President Prasert Taedullayasatit said the condo market is seeing a growing number of speculative buyers in middle- to-higher-end projects in some locations.
“It’s unusual for upper-end projects to see buyers queuing up to book a unit,” he said. “For high-end customers, they won’t buy a unit if they have to take a long queue.”
The upper-end segment is unlike the lower-end market. The latter has a secondary market of buyers who will buy a condo unit when construction is complete and move into the unit because they cannot afford to pay rent and a down payment at the same time, Mr Prasert said yesterday (July 20) at a seminar on condo development.
CAPACITY TO PAY
He said developers involved in joint ventures with partners must use big and aggressive marketing events to launch projects. Some need to build up their presales, regardless of buyers who might be speculators.
“Speculative buyers will backfire on developers when the project completes construction, as some of these buyers may refuse to get a unit transferred,” Mr Prasert said.
He said many condo developers shifted to the upper-end segment after the lower-end market experienced “problems”, namely with potential buyers experiencing weak purchasing power, high household debt and rising mortgage rejections.
Developers should screen customers, particularly those buying a unit for B10 million or more, before allowing them to book a unit, he said.
“We should prevent a situation such as what happened in the provincial condo market five years ago,” he said.
“At that time, many condo projects in major provinces like Phuket, Chiang Mai and northeastern provinces sold out in a short period but had very few unit transfers upon completion.”
CALL FOR LONGER LEASES
Mr Prasert spoke of a new landscape in the property market over the next three years, with at least eight mixed-use projects spanning 360 rai under development in Bangkok.
The largest is One Bangkok on 104 rai at the junction of Wireless and Rama IV roads with an investment of B120 billion. The project is a development of TCC Assets Thailand, a subsidiary under the group owned by tycoon Charoen Sirivadhanabhakdi.
“All of these mixed-use projects are on leasehold plots,” Mr Prasert explained. “The leasehold property trend will be not in large-scale projects but in the consumer market, as land prices keep rising higher than people can afford.
“The government should thus consider an extension of the leasehold period to at least 50 years, so that consumers can afford a condo unit in the city and the bank will give a higher credit line than for a 30-year contract.”
Peerapong Jaroon-ek, chief executive of SET-listed Origin Property Plc, said his company is adjusting to cope with changes in the environment and consumer behaviour.
Origin has shifted to the upper-end market, with condos priced at more than B3 million a unit making up 62% of supply this year, up from 18% in 2014.
The group also acquired Proud Residence Co, which is developing the Park 24 condo project in Sukhumvit Soi 24, as a way to enter the high-end segment earlier this year.
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