Supalai Expects Real Estate Business in 2019 to Remain Stable Despite LTV Measures and Rising Interest Rates

Jan 14, 2019 | view 8,543

Supalai Expects Real Estate Business in 2019 to Remain Stable Despite LTV Measures and Rising Interest Rates

Mr. Traitecha Tangmattatham, Managing Director of Supalai Public Company Limited, stated that the overall real estate industry this year is likely to remain stable due to several negative factors stemming from a volatile economy, rising interest rates, and the impact of measures from the Bank of Thailand controlling the loan-to-value (LTV) ratio for home purchases, which will take effect in April. It is expected to have a slight effect on retail customers, as over 90% of customers are first-time buyers, while those purchasing second or third homes are fewer in number and mostly able to meet the new down payment requirements.

Regarding the trend of controlling commercial bank lending, most banks continue to lend to customers as usual, although some banks have tightened lending controls since late 2018, including raising interest rates and lowering home loan targets. However, it is believed that the overall situation is not concerning. The current loan rejection rate is around 9%, a slight increase, mostly affecting customers in the lower price range of under 2 million baht.

On the positive side, the business continues to receive support from government infrastructure development projects, with income from exports and tourism on the rise. Thai individuals with stable incomes or salaries are experiencing income growth that outpaces inflation. Additionally, private sector investments are increasing, particularly in the Eastern Economic Corridor (EEC), which is expected to stimulate the purchasing power for housing among the public in 2019.

In 2019, the company plans to prepare for business fluctuations and the impact of the Bank of Thailand's LTV measures by launching campaigns that allow customers to make larger down payments, along with promotions such as "Speed Up Sales" to boost sales in the final stretch before the LTV measures take effect.

The sales target for 2019 is set at 35 billion baht, a 5% growth from 2018's 33.34 billion baht, with a revenue target of 28 billion baht from the launch of 34 new projects, including 28 horizontal projects and 6 condominium projects, totaling a value of 40 billion baht, with a land acquisition budget of around 8 billion baht.

Recently, Supalai launched a new condominium brand, "Supalai Prime Rama 9," which is a low-rise condominium targeting the premium segment. It features spacious room designs and high-quality materials, offering privacy to customers while remaining in a central urban location, with prices starting at just 2.53 million baht (or 77,900 baht per square meter). Its highlights include proximity to the future Orange Line MRT station, just 350 meters away, and close to Rama 9 expressway, Ratchada, Asoke, Din Daeng, Ramkhamhaeng, etc.