High costs worry developers Low-priced projects might be delayed
Property developers should be careful of higher construction costs and new property-related laws as they diversify their portfolios, industry executives said.
Issara Boonyoung, managing director of the residential developer Kanda Property Co, said higher construction costs would likely affect low-priced condominium projects. Those with prices of 30,000 baht per square metre might not be built as costs have climbed to as high as 20,000 baht.
‘‘Despite the good sales, some developers of low-priced units might not be able start construction due to higher costs,’’ he said.
Meanwhile, high-end condominium developers would not face this situation as they have higher margins.
Another issue developers might face is escrow accounts, which might be effective within a year after being talked about for two decades. All developers would need more money to invest for developing projects, but homebuyers would have more confidence in buying a unit as their down-payments would not be used for developers’ cash flow. Environmental issues are also a concern.
‘‘Actually, an environmental impact assessment (EIA) is not a new issue but new regulations on green areas have delayed many projects. There should be clear regulations announced to developers,’’ he said.
Prasert Taedullayasatit, chief business officer of the listed developer Preuksa Real Estate Plc, said the EIA board, at its latest meeting in January, discussed whether to cancel the new regulations on green area. This would be good news for condominium developers whose projects are waiting for EIA approval.
‘‘Last year every condominium developer enjoyed selling units, but they might face difficulties caused by increasing prices of steel. They should try to reduce and control costs,’’ he said.
The Real Estate Information Center (REIC) yesterday reported a survey on residential supply in Greater Bangkok. It found that more than 231,164 outstanding units from 1,157 projects were available for sale at the end of the third quarter of 2007.
Of the total projects, 951 were lowrise and 403 were located in Bangkok, followed by 152 in Nonthaburi, 149 in Pathum Thani, 128 in Samut Prakan, 64 in Samut Sakhon and 55 in Nakhon Pathom.
The total number of low-rise units was 153,648. There were 53,655 units in Bangkok, followed by 35,967 in Pathum Thani, 26,492 in Samut Prakan, 20,906 in Nonthaburi, 11,251 in Samut Sakhon and 5,377 in Nakhon Pathom.
In the third quarter of 2007, 9,402 units were sold and 62,911 remained up for sale, 25% of which were pre-built units. At the same time, 206 condominium projects were sold in the quarter.
Meanwhile, 77,516 condominium units were available for sale at the end of the third quarter. About 44% were priced at 1-2.99 million baht a unit.
Of this number, the largest were in Bangkok with 62,880 units, followed by Samut Prakan with 12,754 units, Nonthaburi with 1,638 units and Pathum Thani with 244 units.
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