SET-listed developer Sena Development is planning to implement new strategies to rent out and transfer completed unsold condos, coping with a high mortgage rejection rate in an effort to increase sales and revenue this year.
Kessara Thanyalakpark, managing director, said the new strategies will start this month, including renting out units to potential buyers who will eventually receive unit transfers, as well as another tactic for people initially interested in renting.
"These two groups represent different generations, each requiring distinct strategies," she said. "We aim to use the new strategies to boost sales of our completed unsold units totalling 5,000, valued at a combined 10 billion baht."
The rent-to-own strategy or renting at first and eventually owning units is aimed at Generation X.
This generation prefers owning an asset but some of them encounter difficulties in obtaining a mortgage loan for various reasons, particularly financial issues.
As rent-to-own buyers need more time to buy, Sena will give them a longer period by allowing them to rent units for up to three years, during which they will pay rent to Sena.
Once they are ready to have units transferred or when their financial records are sufficiently prepared to secure a mortgage loan, Sena will transfer the units to them and the amount they have paid for rent will be deducted from the unit price.
"Residential demand in the lower-end segment remains robust, but there are challenges in securing mortgages," she said. "Rather than shifting to upper-end segments like other developers, we will use the new strategies to address this issue."
Last year Sena had a mortgage rejection rate of 50% due to the majority of their products being units in the lower to middle-end segments.
Of the total 99 residential projects worth a combined 116.4 billion baht on hand, 27 are in an income segment of 15,000-25,000 baht per household per month, six in the 20,000-25,000 baht range and 24 in the 25,000-45,000 baht range.
According to its research, 70% of the households in Greater Bangkok (totalling 5.61 million) had an income of 40,000 baht or lower per month, making them able to afford units priced 4.9 million baht or lower.
Those earning 30,000 baht or lower who can afford units priced 3.6 million baht or lower were also Sena's main target, representing 54%.
"The rent-to-own strategy and our non-bank mortgage loan, which was launched last year, may not have reduced the mortgage rejection rate from 50% to zero, but achieving a rate of 30% is considered a success," she added.
Another strategy aims to rent out units, as younger generations have grown up with a non-ownership lifestyle, such as streaming music and videos.