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L.P.N. moving away from condo slowdown in 2019

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SET-listed residential developer L.P.N. Development Plc will shift to development of single houses, townhouses and duplexes next year, doubling launches in this segment after seeing a slowdown in the condo market.

Chief executive Opas Sripayak said from 2019, the condo market will fall behind previous years' growth as negative factors such as stricter mortgage regulations and higher interest rates will dampen consumer sentiment.

"The third quarter this year is the worst period, as condo presales and transfers will be the lowest," he said. "We see many developers advertising for ready-to-transfer units with heavy discounts."

Mr Opas estimated a drop of 10-20% in total condo presales and transfers in the overall market in the third quarter from the same period last year. The key cause was financial institutions tightening mortgage lending rules.

Condo demand remained strong but buyers were unable to get housing loans as their monthly income was lower than the bank's requirement or credit line.

"The market in the fourth quarter will pick up and continue next year because of the general election," he said. "But the low-rise [single house, townhouse and duplex] market will be stronger."

In 2019, L.P.N. plans to more than double low-rise products from 10-20% of total new launches this year to 30-40% next year. It aims to open low-rise projects worth a combined 5 billion baht and condo sites worth a total 10 billion.

During the first eight months of 2018, L.P.N. launched nine new projects worth a combined 13 billion baht. They comprised seven condo projects worth a total of 9 billion baht and two low-rise housing projects worth a combined 4 billion.

From Jan 1-Sept 24, the company recorded 12 billion baht in presales, comprising 10 billion baht from condos and 2 billion from single houses and townhouses.

It aims to have 18 billion baht in presales by the end of the year, up from 16 billion baht last year.

Some 14 billion baht will be from condos, while 4 billion is to be from low-rise projects. Revenue is targeted at 14 billion baht, up from 9.65 billion in the previous year.

In the fourth quarter this year, L.P.N. will launch three townhouse projects worth 500 million baht each.

Two of the projects are on Rama II Road in Tha Kham area and Sukhumvit Soi 113, with units priced around 2 million baht. The other is located on On Nut Soi 44, with units priced from 10 million baht.

LPN shares closed yesterday on the Stock Exchange of Thailand at 11 baht, down 10 satang, in trade worth 36.62 million baht.

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