Middle-income group WILL KEEP BUYING

It is planning to go ahead with 12 residential projects in 2009, including four city condominiums, and its president Prateep Tangmatitham believes firmly that the overall property market will fall by no more than 5 to 10 per cent.

-Do you think the global economic crisis will affect Thailand's property market?

We believe that Thailand will get a lesser negative impact from global economic crisis [than it did in the 1997 crisis], because Thailand's property firms are now financially strong.

The property market faced a hard time in the 1997 financial crisis, and most property firms learnt how to manage their business through a crisis. That's why most of them are now in a strong financial situation. We believe that most of them will sail through this twin crisis of global downturn and political turmoil.

The global economic crisis will have a direct negative impact on exports and the tourist sector, and that may have an effect on purchasing power because people's earnings will drop after the fall in income from exports and the tourism sector.

That may indirectly affect Thailand's property market, when home-buyers delay their decisions to buy, or reduce their budget to buy a residence from Bt5 million to Bt3 million per unit.

However, this is a lesser impact for Thailand's property market this time.

-What do you think Thailand's property market trends will be this year?

Although the economy will be affected by the global economic crisis, we believe that domestic demand for residential properties will continue to grow because some factors are helping home-buyers to save costs. These include lower interest rates, a fall in construction costs and the government's tax incentives for home-buyers.

Thailand's property market in 2009 may be lower than that last year because of a drop in purchasing power, but we believe this will affect the speculation market more than real demand.

In my view, demand for luxury residences will be fall because most buyers in the luxury market are purchasing a second home. They may delay their decision to buy and instead renovate their existing home.

Meanwhile, the lower-income market will be directly hit by slight growth or even a fall in the country's economy and maybe they won't have enough money for a new home.

However, we believe that demand from middle-income buyers will continue to grow or at least remain at last year's level, for houses priced between Bt2 million and Bt4 million per unit. Most of these people are buying their first home. Most of them have been saving money for a long time before deciding to buy. We believe that this market has the potential to grow this year, and it will help the property market in 2009 to fall only slightly - by 5 to 10 per cent - over last year.

-So what are your business plans for this year?

We will go ahead and launch 12 new residential projects with a market value of Bt16 billion in 2009. Eight of them will be detached houses and townhouses and the other four will be city condominiums.

We have changed our product mix this year by increasing the number of low-rise projects. Last year, 68 per cent of our revenue came from condominiums and 32 per cent from low-rise projects, including townhouses and detached houses. This year, the percentages will change to 50 per cent from each.

We had to change this product mix because of the construction process and market demand. When building condominiums, the construction period takes one and a half to two years, which means the company has to inject money into a project for that time before expecting any returns.

Detached houses or townhouses, on the other hand, take about six to eight months to build and are generating income much more rapidly.

Meanwhile, we will cut back on the amount of money we will spend to buy undeveloped land, from our usual budget of Bt3 billion to about Bt2 billion, because we now hold seven undeveloped plots in Bangkok, and these are sufficient for new residential projects until 2011.