Glut causes Origin to slash new condo launches
SET-listed developer Origin Property Plc is reducing new condo launches from 16 last year to only four this year, mainly because of the enormous glut in the market.
Chief executive Peerapong Jaroon-ek said supply has built up in the condo market from launches the past few years, leaving many unsold units.
"If new condo projects have sales prices in the same range or higher than those launched earlier, they will be less attractive as existing supply offers lower or discounted prices," he said.
Last year Origin launched a total of 20 projects worth a combined 24.2 billion baht, comprising 16 condo projects worth 18.2 billion and four low-rise housing projects worth 6 billion.
This year it plans to launch 14 projects worth a total of 20 billion baht, comprising four condo projects worth 7.9 billion and 10 low-rise housing projects worth 12.1 billion.
The company aims to have 21.5 billion baht in presales in 2020, down from 28.9 billion in 2019.
Of the target, 16 billion baht will be attributed to condos, down from 25.8 billion.
But low-rise housing presales are projected to surge to 5.5 billion baht from 3.12 billion.
"Despite posting a new record for presales last year, mainly driven by condos, we will be very conservative this year as the market is unfavourable," said Mr Peerapong.
Assuming the Covid-19 outbreak ends by July, the company has four other plots for condo development and plans to launch them in the second half with a combined sales value of 4-6 billion baht, he said.
The company reports it has unsold, completed residential units ready to transfer with a combined sales value of 8 billion baht.
Of the amount, 7 billion baht worth are condo units.
To diversify risk and create value amid the market downturn, Origin this year plans to be open to more partnerships with various parties such as landlords, investors, hotel chains, tenants, customers and other businesses in the service sector or tech firms, said Mr Peerapong.
One new partner this year is Ci:Z Holdings, a manufacturer of cosmetics, skincare products and health food in Japan.
The company has a joint venture with Origin for a healthcare-oriented hotel in the Thong Lor area.
Another partner is GS Engineering & Construction Group, one of the largest condominium developers in South Korea, as the two firms have planned a joint venture condo project.
Origin aims to have 16 billion baht in revenue by the end of 2020, up from 14.1 billion in 2018, of which 4-5% will come from non-residential development business such as property management, hotel and services.