Le Luk Condo

W-Property hopes to advance Phra Kanong as the new “hotspot” residential area in Bangkok with Le Luk, which has so far generated sales of THB900 million (US$27.85 million).

“We saw the potential of Sukhumvit-Phra Khanong a long time before we launched Le Luk Condominium. Today we celebrate the success of Le Luk Condominium and the launching of Le Luk as a new landmark in Sukhumvit-Phra Khanong,” said Mr. Wichai Poolworaluk, president of W-Property.

Le Luk has a value of THB4.4 billion (US$136.12 million) and is located on 9 rai of land. Units range in price from THB3.3 million to THB15 million (US$102,062 to US$463,922) in the condo development, which features a communal infinity pool, party room, gym, green area, reading cafe, and kid’s room.

The new sales campaign, called “7 Best Wishes”, throws in seven special offers for buyers, including furniture, appliances, and 10 MB Hi Speed internet for one yea

Unlike the constant demand for real estate in Bangkok, the property markets in Thailand’s coastal holiday destinations such as Pattaya, Phuket, and Samui have remained subdued during the first half of 2010.

Professional real estate services firm Jones Lang LaSalle said that, dominated by foreign investors, investment activity in these areas has witnessed a marked slowdown since the global financial crisis escalated during the final quarter of 2008.

But as many parts of the world have seen signs of economic recovery, a number of international investors are regaining their financial strength and are expected to come back into Thailand’s holiday property markets in the near future.

In addition, Jones Lang Lasalle noted, there are several good resort properties and land offered for sale in these markets. Selling prices are generally very attractive with some properties being offered for sale at a price discounted by between 20 and 30 per cent from the peak levels seen three or fours years ago.

Umpon Thepnumsommanus, Director of Investment at Jones Lang LaSalle, said: “Smart investors understand the cyclical nature of property markets. Sooner or later, these investors will come back.”

AREA’s President Dr. Sopon Pornchokchai said that 111 new property projects were launched in Thailand during the first five months of the year, with a total of 28,374 units valued at more than THB65 billion (US$2 billion). Of the 111 new projects, 24 came from Prueksa Real Estate, one of Thailand’s largest listed property developers. The combined value of these projects alone was THB11.8 billion (US$365 million).

Meanwhile, the average price per unit was THB2.29 million (US$70,612), 35 per cent lower compared to a year ago when the average price stood at THB3.5 million (US$107,964) per unit.

Dr. Sopon predicted that there will be a total of 266 new projects, or 69,233 units, launched by the end of the year. He also anticipated the average price per unit will fall slightly to stand at THB2.25 million (US$69,325).

SOURCE: Property-report.com

Property Market slowing down?

The political instability in the past two months partially affected the market. The number of new build units in Bangkok dropped but the market in the outskirt areas of the capital and upcountry continuously grew during the first half of 2010. However, according to the report, the market value is expected to grow only 3-5 per cent, lower than the previous expectation of 5-8 per cent.

PD House’s research and business development department also conducted an online survey of 2,548 people on consumer attitudes nationwide on the preferred financial source for new home building. The survey showed that almost 80 per cent of the target group would get a loan from banks rather than use their own savings. This is quite the opposite to the results conducted 5-6 years ago where over 60 per cent preferred using their own savings to build a new house.

Sitthiporn Suwannasut, Chairman and Director-General of PD House Home Builder Centre, said that over 70 percent of its clients would apply for a mortgage to build their new home during the past 5-6 months.

“This is a growing trend. In the past, consumers thought that it was difficult and complicated to get a home loan from the banks. Some didn’t even realise that they were allowed to do that. But now it’s something different,” said Sitthiporn. “Most people believe that their dreams of having a new house could become true more easily once they manage to get a loan while some don’t think they can save enough money to keep up with the increasing house prices”.

SOURCE: Property-Report.com

“We believe that demand for home-office and town-home projects in eastern Bangkok will continue to grow. As a result, we have an aggressive investment plan to launch new property projects in the area, including Romklow Road and Suwinthawong Road,” said the company’s managing director, Visit Kittiudom.

The company has set aside an investment budget of between Bt100 million and Bt300 million to buy a land with which to develop three or four new projects a year, he said.

Currently, the company has a land bank of 46 rai; 20 rai of that is located at Hatairat in Minburi district, and the remainder on Suwinthawong Road. Both areas are slated for residential projects in the next year.

The company also plans to buy undeveloped land to develop residential projects in the next year.

This year, the company plans to launch four new property projects worth Bt2.75 billion. Last week saw the launch of the Bt950-million RK Biz Centre, a home-office project with just 177 units. Also due to launch this quarter is the Bt650-million RK Office Park at Ramindra-Ramkhamhaeng. The next two projects, due to launch in the third and fourth quarters of this year, are RK Office Park on Shathairat Road and RK Office Park at Kubon, worth Bt700 million and Bt450 million, respectively.

Most of its investment budget comes from the company’s cash flow, Visit said.

“We have made a huge expansion in our investments for this year and next, because we see business opportunities and demand in the market,” he said.

Visit said that the recent 5- to 10-per-cent increase in the price of construction raw materials had not impacted the company’s construction costs, because the company has signed long-term materials purchase contracts to help manage costs. The firm’s return on investment averages between 10 and 15 per cent, he said.

“Our business risk is controlled using cash-flow management. When we succeed in selling out property projects, we use that cash, rather than borrow from banks, to reduce risk,” he said.

The country’s economic and political situations also represent business risks, but are out of the firm’s control. The company can manage its cash flow, however, in such a way that helps it survive, he said.

Rung Pattana Property is a property firm with origins in the construction business. It has more than 10 years experience in developing residential projects, especially home-office projects in eastern Bangkok under the Rung Kit brand.

The company now has three subsidiaries focusing on different types of residential projects. They include RK Housing and Space Co, with registered capital of Bt5 million, which develops home-office projects. Rungkit Real Estate Co, which has registered capital of Bt50 million, develops single-detached housing projects. RK Office Co, a developer of home-office and town-home projects, has a registered capital of Bt50 million.

SOURCE: The Nation

The government last week extended its reduction of land transfer and registration fees to 0.01 per cent until May 30. Property firms’ business-tax break was not extended, however, and returned to 3 per cent from 0.1 per cent yesterday.

According to a survey by The Nation last week, despite the extension of the incentives, most home-buyers went ahead with plans to transfer ownership before the original March 28 deadline.

Likewise, most property developers in recent months sped up construction and ownership-transfer plans as the date loomed. As a result, most will show improvements in their financial results for the first quarter of this year over the same period last year.

Asian Property Development senior vice president Visanu Suchatlumpong said the company sped up transfer of residential projects to customers, especially for its five Life condominium projects – Life @ Sukhumvit, Life @ Sukhumvit 67, Life @ Sathorn 10, Life @ Ratchada-Hwangkwang and Life @ Ratchada-Suthisarn. The projects are worth a combined Bt5.5 billion.

The two-month extension only covers the tax breaks for buyers and consumer sentiment toward buying residences should remain high through May, Visanu said.

Property Perfect CEO Chainid Ngowsirimanee said the company’s presales topped Bt2 billion in the first quarter – beating results for the same period last year. Total revenue growth will also exceed last year that thanks to the customer rush to transfer ownership.

Chainid agreed that the decision not to extend the special business-tax rate of 3.3 per cent for property developers would not have a significant impact on the market.

He added that most property developers would sell inventory and speed up new investments in residential projects in the next two months. The extension of incentives for buyers would keep the market active, saving home-buyers Bt30,000 for every Bt1 million of the cost of a residence, he said.

Kasikorn Research Centre said that prompted by the tax breaks, the number of property transactions had skyrocketed recently, overwhelming officials at the Lands Department. The backlog of applications was part of the reason for the deadline extension.

A flood of loan applications has been received at banks, exceeding their capacity to process them. Many home-buyers made hasty decisions on home purchases in order to qualify for tax breaks.

The research centre expected the property market would remain unusually active during the next two months until the fee reductions come to an end. The extension is expected to be quite helpful to property developers, especially amid the considerable rivalry in the market, where a larger housing supply is expected to develop in total projects and new housing completions, the centre said.

To cash in on the extension, developers are expected to stage a number of marketing campaigns to sell off their unsold units. The move will also help boost sales by attracting reluctant home-buyers who will now have more time to make a choice that meets their needs. It will help ease cost burdens for potential buyers, especially those with low to medium incomes.

Meanwhile, financial institutions will also benefit from the extension, as it will allow them greater time to scrutinise loan applications and thus ensure quality loan approvals, the centre said.

Demand for housing units is therefore expected to be high during the first half of 2010. Thereafter, the real-estate market in the second half this year may experience slower sales turnover. Developers should thus adjust their marketing strategies to brace for new challenges to their business operations later on, the centre said.

Thai Real Estate Association president Kittipol Pramoj na Ayudhya said his organisation and the Thai Bankers’ Association had submitted a letter to Prime Minister Abhisit Vejjajiva on Sunday, asking for the extension.

Before yesterday’s decision, the number of transactions had skyrocketed this month ahead of the end of the incentives, overwhelming the limited number of officials at the Lands Department.

Banks have also received a flood of loan applications, which they could not process as quickly as demanded.

In their letter, the associations also said traffic congestion as a result of the ongoing red-shirt political rally had also limited the travelling convenience of home-buyers. Kittipol said as many as 40,000 home-buyers in Bangkok were still waiting to complete transfers this month.

“The extension means greater convenience and will benefit more home-buyers, particularly those deciding whether to buy a house now for fear of inability to reap benefits from the tax incentives,” he said.

Kittipol expects 10-per-cent growth in the industry’s sales revenue this year, thanks to the incentives, which offset negative factors brought about by the political conflict.

The Cabinet yesterday endorsed a two-month extension of the tax incentives after earlier denying one on grounds that companies had already benefited hugely from the incentives.

It is estimated that for every Bt1 million in the price of a house, a buyer’s cost will rise Bt20,000 once the incentives end. The transfer and mortgage-registration fee is now 0.01 per cent and will return to 2 per cent after two more months, while the special business tax will rise from 0.11 per cent to 3 per cent.

SOURCE: The Nation

SET-listed Sansiri Plc plans to develop 20 projects worth 27 billion baht this year with sales projected to grow by 21% to 20 billion baht.

Of the total projects planned, eight will be condominium developments located in prime business areas or near mass transit routes.

The first three projects, worth about 7 billion baht, are due for launch in the first quarter.

In the latter part of the year, Sansiri plans to build its first low-cost condominium under the Board of Investment Home programme, on a 10-rai site in Rattanathibet. The project will mark the developer’s entry into the lower-end market to support its targeted revenue growth of 15% to 20% each year.

President Srettha Thavisin said this year would bring a slight improvement in the value of the Thai property market of about 5% to 10% year-on-year. But political uncertainty will continue to cloud the market outlook and remains the main factor damping sentiment.

”The economic figures have shown that the economy is going in a good direction,” he said.

”Fund managers are most concerned about the political issues. Without such issues, Thailand would be one of the most appealing countries for investors.”

Sansiri delayed its earlier plan to finish raising its registered capital by the end of last year, because of poor market sentiment. The company expects the fundraising, through the issue of 1.473 billion shares, to resume next month providing there is no increase in political risk.

Mr Srettha said the company would not be affected if the capital raise was unsuccessful as it has no liquidity problems and the project finance can rely on bank loans as well as issuing debentures.

Sansiri forecast its sales this year would grow by 21% to 20 billion baht from 16.5 billion baht last year. Revenue is projected to rise to 18 billion baht, a 6% increase from the 17 billion baht expected in 2009.

Net profit in 2009 is estimated to have risen by 64% to 1.5 billion baht from 914 million in 2008.

The company currently has a presales backlog of 16.5 billion baht to be realised in three years.

Sansiri and its subsidiaries currently have about 70 projects to support sales throughout 2010.

Sansiri expects its net profit margin to reach double digits this year as the cost of marketing declines due to more efficient management and media targetting.

The company also delayed its plan to sell a six-unit condominium near London’s High Street Kensington to the second or third quarter this year. The residence costs about 15,793 to 16,722 per square metre. Other overseas projects, including those in Vietnam and New York, are under review.

Sansiri has a 2.4-billion-baht budget to buy land this year. The company is considering plots in Pattaya and Phuket.

Sansiri shares (SIRI) closed yesterday on the Stock Exchange of Thailand at 4.46 baht, up two satang, in trade worth 44 million baht.

SOURCE: Bangkok Post

She said the company was in talks to acquire a plot by the first quarter of 2010. The project, planned for an official launch by the end of next year, would be located near an extension line of the current mass-transit system.

“Before jumping into condominium development, we considered it for a long time. It needs a well-prepared market study. The BoI will give us tax benefits,” she said yesterday.

In 2010, MK plans to launch five projects worth a combined 2.5 billion to 3 billion baht. They would include Chuan Chuen Island on Krungthep-Pathum Thani Road, comprising 113 single houses priced between 3 million and 3.5 million baht each.

It also plans Chuan Chuen Centro in Chaeng Watthana Soi 41, close to Muang Thong Thani, comprising single houses, townhouses, duplexes and home offices on a 40-rai site worth 280 million baht.

Another two projects would be new phases of existing projects in the Rarm Intra Km 8 area and Wat Ku Bon, including single houses and duplexes. The company also has a 10-rai site in the Bang Na area for residential development next year.

MK yesterday launched Chuan Chuen Modus Charan Pin Klao and Chuan Chuen Phetkasem 81.

It expects to have 2.2 billion to 2.3 billion baht in sales and realise 2.4 billion baht in revenue this year. Currently, it has a sales backlog of 1 billion baht.

In 2010, it aims for sales and revenue of 3 billion baht – 40% would be from its backlog, 40% from new projects launched by the end of 2009 and 20% from new projects launched next year.

“Oil prices in 2010 should not be higher than $85 a barrel but the world economic situation and Thai politics should be more of a concern,” said Ms Tunya. “Interest rates are likely to be stable in the first half of 2010 but increase slightly in the second half.”

MK shares closed yesterday on the SET at 2.62 baht, unchanged, in trade worth 1.44 million baht.

SOURCE: Bangkok Post