Provinces losing lustre as sales fall

Provinces losing lustre as sales fall

Lower-than-expected sales and sluggish economic prospects have prompted several Bangkok-based property firms to shelve expansion plans in the provinces.

The Base, a Sansiri condo development in Khon Kaen, was cancelled due to weak sales.

"The provincial property market has been hit hardest by the falling prices of agricultural products, the economic slowdown and political problems," said Naporn Sunthornchitcharoen, president of SET-listed developer Land & Houses Plc (LH). "The country's economy relies only on government investment."

LH's provincial sales last year fell 25% short of target, the sharpest decline since the company entered the provinces. The provincial market's share of presales dropped to 10% from the typical 15%.

LH decided last year to freeze a plan for a single-house project in Maha Sarakham, an emerging destination in which it saw potential, as the province's economy depends on SMEs.

"Single houses and townhouses remain in good condition, but condo performance was pretty bad, especially in the northeastern provinces, as they faced weak purchasing power," Mr Naporn said. "The situation will hopefully improve this year."

He said condo buyers reluctant to get a unit transferred were more common in the provincial market, due to the very low amount of down payment. More speculators are dealing in provincial condos, as condo prices in Bangkok have risen every year.

Prasert Taedullayasatit, president of the Thai Condominium Association, called the provincial condo market "worrisome", as the large number of units launched exceeded real demand.

"It will take time for demand, which is very limited, to absorb the large amount of supply launched in the last three or four years that began reaching completion last year," he said.

Vittakarn Chandavimol, chief marketing officer of SET-listed developer AP (Thailand) Plc, said the condo market in Udon Thani drew heavy competition as condo demand in the province was limited and at least three Bangkok-based developers had launched new projects during a short period.

AP's 413-unit condo project Aspire Udon Thani has seen sales of 50-60%. Construction is 80-90% completed, with transfers scheduled for March.

"The economy in the provinces was not good because of fluctuating prices of agricultural products that weakened demand," Mr Vittakarn said.

Two years ago, AP froze a condo project with 476 units planned for Pattaya.

SET-listed developer Sansiri Plc also recently cancelled two condo projects under The Base brand in Udon Thani and Khon Kaen worth 1.55 billion baht and 893 million baht, respectively.

Sansiri returned booking money to customers after disappointing sales.

The projects saw sales of just 15% and 19%, respectively, and were scheduled for completion and transfers in 2016 and 2018.

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