QH delays projects on weak market

QH delays projects on weak market

Mr Chadchart says this year has seen an oversupply of condos.
Mr Chadchart says this year has seen an oversupply of condos.

SET-listed developer Quality Houses Plc (QH) has postponed the launch of three condo projects previously planned for 2018 to next year, due to oversupply and high land prices.

Chief executive Chadchart Sittipunt said condo market sentiment in the first half of the year was relatively weak because of two factors, one of which was an oversupply in some locations, such as along the Purple Line.

"Many developers launched new condos in those locations all together within a short period," Mr Chadchart said on Tuesday. "Condo demand was not strong enough to absorb the surfeit of supply."

The company's new launches this year will focus on low-rise projects because demand is real and stronger. The projects will be targeted at the middle- to upper-end market, as high household debt has hit low-end buyers.

New mass transit lines will also expand potential locations, particularly where houses are popular.

Mr Chadchart said the other factor in freezing condo launches is soaring land prices, which have driven up the prices of new condos in many popular locations, making them unaffordable for the mass market.

"Sales of new condos on Sukhumvit Road along the skytrain are starting to become sluggish, as unit prices are high and not reachable for working people," he said. "Units priced higher than 5 million baht are regarded as unaffordable for them."

This year, QH will launch only 12 residential projects, all of which will be single-house, townhouse and duplex projects worth more than 10 billion baht combined in Greater Bangkok and Chiang Mai.

Earlier this year, QH announced the launch of 15 projects worth a combined 13 billion baht.

One of the postponed projects, for which the company is doing an environmental impact assessment (EIA) report, will be in the Lat Phrao area.

The other will be at a site on Charoen Nakhon Road. A neighbouring high-rise project may hinder the EIA.

QH will relaunch Q Sukhumvit, a luxury condo project worth 10 billion baht, in the fourth quarter. Construction will be completed within the period.

The project was launched three years ago and sales activity was frozen. The project has a sales rate of 20% with a selling price of 300,000 baht per square metre.

The delay will not have an impact on QH's sales target, since the earlier launch schedule was in the fourth quarter, Mr Chadchart said.

QH aims to have 15.5 billion baht in presales by the end of the year, up 10% from last year. It also expects 10% growth in net profit.

QH shares closed on Tuesday on the Stock Exchange of Thailand at 3.48 baht, down six satang, in trade worth 320 million baht.

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