Condo launches fall (Bangkok)

New condo launches likely to fall 25%

Plus planning 10 projects worth B4bn

New condominium launches this year are likely to drop by 25% from 2007 due to higher competition in the market and rising construction costs, says Mayta Chanchamcharat, chief executive officer of the developer Plus Property Co. New condo units would total less than 30,000, down about 25% from last year. But demand remains strong as consumers are concerned more with travel expenses because of high fuel prices.

''We have seen signs of a slowdown since last year. Many small and medium-sized developers faded from the market, while the remainder were selling already launched units rather than opening new projects as financial institutions had stricter rules. Most new launches were from large developers,'' said Mr Mayta.

The take-up rate last year was 70-80%, which was solid but still down when compared to the levels in 2005-06. Some projects sold out within a few months, while some needed four to five months to sell 80-90% of the units.

According to Plus Property's research, 119 new condominium projects were launched last year in Bangkok with 39,341 units, up 42% from 2006. About 17,000 units from 61 projects were launched in the first half, while around 22,000 units from 58 projects were launched in the second half.

The figures indicated that newly launched projects in the second half had more units in each site, but smaller unit sizes as developers tried to offer lower-priced units to match lower purchasing power, said Mr Mayta. Some projects sold for 600,000 baht a unit, or as low as 20,000 baht per square metre.

About 70% of launches this year would be condominiums, as sales depend on confidence in the economy, interest rates and living expenses.

Last year the top zone for new launches was the Thon Buri area, where the new BTS extension is under construction. It was followed by Ratchada-Lat Phrao, Phahon Yothin, Sukhumvit and the central business district, respectively. All are close to mass-transit lines.

Plus Property, a subsidiary of the listed developer Sansiri Plc, plans to launch at least 10 projects worth a combined four billion baht this year. They would comprise five townhouse projects and five condominium projects.

Last year the company acquired four land plots for new projects, some of which will be located on Phahon Yothin Road near the BTS, Mr Mayta said. It also planned to spend two billion baht to buy more plots.

The new launches this year would include new townhouse brand Home+ to tap the lower-end segment as unit prices would start at 2.5 million baht. It will launch a new townhouse brand for a higher segment than Town+, as well as a new condo brand that would appeal to richer customers than My Condo.

Currently, the company has three housing brands: Town+ for townhouses priced between 2.8 million and three million baht a unit; My Condo and Condo One with prices starting at 50,000 baht a square metre; and sub-brand Condo One X tapping the lower-end segment.

Due to higher construction costs, which are expected to increase about 6-8%, condominium developers should shift to pre-fabrication and precast construction technology to reduce construction time by 10% and save overall costs.

Mr Mayta said prefabrication would be used in building structures, while precast would be used for walls. These methods, which cost 10-15% more than conventional methods, would help speed up completion and reduce the reliance on labour, as construction workers are in short supply and wages are rising.

KANANA KATHARANGSIPORN