Stocks of built but unsold residential properties are piling up in Bangkok causing developers to change tactics to speed up sales, The Nation newspaper has reported.
Bangkok developers have been aggressively building new properties but buyers are holding back because of rising interest rates.
Opas Sripayak, Managing Director of LPN Development, said his company was looking to speed up sale by opening with “soft sales” and taking as many bookings as possible before a grand opening. Before, they wouldn’t accept bookings before a grand opening but the change happened after LPN was unable to sell out its Lumpini Park Riverside-Rama III project when it opened in the fourth quarter of 2010.
“We changed our selling process to meet a change in home-buyers’ behaviour,” he said, adding that home-buyers needed time to consider a purchase and convenience in the buying process.
The new techniques were used in selling LPN’s first two projects launched this year, Lumpini Condotown Nida-Serithai and Lumpini Condotown Lasale-Bang Na. The grand openings for the two projects is this weekend, but both have already sold around 80 per cent during their soft sales period. The two projects are valued at THB1.45 billion (US$ 47.3 million).
This soft sales strategy is part of LPN’s efforts to reduce its residential inventory, which reached a value of THB4.4 billion (US$143.5 million) at the end of last year, up 52 per cent from an inventory value of THB2.9 billion (US$94.6 billion) in 2009.
Another developer, Pruksa Real Estate, is launching an aggressive marketing campaign to deal with its large inventory. The company had THB27.8 billion (US$900.7 million) in unsold units at the end of 2010, double the amount they had at the end of 2009.
Pruksa’s Director and Chief Business Officer Prasert Taedullayasatit said that more than a half of the company’s inventory was undeveloped land in existing low-rise residential projects that was waiting for development, and this was not a burden for the company.
“Our inventory stock of residences that are ready to live in is worth only Bt1.2 billion, and that does not affect our business,” he said.
According to the financial results of property firms at the end of 2010, residential inventories, covering both undeveloped land and finished homes that were ready for occupation, had risen by between 20 per cent and 100 per cent.
According to the Agency for Real Estate Affairs (AREA), the inventory of finished but unsold residences in Bangkok and its suburbs totalled 110,666 units in August last year. Of these, about 36,352 units, or 33 per cent, were townhouses. Thirty-two per cent, or 35,187 units, were single detached houses and 25 per cent, or 27,209 units, were in condominiums.
However, the Real Estate Information Centre (REIC) says its research shows that the total inventory in mid-2010 amounted to 189,000 units worth Bt472.5 billion, for an average price of Bt2.5 million per unit.
The research also shows that home-buyers behaviour has changed from buying low-rise residences such as single-detached houses, townhouses and twin houses, to condominiums. This follows planning for new mass-transit routes in Bangkok.
REIC Director General Samma Kitsin said property inventories at that time would take between 24 and 26 months to clear – in the event that no new supply hit the market. (Source: The Nation)