LH Unveils 2019 Plan to Delay New Condo Launches Due to LTV Impact and Market Oversupply

       Mr. Nopphon Sunthornjitjaroen, Chairman and CEO of Land and Houses Public Company Limited, stated that the overall real estate business is expected to slow down this year compared to last year due to several negative factors. These include Thailand's GDP in 2019, which is anticipated to fall short of expectations, affecting the purchasing power of grassroots consumers. Although the government is attempting to stimulate the economy, the impact on purchasing power may not be significant. Additionally, the Bank of Thailand's measures to control the loan-to-value (LTV) ratio, effective this April, are believed to impact the high-rise property market, which currently has a high supply due to numerous joint ventures with foreign partners last year.

 

 

       Regarding interest rate trends, a slight increase is expected. However, the real estate sector must closely monitor the risks associated with commercial banks' lending practices, as they are transitioning to align their lending with actual demand. This is evident from the loan rejection rates in the third and fourth quarters of 2018, where clients seeking properties priced below 10 million baht faced rejection rates of about 10-12%, while clients from provincial areas experienced rejection rates of 12-13%.

       Therefore, in 2019, the real estate sector needs to adapt to the situation and closely observe market trends. Land and Houses plans to launch 16 projects this year, with a total value of 29.96 billion baht, including single-family homes, duplexes, and townhomes in Bangkok and its vicinity (14 projects) and two projects in provincial areas, with prices ranging from 2.7 to 47 million baht. There will be no new condo launches this year; instead, the focus will be on selling existing stock to mitigate risks and reassess market direction. In the meantime, preparations for EIA applications and construction permits are underway, awaiting market recovery.

 

 

       For 2019, the company has prepared an investment budget of approximately 10 billion baht, divided into about 7 billion baht for land acquisition for residential development and another 3 billion baht for rental property investments. The sales target (bookings) is set at 33 billion baht, with a revenue recognition target of 37 billion baht, reflecting a 10% growth. This will come from sales of 32 billion baht and rental businesses, such as apartments, hotels, and shopping centers, contributing another 5 billion baht, which is expected to grow by around 35%. The sales composition for 2019 is projected to be 72% from single-family homes and duplexes, 8% from townhouses, and 20% from condominiums. Additionally, the company plans to sell one hotel to a REIT and is preparing to issue bonds worth 12 billion baht to pay off debts and expand its business.