The Bank of Thailand's fourth interest rate reduction this year, which brought the benchmark rate down to 3.5%, is a good sign for both homebuyers and property developers because it is likely to lift the slowing market, according to Supalai Plc president Prateep Tangmatitham.
Lower rates will reduce developers' interest burden while making it easier for people to buy property. Purchasing power will expand by 10.5% as lower monthly installments increase homebuyers' mortgage limits.
Mr Prateep maintains that an interest rate reduction is better for the real estate market than other proposed incentives such as reductions in transfer fees and special business taxes.
One new move that will help middle-income earners is the doubling of the mortgage interest amount that can be deducted from personal taxable income. The government last week approved the new amount of up to 100,000 baht a year.
''Personally, I never expected the government to reduce the transfer fee,'' said Mr Prateep.
He noted that lower interest rates could also stimulate investment and consumer spending, including outlays on big-ticket items. While the political climate may have discouraged investors and entrepreneurs, Mr Prateep believes salaried workers are less affected as their incomes increase every year, albeit modestly in many cases.
''The low interest rate will boost the public's purchasing power, so it's a good time to buy and the Bank of Thailand has said that barring unknown factors, these rates won't change.''
Mr Prateep is optimistic that the worst is over for the Thai economy, and that conditions will improve after the general election scheduled for December. Despite the slowing economy Supalai itself is sailing smoothly with first-quarter results showing increased revenue year-on-year although sales did slow down.
''Actually our sales declined in some areas, but we hope that we can make it up in the second and third quarters. We are going to launch new projects from now until year-end.''
The new projects include both condominiums and housing estates with three condo projects to be located in the Ratchada-Charan Sanitwong, Tha Phra and Ngam Wong Wan areas. All sites are close to mass transit stations.
A fourth condo is in Phuket where the company has bought three land plots. This will be built before being sold and will also have townhouses. Single house and solely townhouse projects are planned at the other two parcels of land. Single house and townhouse projects are planned on the other two land parcels.
''We plan to launch these [Phuket projects] at the same time at the end of year.''
Townhouses planned in Bangkok and its neighbouring provinces include an estate on Krungthep Nonthaburi Road near the Public Health Ministry and the other in the Pin Klao-Wong Wian Yai-Rama V area. These plots too are close to mass transit stations or within 100 metres of them.
While Supalai develops different types of residential property, Mr Prateep admitted that Bangkok's condo fever means that as much as 50% of its revenue is generated from high-rise and low-rise condominiums.
Mr Prateep expects the condo trend to last, citing changing lifestyles, smaller family units and higher oil prices.
To stay a step ahead of the competition, Supalai focuses on energy-efficient residences and condos. Some features are walk-in closets between the bedroom and bathroom to reduce air-conditioning while ensuring that the bathroom is not cold in the morning, and the humidity does not travel to the bedroom.
The developments also feature insulated roofs, louvered sunshades and sub-roof ventilation, to bring in fresh air. Windows often have green glass to ensure maximum light in the room and minimum heat retention.
Mr Prateep suggested the government offer more tax breaks as a way of encouraging eco-friendly development.
Source: Bangkok Post
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