The more affordable a condo, the more should be the focus on improving engineering and design operations. Currently, the most active residential property in Bangkok has become the affordable condominium sector as we see major developers launching many new projects. This shift in the industry brings up some interesting points worth mentioning. The more developers expand into this sector, the more attention they should pay to improving their engineering operation. There are many valid reasons why this sector is becoming more popular among developers: n The shift in consumer preference; n The purchasing power has not caught up with the land price. The price of land has been increasing continuously and significantly over the last few years. This is because the expansion of the mass transit system continues and the good earnings of developers make them aggressive to pursue expansion and also lure many newcomers into the industry. With the increasing land cost, the developers have no other way but to increase the density of the plot while keep the product small and efficient in order to make it attractive and still affordable to the real demand. The interesting points leading to the shift in focus to this special sector should be discussed. Shifting from lower density development to higher density development means more direct cost is shifting towards the building construction cost from land cost. On the other hand, the proportion of the overall project turnaround time, from land acquisition to transfer, increases in the construction phase as larger and taller buildings come up on each plot. It means construction time and cost play major roles in project returns. Moreover, since this sector is more difficult to differentiate compared to the higher end sector, the ability to push the price up for higher margin is relatively difficult. Therefore, developers in this sector should not focus too much on marketing but rather on improving their engineering and design operation. The returns from a project are sensitive to these operations even more in this particular sector. However, improving capacity in design and engineering operations leading to operational efficiency cannot be achieved quite simply. The better, faster and cheaper construction process must be thought through from design through construction, and should be further continued for long-term maintenance as well. Although product variety will still be with us, the creativity in design and engineering can still lead to economy of scale and speed. Good understanding of constructability by the architect leads to better efficiency in engineering work. The proper design that supports modular systems allows the construction process to be efficient and effective. However, there are some challenges to improve the engineering profession. Sadly, since the economic crisis hit Thailand in 1997, many professional engineers have left the industry due to lower compensation and lesser recognition. The engineering industry widely competes on cost as many developers are accustomed to the lowest bid procedure. Some even ignore many hidden costs that could be incurred by too much focus on low initial construction cost. Many have experienced that the lowest bid could eventually lead to higher cost, longer time, and poor construction. The low margin of the construction industry also makes significant innovation in the industry very slow. This is the challenge facing developers that aim to improve the design and engineering operation as human resources are hard to find. Hence, it may be a good time for many developers to start to shift their intention back a bit from marketing to another backbone of the industry, the operational side of the business. Since the shift toward urban and suburban affordable condominium seems inevitable, it may be a good time to pay more attention to improving the design and engineering operation. Source : nationmultimedia.com .
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Condo developers must focus on engineering and design
The severity of the global financial crisis also saw the government introduce additional sweeteners for buyers — a 300,000-baht income tax deduction for any buyers of a new home that was transferred within 2009. At the same time, mortgage interest that could be deducted from taxable earnings was increased to 100,000 baht from 50,000 and has now become a permanent tax benefit.
The reason is partly improved infrastructure, with the Skytrain and soon to be opened Mass Transit Subway system making the business districts more easily accessible from the outskirts of Bangkok. Northern districts such as Ram Intra, Rangsit, Nonthaburi, and Chang Wattana are the hotspots of housing estate development, while the downtown areas surrounding Silom, Sathorn, and Sukhumvit Roads remain the most active areas for new condominiums.
At the end of 2002, quality “Grade A” condos in the Central Business Districts ranged from $148 to $170 per square foot. Ongoing projects in the same area now sell for $193 to $273. Both expats and investors mostly seek two- and three-bedroom units. But if you drop down from luxury to “decent” level, you’ll find plenty of resale properties in the $62 to $227 per square foot bracket. As in most cities, the smaller the property, the more expensive the cost of floor space.