Developers told not to expect loans

Despite the stronger than expected outlook for the property market, developers should adjust their strategies to cope with mortgage rejections and better manage their overhead, property veteran Anant Asavabhokhin said yesterday.

The market, although still sluggish, is proving pessimists wrong this year and many developers are seeing rising revenues and profits, Mr Anant said.

He was speaking at a seminar called “Real Estate Business Adjustment and the Future of Thai and Global Real Estate”.

For their part, banks are offering a different perspective.

“Even with surplus deposits, banks are still concerned about the rise in non-performing loans (NPLs),” Mr Anant said.

Homebuyers who have been repaying their mortgages for three straight years or more rarely stop paying, he said, adding that a substantial share of banks’ NPLs now come from people who have been repaying their l oans f or over five years.

“Down-payment rates are very low, and monthly payments come close to the cost of renting a unit,” Mr Anant said. Cheaper prices have attracted customers who still lack the financial means to buy a house, he said.

Mr Anant, the former chairman of SETlisted developer Land and Houses Plc (LH), said rejected mortgage applications will continue to be a burden for developers as high NPL rates make banks leery of dispensing loans.

Developers’ condo projects are coming under intense scrutiny from financial institutions, which often demand a sales rate of at least 60% before extending a loan, he said.

Mr Anant urged developers to look at real estate investment trusts (REITs), which LH used to expand its non-residential business.

“The retail and hotel sectors need huge long-term investment,” he said. “Without REITs, we might be not be able invest in new projects on a recurring basis.”

Last week, LH sold Grande Centre Point Hotel Rajadamri to a REIT. It plans to sell Terminal 21 Korat in Nakhon Ratchasima within two years, as well as offload a sixmonth-old hotel on Thong Lor to a REIT, according to insiders.

Mr Anant said his resignation as LH chairman would not affect the business, as most of the units have been sold.