Despite the condo market contraction, SET-listed developer Supalai Plc plans to continue launching new condo projects next year as it is confident about the projects’ prices and locations, its strong financial status and less competition in the market.
Managing director Tritecha Tangmatitham said the number of new condo projects being launched in Greater Bangkok next year will keep decreasing, reflecting an unfavourable market with a glut of unsold inventory.
“Many condo projects launched this year were planned last year and their developers decided to launch them because everything was completed, such as an environmental impact assessment approval,” he said.
Even though the number of new condo supply launched this year decreased, the company expects new units in 2021 will be lower as land transactions for new condo development were minimal.
“The condo market will continue slowing next year and so will condo developers,” said Mr Tritecha. “We will take this chance to launch new condo projects as we have competitive prices and the competition will be lower.”
According to the Real Estate Information Center, the volume of new condo supply being launched in Greater Bangkok this year will drop 45% to around 30,000 units, compared with last year.
In 2021, Supalai plans to launch the same amount of new residential projects as this year with 29 new sites, mostly low-rise housing projects.
This year it launched a total of three new condo projects and currently has five plots of land for development of new condo projects in 2021 and the year after, said Mr Tritecha.
He said new condo projects opening this year should offer competitive prices or cost less than neighbouring projects. Though such projects may be located far from a mass transit station, some buyers will agree for a lower price.
One of the key factors contributing to a decrease in condo supply being launched next year is the stringent rule for project loans.
Many financial institutions lowered the loan-to-value ratio for project loans to 40-50% from 70% earlier, while the sales rate is now required to be 60-70%, compared with 40% earlier, said Mr Tritecha.
“This condition will make many developers be more cautious,” he said. As of Sept 30, Supalai had a debt-to-equity ratio of 0.65 times, the lowest among active listed developers, said Mr Tritecha.