Condo developers wary about second-half outlook

Condo developers wary about second-half outlook

Condo developers should be more cautious with their launches in the second half and carefully monitor demand and high household debt given the sluggish economy and unfavourable market sentiment, warn industry leaders.

Prasert Taedullayasatit, president of the Thai Condominium Association, said a recent stock market slump might hit demand for high-priced condos as the purchasing power of most buyers is linked to the bourse.

"If the SET falls to 1,400, some condo buyers may be reluctant to buy," he said yesterday at a seminar on development strategy in 2015.

An unfavourable stock market might also hit condo transfers in the second half, which are expected to mark a record high as 190 billion baht worth of units are waiting to be delivered to customers. 

During the first half, most new condo supply launched in Greater Bangkok was in the mid- to high-priced segments, as unit prices were driven by soaring land prices, which hit 2 million baht per square wah in some prime locations.

Mr Prasert increased his forecast for the value of new condo supply launched in Greater Bangkok this year to 180 billion baht, up 27% year-on-year, from a 4% gain as new condo supply in the first half jumped 72% to 101.4 billion baht.

The Real Estate Information Center reported 74 new condo projects comprising 31,900 units launched in Greater Bangkok in the first half, up from 68 projects with 31,700 units year-on-year. Of the total, 34 projects with 19,000 units were from listed developers, led by L.P.N. Development with 4,900 units, Ananda Development with 2,700 units, AP (Thailand) with 2,500 units and Supalai and Pruksa Real Estate with 1,900 units each.

Vittakarn Chandavimol, chief marketing officer of SET-listed developer AP (Thailand), said developers should monitor sales and try to control condo purchases to prevent speculation.

"We limit purchases to two to four units per name at some projects to limit risk," he said.

The right location is not enough. Condo sizes and prices should match demand amid soaring land prices, said Mr Vittakarn.

"Lower-priced condos have demand, but developers should monitor household debt," said Opas Sripayak, managing director of L.P.N. "Developers should also consider buyers' qualifications as they usually have difficulty borrowing."

"It is a good time to buy a condo as developers will not raise prices amid a sluggish market with stable development costs," said Tritecha Tangmatitham, deputy managing director of Supalai.

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