Pruksa targets richer buyers in flat market

Pruksa targets richer buyers in flat market

Project size and pricing revamped

A digital rendition of The Tree Victory Monument, a 31-storey condo with 253 units worth 1.3 billion baht that Pruksa Real Estate plans to launch this weekend.
A digital rendition of The Tree Victory Monument, a 31-storey condo with 253 units worth 1.3 billion baht that Pruksa Real Estate plans to launch this weekend.

Pruksa Real Estate, a property development arm of SET-listed Pruksa Holdings (PSH), will downscale projects as it looks to lure middle to upper-end buyers with strong purchasing power to cope with stagnant market growth next year.

Piya Prayong, Pruksa Real Estate's chief executive for value business, said property market growth in 2020 will be flat from this year, with the 2019 market forecast to drop by 12%.

"The key factor is the difficulties homebuyers face in obtaining a mortgage, despite the property incentives meant to boost demand," he said.

"Banks are applying stricter mortgage lending criteria after the new lending curbs took effect."

To maintain business growth, Pruksa will downscale project size from at least 80 rai to no larger than 30 rai per project for the development of low-rise houses (single detached houses, duplex houses and townhouses).

The number of units per project for condos will be reduced to 200-300 units per site from 600 units as the company wants to shorten the sales and construction period.

"We need to ensure demand in each location we plan to develop before launching a new project," said Mr Piya.

"Attractive locations for low-rise houses are near mass transit lines or transport routes."

Pricing segments where demand remains strong and purchasing power is still healthy are 2-5 million baht a unit for a condo or around 100,000 baht per square metre.

The company will move to develop townhouses priced 3-5 million baht from the current 2-3 million, and single detached houses priced from 7 million instead of those priced from 5 million.

"These segments are for upper-end buyers with a household income of between 50,000-100,000 baht per month. Their purchasing power is strong and they are still looking for a house," he said.

Mr Piya said the loan-to-value limits have had a strong impact on ready-to-transfer condos and the low-rise segment, but less so for off-plan or newly launched condos.

Despite a drop of 28% in condo market value in the first nine months this year, the company is confident there is condo demand in some locations where there is room for some condo pricing segments.

This weekend Pruksa will launch The Tree Victory Monument, a 31-storey condo worth 1.3 billion baht on Din Daeng Road, comprising 253 units priced 130,000 baht per sq m on average, or from 3.6 million baht.

The company expects to have 20% of units sold by year-end for around 300 million baht.

PSH shares closed on Monday on the Stock Exchange of Thailand at 15.40 baht, up 20 satang, in trade worth 9.7 million baht.

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