Kiatnakin Bank (KKP), the major player in the real-estate lending segment, plans to offer longer-term loans to small and medium-sized real-estate developers in a bid to help them with their cash flows amid a difficult business climate.
Vissarut Panyapinyopon, vice president for real-estate lending, said last week that the political unrest is among the factors contributing to downside risk, and the bank does not expect new-loan growth to accelerate this year.
The bank will emphasise servicing existing customers, as it believes the political turmoil that has existed since the end of last year will lead to cash-flow problems for some property developers.
Housing buyers are expected to delay their decision to buy residences due to reduced confidence in the political situation. Small and medium-sized real-estate developers have to hold their cash flow in reserve until demand revives, the banker said.
“The bank can help small and medium-sized property developers by offering longer-term loans than normal, which will not require customers to repay the bank quickly once construction is complete,” he said.
Slowdown in condo market
Real demand for townhouses and detached houses will resume quickly, compared with condominiums, he said.
During the ongoing political unrest, the bank has seen a slowdown in buying by speculators in the condominium segment, the banker added.
Vissarut said loan growth this year should slow down. Last year, the bank provided new loans for real-estate developers worth Bt33 billion.
KKP this month granted new loans worth Bt2 billion to property developers in Bangkok and the provinces.
The banker said that new condominium projects along the mass-transit lines showed a significant decline.
The bank continues to focus on townhouses and detached houses rather than on condominium developers to ensure non-performing loans remain low.
Projects that cater to real demand will have an advantage over projects that are aimed at both real-demand buyers and speculators.
Vissarut added that opportunities in real-estate lending remain, especially in those provinces which stand to benefit from the Asean Economic Community.
“KKP’s loan portfolio upcountry is 40 per cent [of the total] and we will try to increase that proportion to 45-50 per cent this year,” he said.