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Friday, 30 May 2008 |
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Low costs could lure condo buyers
source: Bangkok Post May 28 2008
Townhouses could become an increasingly attractive alternative to condominiums
as rising construction costs force developers to increase unit prices by 15%,
says Teerachon Manomaiphibul, chief operating officer of the listed developer
Property Perfect Plc (PF).
"Townhouses in the same location [as condominiums] or located a bit farther from
mass transit will be a choice for homebuyers as their prices and condominium
prices nearby are nearly the same," he said yesterday.
He said construction costs had risen by 20% since last year for low-rise units
bu were up 30% for high-rise condominiums. Prices of condominium, for which
construction accounts for 50% of unit prices, need to rise by 15%.
"Developers cannot sell condominium units at the same prices as those in the
same locations offered last year or those offered in previous phases as prices
of steel - a main component in condominium construction - have soared," said Mr
Teerachon.
He estimated there was a sales backlog worth 40 billion baht in the condominium
market at an average of two million baht a unit, of which 30% have already been
constructed. For unbuilt units, developers may face problems as contractors may
decide to leave the jobs as costs soar.
For the rest of this year, PF plans to launch six projects worth 16.5 billion
baht. They will include two condominiums worth four billion baht each - Metro
Park Sathorn Phase III with 2,000 units and Metro Park Ratchada with 1,250
units.
Mr Teerachon said new prices for Metro Park Phase III would start at 50,000 baht
per square metre, up from 36,000 to 39,000 baht for Phase II and 30,000 to
33,000 baht for Phase I launched since 2005.
The company will also open a townhouse project in the Pattanakarn area with 599
units worth two billion baht, and three single-housing projects: 194 units worth
750 million baht in the Suvarnabhumi area, 486 units worth 2.35 billion baht in
the Ratchapreuk area; and 342 units worth 3.35 billion baht in the Rama IX area.
Townhouse growth will be brisk this year for Property Perfect with an
expectation of 900 units newly registered, up from 200 in 2006 and 400 last
year.
After raising prices of low-rise units by 5% late last year, PF plans to
increase them another 2% in June as it needs to pay contractors more. "There may
be greater damage if they [contractors] leave the job."
Mr Teerachon said high oil prices and inflation would pressure interest rates
this year and they could rise by 50 basis points by the end of the year.
The company will ask its board to approve a debenture issue worth two billion
baht and convertible debentures of US$30 million for private placement. Both
lots would be issued by the third quarter.PF reported a first-quarter net profit
of 158 million baht, up from 5.9 million in the same period last year, on sales
that doubled to two billion baht year-on-year.
Mr Teerachon said the company's gross profit margin in the first quarter of this
year dipped to 26.49% from 28.24% a year ago as the company sold housing units
to a property fund which generated lower margins than a normal sale.
PF shares closed unchanged yesterday on the Stock Exchange of Thailand at 4.78
baht, in trade worth 349,000 baht.
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Friday, 30 May 2008 |
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The Nation May 28, 2008
Listed developers see lower profits - and some a net loss - as buyers put off
property transfers
With construction and management costs rising and homebuyers putting off
transferring their property to avail of the government's tax package, 19 of the
30 property developers listed on the Stock Exchange of Thailand (SET) reported
lower net profit in the first quarter as compared to the same period last year.
The government's tax package includes a reduction in the property-transfer fee
from 2 per cent to 0.01 per cent, which is why homebuyers opted to wait till the
package came into effect.
While the package was launched in February, it came into effect from March.
Ten of the 19 developers who posted a net profit in the first quarter recorded a
net loss for the financial year. (see graphic)
The remaining companies managed to increase their revenues by launching new
projects to match homebuyers' changing needs and by managing costs better.
Preuksa Real Estate president and chief executive Thongma Vijitpongpun said the
company tried to reduce construction costs and unveiled projects in line with
home-buyers' demands in the first quarter.
This led to the developer recording sales of Bt2.23 billion and net profit of
Bt308.28 million in the quarter, up 17.89 per cent and 5.54 per cent,
respectively, from last year.
Property Perfect chief executive Dr Teerachon Manomaiphibul said the company
paid the fees for home-buyers who were willing to get their properties
transferred before the government's tax package came into effect.
The move led to the company's recording sales of Bt2.05 billion in the first
quarter, up 105 per cent from the same period last year.
The property developers who saw sales drop and posted a net loss for the quarter
said rising construction costs had a negative impact on business. They were also
unable to meet sales targets as many homebuyers opted to wait for the
government's tax package.
In a statement to SET, KC Property vice president Somchai Vanavit said the
company's total revenue in the first quarter declined 13.86 per cent compared
with the same period last year. One of the reasons was the rise in
construction-material and labour costs over the past year.
The cost of materials rose from 53.49 per cent of revenue to 61.53 per cent.
Operating profit declined from 46.51 per cent to 38.47 per cent compared to last
year.
Prinsiri finance director Namchai Vanapanubet said the company recorded a net
loss in the first quarter because the company has high selling and
administration expenses that increased Bt24 million in the first quarter when it
launched television campaigns to promote its brand.
As many customers postponed property transfers so they could wait for the
tax-promotion package coming into effect, Prinsiri recorded lower realised
income than expected, he said.
Rasa Property Development reported a net loss of Bt9.98 million in the first
quarter, a decline of Bt11.08 million, or 1,010.95 per cent, from the same
period last year.
One of the prime reasons for the decline was that the company's revenue from
sales dropped 72.17 per cent in the first quarter compared to last year.
The company's sales and administrative expenses increased by Bt6.38 million, or
50.61 per cent, from last year due to the launching of new projects which raised
expenses, Rasa directors Rapi Pinijchob and Lertmongkol Waravenuch said.
Sansiri senior executive vice president Wanchak Buranasiri said the company saw
a net loss of Bt254 million in the first quarter.
It had posted Bt42 million in profit last year.
Its income decreased 4 per cent or Bt112 million - from Bt2.69 billion to Bt2.57
billion. Expenses grew about 9 per cent, from Bt2.56 billion to Bt2.78 billion.
The rise in expenses was due to the launching of eleven Condo One projects by
Sansiri subsidiary Plus Property.
This was also one of the reasons why there was a more than 20-per-cent variance
in the profit reported by the company and its subsidiaries as compared to last
year.
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Friday, 30 May 2008 |
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source: The Nation May 27, 2008
Property company City Resort Group is planning to develop two new residential
projects - one each on Rachadapisek Road and Sukhumvit Road next year - after
Rajvithi City Resort, its latest condominium project, valued at Bt450 million,
opens for pre-sale in the first quarter.
Rajvithi City Resort recorded a pre-sale of 30 per cent after bookings opened
last month, the group's managing director Chaivai Poonlapmongkol said.
City Resort Group was founded by Chaivai and a close friend of his. The group
has developed two city-condominium projects with a cumulative value of Bt1.5
billion. These include the Silom City Resort, which is sold out, and Sukhumvit
City Resort, where construction has been completed and 90 per cent of the total
project value of Bt1 billion has been recovered.
Chaivai, 60, said the group has been developing residential projects since 1990.
Its first few projects included the Royal Ping Garden and Resort in Chiang Mai,
a residential project which comprised townhouses, detached houses and
condominiums in the Klong Long district, Pathumthani province.
"We suspended our business expansion after the economic crisis of 1997 and came
back to expand our investment in 2003 by developing the Silom City Resort which
was successfully sold off and transferred to our customers in 2006," Chaivai
said.
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Friday, 30 May 2008 |
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source: The Nation May 27, 2008
Offices, Sky Train boost the area's appeal for home-buyers, investors
Sixteen city-condominium projects, valued at about Bt16 billion, are expected to
be launched in the vicinity of the Victory Monument. Most of these projects have
sold 30 per cent to 100 per cent within three to six months of opening for
booking.
According to a survey conducted by The Nation, these projects are targeted
toward the middle- to upper-income segment of the market with prices starting
between Bt48,500 per square metre and Bt100,000 per square metre.
The main locations include Phahonyothin Road from Soi 2 till Soi 18, Phayathai
Road, Sri Ayudhya Road, Ratchapralop Road and Petchaburi Road.
Resale prices for city condominiums in this area have risen between 10 per cent
and 20 per cent this year compared to last year.
Harrison chief executive Alan Lin said that when developers raise prices 10 per
cent to 15 per cent of new residential projects to adjust for higher
raw-material costs, resale prices of existing residential units will also rise
10 per cent to 20 per cent, depending on the location.
City condominiums located close to the inner Central Business District, in areas
such as the Victory Monument, will also witness a significant rise from an
average of Bt60,000 per square metre to about Bt80,000 per square metre, Lin
said.
According to research conducted by Harrison, a local property consultant, the
demand for residential projects around the Victory Monument has risen because
this area has many offices and is located close to the mass-transit system.
However, there is limited availability of land for residential projects for sale
around the Victory Monument. This is because most land owners have used the land
to develop serviced apartments.
The research said population in the Ratchathivi district stood at 97,416 while
the residential register recorded 33,769 units, as of January.
Other locations close to the Ratchathivi district, such as the Phayathai
district, the Pathumwan district, the Hua Kwan district and Dusit district
recorded a population of 332,538 while the residential register showed 125,647
units.
After analysing these figures, Harrison believes that demand for new residential
projects in this location will continue to grow, especially for residential
units priced between Bt50,000 per square metre and Bt80,000 per square metre.
Last year, the number of completed condominiums in Bangkok stood at 126,071
units, a rise of 21 per cent from 2006's figures.
Of these, 17 per cent were located at Ratchadapisek while another 17 per cent
were at Rama III Road. Another 15 per cent were located at Sukhumvit Road,
between Soi 70 and Soi 107 and 14 per cent between Soi 1 and Soi 55. A further 9
per cent of the total condominiums were located inside the Central Business
District in areas such as Silom, Sathorn, Wireless Road and Pleon Chit. The
Thonburi district also had a figure of 9 per cent while Phahonyothin Road had 7
per cent of the total. Phayathai district had 4 per cent of the completed units
and the rest of the 8 per cent were located in other areas on the list.
The research also shows that 67,036
city-condominium units are under construction.
It revealed that one-bedroom apartments with a utilisation space between 45
square metres and 55 square metres are the most popular type of city
condominiums.
City Resort Development managing director Chaivai Poonlapmongkol said the
company believes demand for residential projects in areas close to the Victory
Monument and the Sky Train has seen strong growth following the rise in cost of
living.
"Buying a property located close to the mass-transit system reduces the
transportation costs for home-buyers. People buying properties with an
investment focus can also expect good rental income because this location has a
number of offices and schools," he said.
Chaivai said investors can expect a return of 7 per cent to 10 per cent.
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Friday, 30 May 2008 |
source: Bangkok Post May 26 2008
Sales for the new Wellington condominium
in Ramkhamhaeng opened yesterday.
The shoe manufacturer SCS Shoes Co has diversified into property development
with the launch of mid-priced condominiums in the Ramkhamhaeng area.
"The real estate business has growth potential and has encouraged us to jump
onto the bandwagon. We have a lot of land plots to do this business," said
Witsanu Wongweeranonchai, sales and marketing manager of SCS Pattana Co, the
property arm of SCS.
SCS Pattana on Sunday launched sales of The Wellington condominium worth 200
million baht. It is located on a two-rai site on Soi Ramkhamhaeng 40, comprising
79 units sized between 66 and 112 square metres and priced about 45,000 baht per
square metre.
The unit sizes would be larger than others in the area in line with the
company's goal to attract buyers who preferred larger units in not-too-crowded
properties, said Mr Witsanu, the eldest son of Wiriya, SCS's owner and chief
executive officer.
"On two rai, we can develop hundreds of units with smaller sizes and more
affordable prices. But we won't as we want to tap another target group in the
niche market, not the mass market," he added. Target buyers are expatriates and
aviation workers near Suvarnabhumi Airport.
Construction started this month and would be completed in April 2009. The
company hopes to sell 20% of its units on the launch date and expected to close
sales early next year.
"We don't need to speed up sales as we use our own cash to develop," he said.
To cope with the rising construction material costs, especially steel, the
company bought steel in advance for construction. It would also adjust unit
prices in line with rising costs.
The company plans to develop one detached-housing estate and two condominiums
worth 800 million baht in the mid-priced segment in the The company has large
land holdings in the Ramkhamhaeng-Srinakarin area. It has already started
developing a 280-rai property in Mae Sai, Chiang Rai.
SCS Pattana was established in 2006 with registered capital of 100 million baht.
It was the first subsidiary of SCS since its establishment 33 years ago.
"My father and I are not new to the property business. He invested in property
development with his friends and now it's time to do it himself," he said.
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Sunday, 25 May 2008 |
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As a result of increasing Japanese production activity in Thailand, the number of Japanese expatriates
continues to increase, fueling demand for Bangkok
apartments and condominiums for rent, according to Mr. Theerathorn Prapunpong, Director of Residential
Leasing Services at CB Richard Ellis,
the leading international property consultants
in Thailand.
Japanese work-permit holders already comprise the largest group of work-permit
holders in
Thailand.
According to the Ministry of Labour, as of February 2008, 24,740 out of
122,262 BOI and temporary work-permit holders were Japanese, roughly equal to
20% of the total.
The most popular residential locations with Japanese expatriates are Sukhumvit
Soi 21-55. This area offers convenient access to a wide range of facilities,
including the BTS, expressways, supermarkets, hospitals, shopping and
entertainment complexes, as well as proximity to the Japanese school.
Supermarkets that cater more to the Japanese crowd include Fuji Super 1,
Fuji Super 2, the Emporium and Villa Market at J-Avenue.
When it comes to unit type, the tenant’s family size is the deciding factor. For
single tenants, a one- or two-bedroom unit in the region of 80 square meters is
sufficient, and budgets can range from THB 45,000 per month all the way to THB
75,000 per month if the person is an executive with a higher compensation level.
Japanese couples, even without children, prefer larger units, and these are
generally of the two-bedroom type, with floor space of around 100 square meters.
Budgets are in the THB 60,000-80,000 per month range, depending on the
unit, personal preferences, and spending limits.
Designs are quite important as Japanese tenants usually look for a higher level
of decoration and fittings, including wooden floors, high ceilings, built-in
closets and storage units, along with a spacious kitchen containing a large sink
and ample countertop space.
Units must include washing machines, four-burner electric stove, large fridge,
and a powerful water heater. However, a dishwasher is not necessary.
Required building facilities include a garden, children’s playground, and
exercise options such as a swimming pool or fitness center.
A wading pool, usually designed for children, is a plus. Also valued are
Japanese language capabilities or services and shuttle transportation to nearby
BTS stations, supermarkets, and hospitals.
“Also key is the presence of children-friendly facilities, such as ramps for
strollers, and other child safety precautions,” explains Mr. Noriyuki Matsuura, Manager of Japanese Residential
Leasing Services at CB Richard Ellis, a specialized team that focuses on
providing residential solutions for Bangkok’s burgeoning Japanese community.
High-speed wireless internet services should exceed 2Mbps as this allows for
viewing internet TV. As for cable TV,
the most popular package is the one that comes with the NHK option.
Most Japanese children tend to go to the Japanese school near Rama IX Road. Other
international schools are not popular with Japanese children, especially until
high school (age of 15 or so). This
is partly because it is essential for Japanese children who want to pursue
university in Japan to go to the Japanese school.
In line with Japanese investment in Thailand, the number of students
enrolled at the Japanese school has been steadily rising as well.
The school has grown from 1,759 students in 2001 to 2,401 students in
2007.
As far as contract terms, most residential leasing in this sector is done on a
one- or two-year contract. In two-year contracts, there is usually a
“diplomatic” clause that permits early termination in the event that the tenant
is transferred overseas for any reason. A 60-day notice period is usually
required in this case. In general, Japanese tenants are more likely to move at
the end of their lease period if they are not satisfied with the accommodations
and service at the property.
Apartments in downtown Bangkok enjoyed an occupancy rate of 90% in Q1
2008. No new supply was completed
during the quarter. Future supply
expected for completion in 2008 includes The Grand Sethiwan 2 housing 172 units
on Sukhumvit Soi 24 and the newly renovated Nithi Court comprising 14 units on
Sathon Road.
CB Richard Ellis expects that demand, especially from Japanese
expatriates, will grow in line with or outpace supply, keeping occupancy rates
well within the 87-93% range seen since 2000.
CB Richard Ellis Thailand : 21 May 2008
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