Tax incentives cause firms to change focus

The Interior of a detached house by Quality Houses, one of the property companies developing ready-to-stay housing in time for buyers to avail themselves of the government’s tax-incentive package.

Property companies are expected to introduce detached houses and townhouses to boost sales from the second half of this year to the first quarter of the next before the tax-incentive package expires on March 28.

According to a survey conducted by The Nation, listed property companies have revised their business plans to launch detached houses and townhouses in the second half so that these units are ready to be transferred in the customer's name by the end of the year, or at least by March.

This, in turn, will help buyers take advantage of the tax-incentive package, which includes a reduction in special business tax from 3.3 per cent to 0.11 per cent, transfer fee from 2 per cent to 0.01 per cent and mortgage-registration fee from 1 per cent to 0.01 per cent.

Property Perfect chief operating officer Teerachon Manomaiphibul said the company plans to launch eight new residential projects worth Bt12 billion in the second half. Six of the projects will be for detached housing, while the rest will be for condominiums.

"We have to launch detached houses because the construction process for this segment takes an average of six or eight months. Therefore, the units will be ready in time for our customers to avail the tax incentives," he said.

Sansiri senior marketing manager Samatcha Promsiri said the company plans to introduce detached-house projects with prices for units starting between Bt3 million and Bt6 million and added that home-buyers who buy now will be able to make use of the tax incentives.

"If we launch condominium projects - the construction process for which takes an average of a year to two - our customers will not be able to get the tax incentive," he said.

Asian Property Development also plans to introduce detached houses and townhouses in the second half of the year, senior executive vice president Visanu Suchatlumpong said.

He said demand for residential projects would grow, especially for projects located close to the mass-transit system. This is despite house prices rising 5 to 10 per cent from last year, following higher construction costs.

Quality Houses is going on an aggressive campaign to launch detached-housing projects in the second half. The company plans to launch 11 residential projects worth Bt16 billion this year to achieve its financial targets, president and chief executive Rutt Phanijphand said.

Research by the Agency for Real Estate Affair (AREA) has shown that demand for detached houses and townhouses will rise in the second half and last until the first quarter of  next year, with buyers rushing to avail the tax incentives.

"Although demand for city condominiums will grow this year, construction of new condominiums will take a year or two and will miss the tax-incentive deadline.

"Resale demand in the detached-house and townhouse segment will grow before tax package expires," AREA's president Sopon Pornchok-chai said.

Eariler, Kasikorn Research Centre said demand for residential units in Bangkok and suburban areas would be for only 67,600 units this year, a drop of 7.2 per cent from the 72,808 units sold last year.

Detached houses, double houses and townhouses are expected to see demand drop 9 per cent from the 32,741 units sold last year, to settle at 29,700 units. The home-builder market also seems set to see a 16.8-per-cent drop, from 25,251 units last year to 21,000 units this year.

Meanwhile, the condominium market is still expected to grow 14 per cent, from 14,816 units last year to 16,900 units this year.