Panon eyes single houses in weary North

Panon eyes single houses in weary North

CHIANG MAI: Panon Co Ltd is concentrating on low-rise (single-house and townhouse) development, with plans to launch two projects next year worth a combined 500 million baht or more.

"The condo market here remains sluggish as there were too many launched in the past few years, driven by a change in city planning in early 2013," said managing director Anon Noi-Am. "There has been no sign of recovery in the condo segment despite the peaceful political situation."

Like Bangkok's property market, Chiang Mai's felt the pinch from the political crisis and the country's economic slowdown in the first five months of 2014.

Since June, when the political climate calmed down, improved sentiment has arisen in the single-house and townhouse segment with a few units sold each month — up from one or none.

The central bank reports the total area of construction permits for condo projects in the Chiang Mai area was 230,000 square metres in 2012 and 140,000 sq m in 2013, up from 30,000 sq m in 2011.

Mr Anon pointed to several condo projects, all by local developers, that are frozen or delayed because of weak finances.

"The main reasons were their customers stopped down payments or their sales rate was lower than the financial institutions that gave them project loans expected," he said. "Some sold-out projects could deliver only 30-50% of the total units, as customers were not confident and some were speculators."

Panon plans to launch Phase 5 of Baan Nonnipa View Doi as one of next year's projects. Phase 5 will sit on Soi Wat Thung Muen Noi near Maejo University and comprise 200 units priced at 2-3 million baht.

The new phase comes on the heels of Phase 4's strong showing, with 40 units sold since the launch two months ago of 87 units worth 400 million baht.

"Demand for single houses priced near 2 million baht is strong because the segment is considered mass-market in Chiang Mai," said Mr Anon, 33.

Monthly household income in the area is typically 30,000-40,000 baht.

Half the sold units have gone to local people and the other half to non-locals doing business, people with children studying in Chiang Mai or retirees.

Monthly rental rates are 15,000-18,000 baht for single-storey houses and 20,000-25,000 baht for two-storey homes.

Panon has nearby land plots spread over 500 rai, with 200 rai developed in four phases since 2009. The company has a 200-rai plot on Central Ring Road where it intends to develop a townhouse and home office project with units priced from 4 million baht.

When finished, the project is tipped to become the future central business district of the province.

Panon Co was set up in 2007 by Anon's parents, Nikom and Orapin. The firm owns a 500-rai plot in San Kamphaeng, where 40,000 teak trees were planted 10 years ago. It also has 30 rai in Mae Rim and 50 rai in Lamphun.

Mrs Orapin, 70, has collected land plots since 1977 and developed a subplot allocation business that saw good sales in the past before housing estates became popular.

In 1993, the family started a housing development business with a mere 10 townhouses.

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