Up to Bt3 billion will be invested this year to build condominiums in Sukhumvit Soi 39 and Srinakarin Road. The other Bt5 billion will be spent in 2020.

The total investment will boost Shinwa’s revenues to Bt1.5 billion and net profits to Bt500 million in 2020, he said.

This will boost its presales to Bt35 billion and bookings to Bt28 billion by the end of this year, he said.

“Market growth this year may be flat or contract when compared with last year,” said Anant Asavabhokhin, a former chief executive of Land and Houses Plc.

“Purchase demand for residences may decline from both overseas customers and domestic investors and speculators if the BOT’s measures that takes effect on April 1 have a direct impact on the market,” he said.

The Bank of Thailand has announced a set of new measures to rein in mortgage approvals, requiring buyers to place a higher down payment for multi-mortgage borrowings. From April 1, it will require homebuyers of a third house to place a 30 per cent down payment, regardless of the price. Down payment for a first mortgage remains unchanged at 10 per cent. For a second mortgage, the down payment is 10 per cent if the re-payment period of the first mortgage exceeds three years, or the house price is below Bt10 million. The down payment will increase to 20 per cent if the first mortgage is less than three years or the house price exceeds Bt10 million.

Meanwhile, the rise in the interest rate, combined with slowing in the growth of the country’s economy this year, will impact purchasing power and hence domestic demand for residential projects, he said.

Real demand for residential homes will stay but demand from both investors and speculators – that normally average about 10 per cent of total market demand – will drop when the BOT’s measures come into effect, Anant said.

As property demand remains stable or drops in comparison to last year, property firms may considering downsizing to serve the slightly smaller market in 2019.

“The slight drop in market size is not expected to cause hard times for the property sector, as was experienced in 1997,” he said. The sector’s melt-down 22 years ago forced a financial crisis on the country.

However, it will affect the property firms which have expanded their investments over the last five years as they may have to lay off staff to match the smaller size of their business,” Anant added.

Business Housing Association president Atip Bichanond forecasts that the property market this year will be almost the same as last year. However there are also new factors that will affect demand for homes, such as the rising interest rate, signs that the country’s economic growth will dip below 4 per cent and the BOT’s measures.

“With every 0.25 per cent rise in interest rates, purchasing power is affected by about a 2 per cent drop, because of the increase in monthly payments. For every 0.25 per cent interest rise, home borrowers have to increase their monthly payments by an average of Bt205 per every Bt1 million in loan principle,” he said.

As well, the upcoming election will impact both property developers and homebuyers, he said. They will have to make evaluate whether to develop their projects against a lack of information about the new government, outcome of the election and possible changes in the investment policy for the country’s infrastructure development, he cited.

There are also concerns about whether a new government would change policies or create new laws affecting the property sector. The Land and Building Act is to come into effect in the year 2020, and the Windfall Tax is waiting for the National Legislative Assembly to consider, for example. Policy moves will affect what property developers do regarding their residential projects, Atip said.

Meanwhile, the US-China trade war and the strong baht have also dampened the demand for residential units in Thailand, especially for condominium projects and luxury properties in Bangkok and its suburban areas as well as tourist destinations, say property experts.

“China was a major source of homebuyers who had expanded their investments in residential projects in Bangkok since 2016. Up to 40 per cent of our customers buying condominiums at Ratchadapisek road, Rama 9 and Pattanakarn were from China. However, the market has now dropped nearly by half from 40 per cent in the last three years to just 20 per cent,” Pruksa Real Estate Plc’s chief executive officer of value market, Piya Prayong, said recently.

“Customers from China delay making their buying decision when the yuan currency is weak compared with the US dollar and the baht.”

A survey by property agency Nexus Property Marketing, found that up to 20 per cent of buyers of condominium units in Bangkok and the suburbs were foreigners, and up to 80 per cent of them were from mainland China.

Nalinrat Chareonsuphong, Nexus’ managing director, says the slowdown in demand for condos by Chinese buyers has continued following a dip last year, due to China’s economy facing negative impact from the US-China trade war.

“Purchases by customers from China for condominium projects in Bangkok have dropped by up to 20 per cent. However, we are confident that they will return to the market in the middle of this year, when the result of the trade war between China and the US becomes clear,” she said.

Meanwhile, increase in the baht strength from an average Bt33 per USD to Bt32 and Bt31.5, also affect demand from other foreign buyers,according to a property expert who asked not to be named.

“The strong baht makes Thai properties expensive compared to the recent past, and that may impact on foreign buyers’ decision,” he said.

Following the market trend, property developers plan to revise down the launches of new residential projects this year with the total expected to be the same or lower than lst year.

For example, Pruksa Real Estate Plc has announced that it may launch fewer projects this year and the plan will be finalised in the next two weeks.

“We may revise down our new residential project launches this year, with 60 projects compared to 70 projects last year if we see a drop in market demand,” Pruksa Real Estate Plc’s chief executive officer for premium market, Prasert Taedullayasatit, said recently.

“We will drive sales of our existing projects, numbering 100, as they continue through the selling process.”

Lalin Property Plc has announced a plan to launch eight to 10 residential projects this year, with the focus on single-detached houses and townhouses at prices between Bt2 million and Bt6 million per unit.

The company will delay the launches of luxury residential and condominium projects until they see a slight growth in demand.

“We will drive sales of our existing projects, to boost the total of presale value to Bt5.3 billion and revenue of Bt4.65 billion at the end of this year, up 15 per cent from last year,” Lalin Property Plc’s chief executive officer, Chaiyan Chakarakul, said recently.

“We believe developers will have a hard time this year, given the negative factors affecting the purchasing power of homebuyers. Property firms must rejig their business models with a long-term focus,” said AP (Thailand) Plc’s chief executive officer, Anupong Asavabhokhin.

However, he remains confident that the market will still post a 5-per cent growth this year, given the strong demand for residential units priced between Bt5 and Bt10 million.

This segment will not be badly impacted by the central bank’s measures on mortgage loans – as opposed to speculators and the second-home market. Yet, the number of residential project launches this year will be lower than last year’s when the company boasted its highest in record, he said.

“We have enough projects for sale this year – both new and existing ones,” he concluded.

In fact the 2019 condo-market outlook in Sukhumvit and other central business district (CBD) zones will compare favourably with last year, she said yesterday after joining the launch of FYNN Asoke Sukhumvit 10.

The price of a condominium unit in the Sukhumvit area has sharply increased, with starting prices for many projects at Bt250,000 per square metre. Despite the cost, there are many new projects around Sukhumvit, particularly in Phrom Phong and Thonglor. Customers are also checking out other prime locations with a lower supply and better value-to-money price packages, said Aliwassa.

For up-and-coming residential development in 2019, single homes and townhomes around connecting areas will gain more interest, she said. With the price of land in the heart of Bangkok so high, many super luxury and branded residences have tremendously high prices per square metre. For 2019, getting the right mix of location, package price and product development is very important and developer needs to carefully calculate it.

Low-rise condominiums therefore become another option for those looking to live in the city, but for a more affordable price. At the same time, land prices continuously increase. And we are on the cusp of witnessing a new height in the price of land – up to Bt3 million per square wah in central Lumpini – due to the low supply of freehold land plots.

Consumers will consider purchasing a condominium not only for their own residences but also for investment. Today’s consumer is more focuses on capital gains compared to the past. Consumers tend to consider a project that is both good for their own residence and offers more opportunity for renting out or selling, along with yield. Meanwhile, the developer needs to shift to lifestyle products and a greater focus on a project’s unique selling points to meet the needs of a consumer, Aliwassa said.

Following the market trend, CBRE is the sale agency for FYNN Asoke Sukhumvit 10, a project offering a price of Bt185,000 per square metre.

FYNN Asoke Sukhumvit 10, developed by Fynn Development Co Ltd, has a total project value of Bt1.8 billion.

This year the company plans to launch two low-rise condominium projects under brand FYNN, said Fynn Development Plc’s chief executive officer Pongsethorn Jom Salakshana. FYNN Asoke Sukhumvit 10 is the first 2019 project launch, with the next scheduled for the second half of this year.

Of the company’s first two projects launched in the past year, FYNN Aree had closed sales worth over Bt350 million and transferred all units to customers, the Bt800 million FYNN Sukhumvit 31 build is over 90 per cent sold and under construction with completion and unit transfers expected within the fourth quarter this year.

The company also plans to develop additional property projects worth a combined over Bt4 billion in this year and the next year, in hospitality, low rise and high rise condominiums. This will boost its sale growth to double digits in this year and the next year, Pongsethorn said.

“We are trying to find the way to reduce our construction waste to zero as soon as possible, because we have a responsibility to society to minimise building waste in the environment,” Sansiri Plc’s president Srettha Thavisin said in a recent interview with The Nation.

He says his company will move toward being a green property firm in 2019.

The company is learning how to manage its construction process to reduce the volume of waste, and to reuse waste from his projects for other construction processes. In doing so, the company aims to move to “circular construction” under the “circular economy” trend, he says.

To reduce waste at the end of a building project, the company starts at the beginning stage by using the Building Information Modelling (BIM) system. The approach reduced construction waste and in the process helps to also reduce construction costs, says Srettha.

Sansiri is also investing up to Bt1 billion to expand its production prefabrication manufacturing capacity from 850,000 square metres of prefabricated products to 985,000 square metres by the middle of this year.

The new production capacity will increase the number of residential units from an average 2,000 yearly to 3,500. The volume of waste at the construction site will also be decreased when all materials are pre-manufactured, the company’s chief operating officer, Uthai Uthaisangsuk, adds.

The company is also collaborating with the startup firm GooGreen, which has developed an app that would allow companies to sell their wastes to waste management firms serving Bangkok and surrounding suburbs.

This is the way to reduce waste from all of its residential projects, Uthai said.

“Circular construction is part of the circular economy, which is the way for property developers concerned about the environment to reduce waste and also improve the quality of life for people,” Assoc Professor Singh Intrachooto, head of Kasetsart University’s Creative Centre for Eco-design, said in a recent interview with The Nation.

Singh, who is also the chief advisor to the Research & Innovation for Sustainability Centre (RISC), says that there has been an international discussion about how to create a circular economy in which changes to processes and products ensures that no waste is created.

“The circular economy concept is now already being used in some industries in Europe. The Netherlands has had success by using it in industry, but it is not in use in the property sector even though the sector has waste of up to 30 per cent of the total raw construction materials used in building,” said Singh.

“If the property sector managed its construction process out of concern for the environment, and improved its approach to become a circular industry, that would improve the country’s environment. It would also help people get a quality residence that is environmentally more friendly and better for the homeowner under the concept of well-being living,” he said.

RISC has researched how to achieve circular construction by reusing raw materials, says Singh, and also how to manage the construction process to reduce the volume of waste at the construction site.

“We’ve opened up our research for all property firms to use. This is a part of improving the construction process to be friendly to the environment,” he said.

According to a 2016 report by the Pollution Control Department of Natural Resources and Environment Ministry, Thailand generates 27.06 million tonnes a year of wastes. Up to 30 per cent of the total are recyclable wastes and the next 64 per cent organic wastes that can be composted. Another 3 per cent is garbage that is difficult to break down such as plastic and foam boxes, while another 3 per cent are hazardous waste such as medical packaging and batteries.

The reported also found that up to 109,500 tonnes, or about 0.5 per cent of total waste, came from construction.

Thailand spends Bt13 billion a year to manage the country’s waste, according to the department report.

“If we could manage the building process so that it is circular construction, that would reduce construction waste,” Singh said.

“The construction industry could also uses other waste as its raw materials for construction infrastructure, such as turning plastic waste from the sea into sidewalks,” Singh added.

“We believe that the property industry can reduce its waste and also be a part of helping the country reduce its overall waste. This is the direction that we are moving in,” Sansiri Plc’s president Sretha said.

Support for a shift to a circular economy has been growing since the World Economic Forum (WEF) undertook a multi-year collaboration with the Ellen MacArthur Foundation under the Project Mainstream to accelerate a transition. Project Mainstream is a CEO-led initiative that helps to scale business innovations related to the circular economy.

The idea behind the circular economy is to reuse and recycle resources multiple times to keep them in use for as long as possible and minimise waste.

Building on the work of the WEF and the MacArthur Foundation, the Platform for Accelerating the Circular Economy – PACE- was launched in 2017 as a public-private collaboration.

It is co-chaired by the CEO of Philips and the heads of the Global Environment Facility and UN Environment, along with the Ellen MacArthur Foundation, the International Resource Panel, Circle Economy and Accenture Strategy as knowledge partners.

The World Economic Forum hosts and facilitates the Platform.

The Global Leadership Group currently includes over 40 CEOs, ministers and heads of international organisations committed to leading a portfolio of projects and activities. Project focus areas include plastics, electronics, food and bioeconomy, the business model, and market transformation across China, Asean, Europe and Africa.

Following the trend across Asia, businesses are increasingly discarding the decades-old “take, make, waste” model in favour of the circular economy in which waste is minimised and products are kept in the market in one virtuous loop.

The approach has the potential to spur a new industrial revolution, Eco-Business Magazine reported recently.

For example, in Taiwan, used coffee grounds collected from Starbucks cafes are turned into T-shirts, socks and soaps by Taiwanese firm Singtex. Lighting giant Philips gives office landlords in Singapore free lights in return for a share of the energy saved. In the Philippines, discarded fishing nets are sold by local communities to carpet maker Interface to make fresh carpet tiles.

All over the world, including in Asia, home-sharing platforms Airbnb and PandaBed, along with car-sharing services Lyft and Tripda, and goods-sharing apps SnapGoods and Rent Tycoon are fuelling collaborative consumption and changing the way people use goods.

In Thailand, Magnolia Quality Development Corporation Ltd (MQDC) has collaboration with PTT Global Chemical Plc (GC) to develop upcycled building materials from plastic waste. The materials were used in the construction of MQDC’s residential projects starting last year.

The first project features construction of a 5-kilometre network of footpaths that will take at least 160 tonnes of plastic waste. The plastic is being provided by GC, which collects it from the sea. Later, the company’s Research & Innovation for Sustainability Centre (RISC) will carry out research and development into the use of other such materials in infrastructure at its projects.

The World Economic Forum estimates that 80 per cent of the US$3.2 trillion (Bt103 trillion) value of the global consumer goods sector is lost irrecoverably each year due to the current inefficient linear “make, take, waste” model.