Developers should focus more on construction quality and after-sales services instead of competing to acquire high-priced land plots, claim property experts. This advice is targeted to small and mid-sized developers who must weigh the cost of the land against other aspects of a potential project.
“Competition among developers in buying land plots causes land prices to rise unreasonably. Developers should estimate costs and focus on profit before planning a project,” says Anant Asavabhokhin, the former Chairmen of Land & Houses Plc, to the Bangkok Post.
Some developers have spent energy on launching, selling and developing new residential projects as quickly as possible sometimes at the expense of quality. These companies are often looking to launch and develop several projects in a shorter time span to help a future listing on the stock market, according to Anant.
Thailand’s residential real estate market is dominated by large developers who want to improve their performance by taking away the market share from small and medium-sized developers. This has also led to developers of all sizes wanting to complete projects in a rush which in turn led to a decrease in quality.
“The residential market has accelerated so much that product quality is poor. The number of complaints about residential units [submitted to the Consumer Protection Board] never declines,” says Annat.
In terms of sales, the high bank mortgage rejection rates from last year should come down since banks are more aware of the market situation. Banks could start designing models that make it easier for potential homebuyers who had difficulties in obtaining mortgage loans in the past find financing this year. Meanwhile, developers have already adapted to the current situation by submitting customers’ profiles to banks to get pre-approval before booking allowing them to secure a unit.
“The lower-end segment, with units priced below THB2-3 million, will remain sluggish this year as purchasing power in this segment will not change from last year,” says Annat.
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