Property developers have had to change their business and marketing strategies and focus on the middle segment of the market to boost sales in the second half of the year, with buyers having reduced their budget for house purchases following the increase in interest rates and a higher cost of living.

According to the first-half financial results reported last week by companies listed in the Stock Exchange of Thailand, property firms who develop detached housing priced between Bt3 million and Bt10 million experienced slower sales growth than last year.

These include Land & Houses, Property Perfect, Lalin Property, Quality House and Charn Issara Development.

Meanwhile, some property firms who develop condominium projects by offering condos for less than Bt3 million per unit have continued to record sales revenue growth on a par with the same period last year.

Teerachon Manomaiphibul, executive director of Property Perfect, said the demand for housing had continued to grow but almost all home-buyers had reduced their budget for property purchases.

Some had planned to buy houses for Bt5 million, but changed their minds and reduced their investment to buy at a lower price over concern about their future earnings, he said.

Firms who changed their business concept from focusing on the high end of the market to the middle segment from the second quarter onwards were not negatively affected by changing market trends.

For example, Preuksa Real Estate has succeeded in generating sales of Bt4.1 billion - up 24 per cent compared to the same period last year - because it offers housing priced between Bt600,000 and Bt2 million that meets current demand.

Supalai and Sansiri have also succeeded in selling their condominiums on Sukhumvit by offering units priced between Bt2 million and Bt3 million.

Preuksa Real Estate president Thongma Vijit-pongpun said the company had had to reduce the price of its housing because the demand for pricier properties had fallen.

The company has focused on selling homes between Bt600,000 and Bt2 million since the second quarter, and as a result has succeeded in maintaining its sales growth during the first half, he said.

Land & Houses senior vice president Naporn Sunthronchitcharoen said his company's sales had dropped because of delayed purchasing decisions by home-buyers and a reduction in the amount they want to invest in buying a property at this time.

Meanwhile, almost all of

Land & Houses' customers are people who have changed their plans from buying a detached house to a condominium because they want to reduce their transportation costs within the capital.

"Our condominium project, The Bangkok, sold out last year, while our new project on Sukhumvit Road is in the construction stage and will start presales next year. As a result, our sales in the first half of the year are lower than the same period of last year," Naporn said.

However, the company believed that when the company launches its two town house projects in the second half of this year, it would boost sales in the last quarter of this year, Naporn said.

Teerachon added that almost all property developers were switching their projects to developing housing priced below Bt3 million, that is, property that meets the current market demand.

"If they don't change their target group, they will lose the market to their competitors," he said.

Somluck Srimalee

The Nation