Frasers shifting focus as pandemic hits homebuyers
Company eyes single detached houses
Residential developer Frasers Property Home (Thailand) will shift to single detached houses and the upper-end segment as the pandemic has hit purchasing power of townhouse buyers and middle-to low-income earners.
Chief executive Saenphin Sukhee said the mortgage rejection rate of townhouse customers who were mostly middle-to low-income people escalated to 70% last year as their income was lower against higher expenses during the pandemic.
"The two-year pandemic caused a rise in household debt to 90% [of GDP]," he said.
"Around 3.2 million people had income insecurity, while unemployment increased to 2.25 million."
This year the company which grew from townhouse development after a change in major shareholder in 2012 will shift to single detached houses.
It will launch 25 new projects worth a combined 29.5 billion baht, of which 54% will be single detached houses and duplex houses. Townhouses will decline to 34% from 60% last year.
Of the total projects, 12% will be located in provinces comprising Udon Thani, Chon Buri and Nakhon Ratchasima. It aims to enter Rayong, Phuket, Ubon Ratchathani and Samut Sakhon in the future.
"Under uncertainties from the pandemic, presales of 10 billion baht or even 100 billion baht will not be able to translate to revenue forecast due to the high mortgage rejection rate," he said.
"Competition in the low-rise housing market is on the rise from both new entrants and developers that shift from condo."
This year the company will spend only 5 billion baht to buy plots of land for projects being launched from next year, compared with a peak of 12 billion baht several years ago.
"Last year we froze land purchase in Greater Bangkok as land prices have soared consecutively at 25%, 29% and 20% in 2019, 2020 and 2021, respectively. Key driver was high competition and new entrants to the low-rise market."
The company targets to have 13 billion baht in revenue by the end of 2022, up 13% from 11.5 billion baht in 2021 which declined from 15-16 billion baht in 2020.
Among the 10 new single detached house projects in 2022, one will be a super luxury house project in the Kaset-Nawamin area with units priced 80-200 million baht.
The project called The Royal Residence was launched in 2008 with 79 units priced at 35-120 million baht. It was developed by TCC CapitaLand, a joint venture between TCC Land and the Singapore-based developer CapitaLand.
In December last year, Frasers Property Thailand Plc (FPT), the parent firm of Frasers Property Home, acquired the project which had 31 plots remaining unsold.
"The project's name remains unchanged but we will introduce new home designs which blend the existing surroundings," he said.