Charn Issara more choosy on location

Charn Issara more choosy on location

Higher-end condos have real demand

An artist's rendition of The Issara Sathorn, a 37-storey condo project with 270 units worth 2.4 billion baht on Chan Road.
An artist's rendition of The Issara Sathorn, a 37-storey condo project with 270 units worth 2.4 billion baht on Chan Road.

SET-listed Charn Issara Development Plc (CI) plans to launch new residential projects only in locations and segments it is confident have demand as the economic situation and property market are unfavourable.

Chief executive Songkran Issara said economic growth the past three years was only 3-4% per year, mainly driven by exports, which did not have a great effect on purchasing power.

"The property market has slowed as there is a supply glut and purchasing power is weak," he said. "High household debt is a key factor making it difficult for homebuyers to obtain a mortgage."

As mortgage lending rules became stricter, rejection rates soared to 40-50%. This made many developers miss their targets for unit transfers and revenue this year.

Charn Issara's revenue this year may be lower than last year's, which was 3.3 billion baht. Revenue in the first nine months from both hospitality and real estate declined as the tourism sector was unfavourable.

"The hotel business dropped nationwide as the stronger baht affected the tourism sector," said Mr Songkran.

To maintain growth, the company will be more selective in launching new projects, choosing locations where it is confident about real demand and market segments where purchasing power is strong.

Charn Issara will launch The Issara Sathorn worth 2.4 billion baht by the end of November. The condo project will be located on a 1.5-rai plot on Chan Road, comprising 270 units sized from 32.75 square metres and priced from 4.88 million baht.

"Condos in the inner city tapping the upper-end segment are still on the rise," said Mr Songkran. "We expect to have 30% of units sold by March next year."

Property consultant Nexus Property Marketing Co said developers in the high-end condo segment in inner city locations were more careful about launching new supply.

Total supply in this segment was 93,122 units as of the first half of 2019, up from 45,706 units in 2014. The number of new condos launched in the first half totalled 3,262 units, which was lower compared with prior years.

The decrease should be good for the industry as the supply will be absorbed quicker, said Nexus. Demand in this segment is real.

In the Sathon area, the number of condos totalled 22,255 units from 48 projects. The sales rate was 84%, higher than the market average of 82%.

The average price of condos in the high-end segment in the inner city was 233,200 baht per sq m, while for Sathon condos it was 214,400 baht per sq m.

CI shares closed on Tuesday on the SET at 0.90 baht, down four satang, in trade worth 116,780 baht.

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