been rising for the property industry in Thailand and some developers in the low- to midmarket segment may be feeling the pinch.
Record-high fuel costs are affecting energy and transport costs. Demand for construction materials is high too, placing a premium on prices. In the face of such challenges, many developers may look to downgrade materials, specifications or simply delay projects.
However, increases will have less impact on the market's upper end and will not impinge on the high specifications luxury developers have set.
For one thing, high-end buyers accommodate higher prices to a greater degree than those seeking lower-end residences, who are much more price-sensitive. Premium real estate buyers also understand the reasons behind the increased costs and absorb them.
It is a fact of life currently that raw material costs such as steel - its price has doubled in the past 12 months - and concrete are difficult to control, as they are staples of the building industry. This has led to some developers, including our company, Raimon Land, to take steps to hedge by paying upfront to secure a better price. This is one way that developers can manage costs.
It is a very volatile situation compounded by high worldwide demand driven by the huge appetites for materials in China, the Middle East and India.
Take our upcoming development, 185 Rajadamri. Prices will eventually break through the 300,000 baht per square metre price barrier, which would be double the average price budgeted when we acquired the site some time ago.
However, the quality of the product and location will be the key factors in driving the price up over time, rather than the increasing costs of construction.
Thailand still holds a strong advantage over other countries in the luxury condominium sector. There will be some convergence on price, but fuel costs overseas are higher than in Thailand and the pricing here for property is still relatively low compared to international markets. A lot of our buyers still see property here as very competitively priced and extremely good value.
Some developers at the lower end may look to design and specification changes to lower costs, especially on final finishes. They may paint external walls rather than use stone or tiles, lower standards on finishes to interiors and public areas or cut corners on appliances, sanitaryware, glazing and wood joinery.
We will not downgrade any of the specifications at our developments, rather we will check for efficiencies. This will be the same for other reputable luxury developers.
Although there is a certain price to pay for a high level of design efficiency, we are looking at all specifications and designs in great detail to ensure that there is no wastage. We have refined our designs so that the end products are not affected.
At 185 Rajadamri, for example, the elements that set it apart as a luxury development, such as optimised unit planning to maximise prime views to Lumphini Park and the Royal Bangkok Sports Club, and a wide variety of unit types to give buyers flexibility in choosing size, layout and orientation at the expense of building efficiency, all remain in place. We are using 3.8-metre floor-to-floor heights with full-height double-glazed windows to allow for clearer glass with increased thermal performance.
Despite rising costs, luxury property developers should not compromise their quality standards, especially when reaching for new heights in design.
For a condominium to set itself apart as a luxury development, it must continue to embrace key design elements and offer a wide variety of typologies such as simplex and duplex condominium units. A successful luxury high-rise must provide buyers with flexibility regarding unit size, layout and orientation.
Along with surveying all aspects of specifications and design to ensure no material wastage, and forward buying to lock in today's prices, developers should secure good long-term contractor partners to guarantee that projects finish on spec as well as on time.
Currently, there is a shortage of quality contractors, but there are also a lot of properties being marketed, and one must wonder who will be building them. A professional developer should have strategic partnerships with top-notch global contractors, which instills confidence in buyers.
Nigel Cornick is Chief Executive Officer of Raimon Land Public Co., Ltd, Thailand's premier luxury property developer with projects in Bangkok, Phuket and Pattaya. For more information visit http://www.raimonland.com
Prev
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Next
