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Thailand: Property market boom in area near Suvarnabhumi Airport cools down(Thai Press Reports Via Thomson Dialog NewsEdge) Section: General News - Property boom fizzles out, leaving many houses unsold and development shelved, The Nation reports. The area around the new Suvarnabhumi Airport has been a magnet for huge investment from both minor and major property developers keen to buy land in such areas as Sukhaphibal III (Ramkhamhaeng), Pattanakarn, Srinakarin, Bang Na-Trat and Thepharak. However, the popularity of the area has suffered a significant slow-down, and many are asking whether Suvarnabhumi's charm has already petered out. One executive at Lalin Property says new-project development is slower now than before the airport opened, meaning current projects began selling one or even two years ago. "The slow-down in consumer demand for our project should be about the same as that for the others," the executive admits, adding that the current economic situation was a major factor. However, he remains optimistic the Suvarnabhumi area east of Bangkok will recover its popularity and become a "golden area" for residential projects once again. The executive's comments echo a recent report issued by the Agency for Real Estate Affairs saying that only four projects had been launched in the area so far this year, while other developers seem to be slowing down planned developments. Most are located on west of Suvarnabhumi, close to Rama IX Park. The report says the general situation of the property industry leads to the belief that investment in new housing projects in the area will remain small throughout this year, because of the number of unsold houses and noise pollution around the airport. It says there were 196 new and old residential projects worth about Bt180 billion as of the end of last year. Most of these were detached-house and town-house projects. New projects in this year's first quarter raised the number of projects to 200, offering 56,000 residential units. About 70 per cent have been sold, and another 16,000 units, worth Bt53.9 billion, are in process of being sold. The average price is Bt3.3 million. At a time when development in the area is being affected by the Kingdom's political instability and economic slow-down, as well as sound pollution, developers are managing to sell only about five units a month - half the usual rate. Therefore, instead of selling an entire project in one year, it is taking more like one year and four months, and developers are suffering from rising costs and interest rates and lower returns on investment. Premsita's Vithawat Louhapoonrungsri says many developers report fewer people visiting their projects. "All businesses must go on, but they need to be more careful," Vithawat says. "They should be good at managing their costs to minimise risks while at the same time producing products that match consumer demands." As well, to create a smooth business performance, developers should consistently launch new projects and spread them over separate locations, he says. Premsita launched its latest project during the House and Condo Show in May. Called Arena-Garden, it is in Bang Na-Suvarnabhumi phase 3. Covering 3.2 hectares, the project is located on Wat Luang Phor To Road and an extension of the company's previous phases. Costing Bt400 million, it features 150 twin houses, each with 150 square metres of floor space. The price per unit is Bt2.4 million. An additional problem the company has found is an inability of customers to obtain bank loans, meaning many houses in Arena-Garden's earlier phases have not been delivered to customers. As a result, the company has delayed plans to launch its second phase in the third quarter, instead beginning the third phase, involving twin houses. Despite the problems, Ananda Development's Chanond Ruangkritya still believes in the high potential of Suvarnabhumi and nearby areas, because of Bangkok's continuing expansion. However, the area needs support from the government in building more infrastructure, he says. Ananda is sticking with its plans to launch seven new projects. The first two - Maldive Palms and Lanta Resortlife - were launched in March and April, respectively. Maldive Palms, located in the Wongwaen-Bang Na area, features 400 units of three-bedroom twin houses and three- to five-bedroom detached houses. Prices start from Bt2.49 million. Lanta Resortlife features 161 units of three- to four-bedroom detached houses, with prices starting from Bt3.49 million. To stimulate consumer spending, promotions and marketing activities have been arranged. For example, Ananda has joined with Samsung to offer 10 consumer-electronic products worth Bt200,000 free to buyers of houses worth between Bt3.5 million and Bt5 million. Property Perfect project-management director Nantachart Kiabphipat says all players must come up with promotions that really meet consumer demand. He says customers have adjusted their negotiating methods in accordance with their expectations. Some want to turn premiums into cash discounts, in order to enhance their ability to obtain bank loans. The crucial point is that developers must always be accurate in estimating consumer demand and developing projects with prices that fit within consumers' purchasing power. Property Perfect is demanding lower reservation fees from customers who buy houses in its projects, helping the company release 200 houses worth more than Bt1 billion and achieve its sales target of Bt7.5 billion. "Unlike in the past two years, the property industry as a whole will be sluggish over the next six months," he says. "In the Suvarnabhumi area, only people who really want to live there will buy houses there." One of Property Perfect's projects - Perfect Place Sukhumvit 77-Suvarnabhumi - is five minutes away from the airport. It features 1,200 detached houses with prices ranging from Bt4 million to Bt10 million. The accumulated value of the project is Bt6.6 billion. At present, 890 of the houses, worth a total of Bt4.9 billion, remain unsold. Copyright 2007 Thai News Service, Source: The Financial Times Limited |