Sena Development turns away from condos as Thailand’s economy slows
SET-listed Sena Development expects to shift focus to low-rise properties, the company’s core competency, and away from expensive high-rise condos in response to a likely economic slowdown this year.
Kessara Thanyalakpark, deputy chief executive of Sena, said the company has focused primarily on condos over the past three years but has decided to target “real demand customers” who buy property for residence and new opportunities.
This customer segment looks for houses (single house or twin house) worth 3-5 million baht or affordable condominiums worth 1-3 million baht or lower.
The company is planning to launch 10 new projects in 2020 throughout Bangkok along the city’s mass transit system worth a combined 7.5 billion baht, including six condo projects (4 billion baht) and four housing projects (3.5 billion baht).
Five projects worth 4.5 billion baht will be developed under Sena Hankyu Hanshin, Sena’s joint venture with Japanese property firm Hankyu Hanshin Properties.
Sena expects 11.5 billion baht from presales and 10.6 billion baht in sales revenue this year.
This year’s target group for Sena is Gen Y: 18- to 35-year-olds who choose condo ownership as a life goal, along with cars or money.
Ms Kessara said the outlook in the industry remains vulnerable to a perfect storm of economic sluggishness, price wars, rising land taxes and loan-to-value limits. She said the business model must be changed every three months due to unpredictable external factors.
For example, according to economists at the end of 2019, the Thai economy was expected to pick up this year because of new government spending and tourism growth, but both areas seem likely to diminish instead.
The spread of a new coronavirus strain out of China has hit tourism, a vital economic engine for Thailand. Inevitably, the property industry has also been affected by slower growth in tourism and the economic slowdown.
Sena will have to determine the reality of the economic situation before deciding whether to add more projects this year, Ms Kessara said.
The industry will bounce back as more mass transit lines open in the next 3-5 years, she said.