Lending Reforms to Aid Real Estate Firms in 2025
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Loading... - Putri Rahman
- 17 Dec 2024
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As Thailand's real estate sector braces for the challenges of 2025, industry leaders are optimistic about potential reforms, particularly the easing of loan-to-value (LTV) measures. This change is expected to provide significant support to developers, especially those targeting the middle-income segment of the market.
Dhira Thongwilai, CEO of Pruksa Real Estate, noted that the real estate sector experienced a contraction of 20% year-on-year in 2024, a trend that is likely to persist into 2025. However, he anticipates a rebound in the first quarter of the upcoming year as developers work to reduce their existing stock of properties.
The anticipated relaxation of LTV rules is seen as a crucial factor in stimulating demand, particularly among buyers looking for second homes. This shift could lead to the development of more affordable mid-priced projects, which Pruksa plans to emphasize in its strategy for the coming year.
Strategic Focus on Mid-Priced Developments
Pruksa Real Estate aims to concentrate on the mid-priced segment, specifically targeting single houses priced between 7-15 million baht. Mr. Dhira stated, "We will focus on appropriate supply and project size, targeting niche markets instead of the mass market in the past." The company currently has an accumulated backlog valued at 3-4 billion baht, with revenue from this backlog expected to be recognized by the end of this year.
The firm’s inventory of single house projects is valued at 4 billion baht, with 40% of these homes priced between 3-5 million baht. This strategic shift reflects a broader trend in the market, as developers adapt to changing consumer preferences and economic conditions.
New Project Launches
Recently, Pruksa launched a luxury single detached housing project called The Palm Residences Pattanakarn, valued at 2.6 billion baht. This development features 57 units of three-storey houses, ranging from 421 to 500 square meters, with presale prices starting from 45-80 million baht. This project is the fifth residence launched this year under the wellness living theme, which has seen a total value of 10 billion baht, accounting for 50% of the total value of new projects in 2024.
Mr. Dhira highlighted the project's strategic location within Pruksa Avenue Pattanakarn, which includes 14 Pruksa projects. The area has become increasingly popular due to its convenient connections to downtown Bangkok, Suvarnabhumi Airport, and Chon Buri.
Sustainable and Smart Living Features
The Palm Residences Pattanakarn project is certified by the Thai Green Building Institute for its use of environmentally friendly materials and construction methods, allowing for energy savings of up to 50%. Additionally, the project incorporates smart home technology, solar energy solutions, and offers 24-hour concierge and health services in partnership with Vimut Hospital.
As Thailand's real estate sector navigates a challenging landscape, the potential easing of LTV measures could provide a much-needed boost to developers and buyers alike. Pruksa Real Estate's strategic focus on mid-priced developments and sustainable living solutions positions the company to adapt to market demands while contributing to the overall stability and growth of the sector in 2025.
