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Transfer process will speed up, firm says
KANANA KATHARANGSIPORN
Expected interest rate increases are leading the listed developer Preuksa Real Estate Plc (PS) to focus on cutting buyers' rejection rates by speeding up the unit-transfer process, said chief business officer Prasert Taedullayasatit. He said transferring housing units to customers quickly would reduce the rejection rate because the company would be able to re-sell the units more quickly.
The company has seen 22.45% of its customers' loans rejected by banks, up from 18% in the first quarter of 2008 and 19.8% in the fourth quarter of 2007.
PS said the rejections had not been a serious problem and that the company was trying to re-sell the untransferrable units within one month rather than the normal period of two months.
Mr Prasert said the major cause of rejection was lower purchasing power. Most rejected applications were found for single houses and townhouses rather than condominium units as condominium buyers were asked to pay a high down-payment and the payment period was longer.
''We'll try to keep it [the rejection rate] lower than last year's average of 24%,'' he said.
PS last year tried to help its customers obtain housing loans without any rejection by monitoring their credit records and suggesting affordable unit prices. As a result, the rejection rate dropped from 26.5% in the third quarter of 2007 to 19.8% in the fourth quarter. It could also re-sell 10-20% of the rejected units to create sales of 30-40 million baht.
He said the company would keep shortening its business cycle, starting from unit booking, construction, contract signing, unit transfer and post-finance applications. So far it has reduced the construction period from 180-days to 110-days for single houses and townhouses.
At the same time, it is trying to reduce the unit transfer period to within 60-days and co-ordinate with financial institutions to approve loan applications faster than the normal 30-days.
Research by Phatra Securities Plc suggests that even though PS had tried to diversify its projects from low-end townhouses, the concentration of its products was still in the range of one to two million baht a unit.
''This segment would be affected from the rising interest rate environment due to lower buyers' affordability,'' said the company.
At the same time, industry risks this year would include soft demand due to weaker-than-expected economic conditions, higher-than-expected rejection rates from rising interest rates, higher-than-expected competition and rising construction costs.
Tris Rating yesterday upgraded the ratings of PS and its existing debentures to A- from BBB+. It has also assigned an A- rating to PS's proposed issue of up to 1.5 billion baht worth of senior debentures due in 2011. The outlook is stable.
Tris said the upgrade reflected PS's strengthening business profile and the ability to fund growth without weakening its financial position. The ratings also take into consideration PS's leading position in the low-priced townhouse market. It also considered its record in low-and mid-priced single detached houses, its ability to grow in the condominium market, its ability to control construction costs, and its financial position.
PS shares closed yesterday on the Stock Exchange of Thailand at 8.80 baht, down five satang, in trade worth 17.13 million baht.
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