Sunday, December 16, 2007

Owner-built homes to rise in poor economy

Business News - Monday December 17, 2007

Bangkok Post

Owner-built homes to rise in poor economy

Costs less than buying mid-range condo


Economic difficulties may lead to an increase in owner-built houses, says Piched Maneerattanaporn, the managing director of the builder Landy Home (Thailand) Co.

He said most owner-built units had two storeys, but that the trend was moving toward compact city homes with more floors so owners would retain their usable space.

Several home builders offer three-storey designs but their sizes are large and construction costs are high at five to six million baht a unit, he said.

Landy believes that there will be more demand for city homes with usable areas of 150-200 square metres at prices between two million and three million baht. The company plans to introduce designs for three-storey units next year.

Many Thai people prefer living closer to the ground than in high-rise units and the cost of having an owner-built unit is still cheaper than buying a condominium at a mid-range price.

''If you buy a 100-square-metre condo at 60,000 baht per sq m, your total price would be six million baht. If you get a 50-square-wah plot at two million baht and spend another two to three million baht to build a house, your total cost is lower and you don't have to pay for the management fee each month,'' said Mr Piched.

He would like to see the government improve infrastructure, especially the road network and roadside environment. This would encourage more people to build their own units, rather than purchase units from real estate developers.

Landy has already increased its prices by 5% and plans to raise them another 5% next year due to higher construction costs, which are up by 5-15% depending on the materials. The difficulty for the home building businesses is that today's selling price may not cover costs when the construction is completed six to eight months later.

Therefore, builders need to use technology that shortens the construction period. Landy Home now has three construction systems: building whole units at the site, precast housing structures with walls and finishing done at the site, and completely precasting the whole house.

The company's customers prefer the precast housing structure due to its low price and high-quality construction. Although a fully precast unit provides more strength with a short construction period of three months, the price is about 20% more, so this system is not popular in Thailand.

Landy applies Japanese technology in producing concrete double-layer walls, and the company is confident that it can build cool, quiet and energy-saving units for its customers.

Landy Home projects business growth of 10% next year though margins are expected to fall to about 10%. Normally, it builds more than 200 housing units worth around 400-500 million baht each year.

The company last year launched a 70-million-baht condominium, The Point in Lat Phrao Soi 19, which has almost sold out. It plans another project at a location close to a mass-transit route and valued at about 150 million baht with selling prices of more than one million baht a unit next year.

Mr Piched founded Landy Home in 1989 as he wanted to own a business in which he could combine his engineering knowledge with marketing skills. Landy also produces precast concrete structures for construction companies.

After the economic crisis in the construction business, the company founded Dai-ichi Corporation Plc to produce precast reinforced fences under the Fenzer brand for individual buyers.

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