Firms Consider Ways to Attract Buyers amid Likely Increase in Interest Rates

With the minor achievement of the government's economic package and a hike in interest rates on mortgage loans expected, developers are considering a change in plan for the second half of 2008.

The trouble of home-buyers will increase around 5-6 % because of increasing rates and elevated apartment prices. This will reduce their interest in property investments in the second half of 2008. Keeping this in mind, developers are trying hard to look for new ways to stir things up on the sales front.

Land and Houses is preparing to stick to its policy of making available apartments at initially predetermined construction prices, in order to attract consumer. It has priced apartments at Bt 3 - 5 million. The developer hopes the low-cost Bangkok apartments and government tax incentives to increase sales and assist the company meet its sales target of Bt21 billion in 2008.

Land and Houses director and senior executive vice president Adisorn Thananun-narapool said elevated inflation and the predictable hike in interest rates were not the only aspects that would lower home-buyers' procurement power. Worsening buyer buoyancy will also play a significant role in keeping them from house hunting, he said.

Asian Property Development plans to decrease sales of condominium projects for which the company has required environmental-impact-assessment licenses. This is for the reason that condominiums take longer time to build. "This approach will protect consumers if the projects do not pass the assessment or there is requirement for any modification in building plans," a company source said. The developer is preparing to launch 10 projects worth a combined Bt18 billion in 2008, among which five worth Bt10 billion are condominiums along the Skytrain.

Preuksa Real Estate is concentrating on projects of Bangkok apartments in Bangkok's central business district and on the outer reaches of the city. The company is purchasing construction materials beforehand and speeding up projects, with the intention of keeping prices down.

Developers tie up with banks to present extraordinary financing packages to consumers

With interest rates on mortgages are likely to increase from 0.5-1% in 2008, developers are tying up with banks to present financing packages to attract home-buyers in the second quarter of 2008. The marketing push comes at a hard-hitting time: buyer's buoyancy has been seen dropping and the political chaos is showing no signs of lessening.

Commercial banks have by now started hiking rates. Kasikorn-bank increased fixed-term deposit rates by 0.35 - 1.25 % in the first week of June. The bank increased its least lending rate, least overdraft rate and least retail rate (MRR) to 7.25 %, 7.5 % and 7.75 %.

Bangkok Bank has raised key lending rates by 0.375 %, increasing the least lending rate to 7.25 %. The minimum overdraft rate has increased to 7.5 % and the MRR to 7.75 %. Siam Commercial Bank's minimum lending rate is now 7.25 %, the minimum overdraft rate is 7.5 % and MRR is 7.75 %. Asian Property Development senior executive vice president Visanu Suchatlumpong said the company has tied up with Siam Commercial Bank to present two financing packages to home purchasers between June to August.

The primary package makes available 0 %mortgages for the initial 6 months of the loan. For the left over period, the mortgage will be set at the MRR. The next package makes available a fixed rate of 2.25 % for the starting year and then an MRR of 1.5 %.

"Most consumers opt for the second package as they consider interest rates will increase considerably with price hike to nearly 6 % in 2008. Though the rates increase by 1 %, home-buyers have to compensate 6 - 7 % extra in monthly payments. " he said.

Prinsiri is making available 0 % financing and a chance to prevail a Honda Jazz to purchasers who go for its Northern Town project.