Middle market attracts major developer firms

Quality Houses’ subsidiary Casa Ville is one of the brands focusing on houses priced between Bt4 million and Bt7 million a unit. The middle market is attracting more attention than the mass market.

Leading property developers have changed strategy to penetrate the mid-priced market - with houses priced lower than Bt3 million  - due to higher demand and lower risk compared to the mass market.

Asian Property Development (AP) managing director Pichet Vipavasuphakorn said many major property developers have changed their strategy to cash in on the market for single, detached houses priced between Bt4 million and Bt7 million, partly due to fewer risks as compared to other housing categories.

This market targets buyers who earn at least Bt70,000 a month, are starting a family and want to move to better environs.

AP has "The City" brand for single, detached houses with prices between Bt5 million and Bt8 million. It recently launched Centro as a new brand single, detached houses priced at Bt4 million.

SC Asset Corporation executive vice president for low-rise property development Kree Dejchai said 80 per cent of its revenue was generated from the housing projects priced between Bt4 million and Bt8 million a unit.

Of that, 60 per cent came from houses priced between Bt4 million and Bt6 million.  The instalment rate for this market is about Bt35,000 a month. Therefore, the buyers need a base income of Bt80,000 to Bt100,000 per family.

 "This housing market is the easiest to target because banks usually grant loans to those who have high purchasing power," he said.

He said the rate of unsuccessful loan requests for this group is much lower when the unit price is lower than Bt3 million. Due to a high degree of risk, banks accord careful consideration before granting loans. The rate of unsuccessful loan requests for low-priced houses is about 25 to 30 per cent. Hence, the project owners have to shoulder a higher cost when customers make the down payment but fail to get the loan approval.

 "Only big, well-known developers have competed in this market. Some of these players have started penetrating the market since last year by launching units priced between Bt3.4 million and Bt3.5 million. When customers become aware of their brands, the developers will raise their selling price to Bt3.9 million per unit for new phases or new projects," he said.

Casa Ville senior vice president Yuthana Tantiyanon said the company has introduced two single, detached-house projects under the "Casa Ville" brand to serve the mid-priced housing market.

The two projects - Casa Ville Ratchapruek-Changwattana and Casa Ville Watcharapol 3 - offer units with starting prices between Bt4 million and Bt7 million. Instalments start from  Bt35,000 to Bt40,000 a month.

Home-builder companies have also expanded their detached-house model to focus on the middle market, with prices between Bt4 million and Bt7 million a unit.

Four Pattana managing director Pramote Theerakul said the company has launched four series with fully furnished houses, with prices between Bt5.1 million and Bt7 million per unit.

Home Builder Association president Panthep Tanvichitkul said demand for residential properties priced between Bt4 million and Bt7 million have strong growth potential compared to luxury or low-priced housing.