Switch in property demand
Demand in Thailand's property market has performed an about-turn, sending developers who last year were selling city condominiums scattering to launch low-rise projects offering townhouses, double houses and detached houses.
Demand for condominium units has fallen significantly, leaving property firms to launch low-rise projects to boost their chances of achieving revenue targets this year.
Preuksa Real Estate is one firm that has faced lower-than-expected sales at three condominium projects at Thonglor, Pinklao and Yaowarat. All were launched in the first quarter of this year. The company has now revised its business plan to focus on low-rise residential projects, especially townhouses. It has added five new townhouse projects to its portfolio this year and is now planning to launch 27 projects instead of 22.
Property Perfect is planning to launch seven or eight new residential projects this year, including detached houses, townhouses and a condominium project.
Darvid Property is planning to launch two new detached-house projects with a market value of Bt1 billion on Bang Na-Trat Road.
Asian Property Development plans to launch 12 new residential projects this year. Five of them will be low-rise projects and the rest condominiums.
Leading developer Land and Houses has also focused on townhouses and detached houses after seeing strong demand in this market.
Preuksa Real Estate director and chief operating officer Prasert Taedullayasatit said his company saw home-buyers' behaviour change from buying condominium units to townhouses or detached houses, particularly townhouses located near to the central business district. Consequently, Preuksa's new business plan will focus on townhouses, rather than condominiums.
However, the company will go ahead with the launch of its latest condominium on Sukhumvit 26, worth between Bt500 million and Bt600 million, in the current quarter. It will be a low-rise condominium with only eight storeys, he said.
Property Perfect CEO Chainid Ngow-sirimanee said his company planned to launch eight new residential projects, worth Bt8 billion, by the end of next month. This follows the nascent market recovery in the first quarter of this year, following the slump in the final quarter of 2008.
More than half of the new projects will be detached-house and townhouse projects. The company may also launch one or two condominium projects, he said.
"We are launching fewer condominium projects because we can see stronger demand for detached houses and townhouses than for condominiums," he said.
The Agency for Real Estate Affairs said there were 51 new residential projects launched in the first quarter. They are offering 10,451 units with a total market value of Bt35.41 billion.
Nearly 40 per cent of the new projects are condominiums, and the rest are low-rise projects like detached houses, townhouses and double houses.
The agency's research has found that the switch in demand from condominiums to detached houses and townhouses has left Bangkok with a significant oversupply of new condominium projects.
Source: The Nation May 20, 2009
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