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Thai developer LPN sees condo market slowing in 2015

[BANGKOK] Thailand's biggest condominium developer LPN Development PCL said on Thursday the company is cautious about buying land as domestic demand for high-rise buildings weakens and banks restrict lending to home buyers.

Several property developers have changed strategies to focus on single-detached houses and townhomes after bookings of condominiums slowed in recent months, Managing Director Opas Sripayak told investors during a quarterly earnings presentation.

"It (the market for condos) is clearly on a downtrend because most developers are trying to reduce building condominiums, especially those that cost less than 3 million baht per unit," Mr Opas said.

LPN, the market leader in medium-to-low priced condominiums, missed its revenue target last year, hit by weak demand from consumers after months-long political unrest in Thailand.

Rising household debt is slowing condo demand in Thailand, and banks are getting cautious about giving loans to home buyers, Mr Opas said. This pushed the rejection rate, or rate at which banks refuse loans, up to 15 per cent in the fourth quarter, versus the normal rate of 10 per cent, he said.

Despite a market downtrend, LPN expects to continue to post revenue growth over the next two years even with a high backlog of condominium projects worth about 43.8 billion baht (S$1.85 billion). The company plans to launch 11 new projects this year worth a combined 19.5 billion baht, Mr Opas said.

The company maintained its revenue target of 16 billion baht for 2015, up from nearly 13 billion baht last year.