Construction costs force sansiri's hand

Sansiri will increase the price of its residential units 3 per cent to 5 per cent for new projects launched in this quarter. This is consequent to the construction costs rising, the company's vice president for project management in the high-rise department Wirote Kappiyajanya said.

He said the company's construction costs have shot up 7 per cent to 10 per cent and it has been forced to pass on some of the added expenses to buyers of residential units, especially city condominiums.

"We will keep our price for existing residential projects stable but will adjust prices for new projects," Wirote said.

He said that although the company will raise prices of new residential projects 3 per cent to 5 per cent, this is not likely to affect its sales figures because other property developers have also had to raise prices to adjust construction costs. Hence, the competition will not affect sales, he said.

"We believe demand for residential projects, especially city condominiums, has continued to grow with the cost of living, which has risen with the oil price rising. Most home-buyers change their lifestyle to buy city condominiums and reduce their transportation cost. Thus, even though our residential price has risen, the transportation-cost reduction is significant," he said.

Sansiri plans to launch four city condominium projects this year. One of them is Baan San Suk in Hua Hin, introduced in the first quarter of the year. Of the 260 units in the project, 200 have been sold.

The company will launch two more project this week. The first is Hive-Taksin which is worth Bt1.51 billion, while the second, Hive Sukhumvit 65, is valued at Bt390 million. Prices for units in these projects will start between Bt80,000 per square metre and Bt90,000 per square metre. This reflects a price adjustment of 3 per cent to 5 per cent.

The next two projects will be launched in the second half of the year and will target middle market.

Wirote said demand for middle-market properties still has growth potential, especially for residential units priced between Bt80,000 per square metre and Bt90,000 per square metre. With this view, the company's new projects will be targeted at the middle market.

He said demand in the luxury market also has growth potential but it is difficult to find the land to develop luxury-residential projects.

"The Central Business District now has limited amount of land for luxury-condominium developments because the price of land has nearly doubled over the past two years. It is due to this we will instead be developing city condominiums for the middle market this year," he said.

Presently, 40 per cent of Sansiri's revenue comes from condominium projects while the rest comes

from low-rise residential projects, including detached houses and townhouses.