Sena Development, a publicly traded property developer, has revealed new plans this month to rent and transfer ownership of its unsold condo units. This move is in response to a high rate of mortgage rejections. The company aims to enhance sales and revenue in the current year.
Kessara Thanyalakpark, the managing director, stated that the innovative strategies would target two distinct demographics. One involves renting units to prospective buyers who will eventually own them, while the other focuses on individuals initially interested in renting.
“We aim to use the new strategies to boost sales of our completed unsold units totalling 5,000, valued at a combined 10 billion baht (US$279 million),” she explained.
The company’s rent-to-own strategy is primed for Generation X, who typically prefer owning assets but often encounter hurdles when securing a mortgage loan, predominantly due to financial issues. Under this strategy, Sena will rent out units for up to three years, allowing buyers more time to prepare their financial records to secure a mortgage loan. Once buyers are ready, Sena will transfer ownership to them, deducting the rent already paid from the unit price.
“Residential demand in the lower-end segment remains robust, but there are challenges in securing mortgages,” Kessara said. “Rather than shifting to upper-end segments like other developers, we will use the new strategies to address this issue.”
Last year Sena had a mortgage rejection rate of 50% due to the majority of their products being units in the lower to middle-end segments.
Income segments of residential projects
Out of the company’s 99 residential projects valued at a total of 116.4 billion baht (US$3.24 billion), 27 projects are in an income segment of 15,000 (US$418) – 25,000 baht (US$698) per household per month, six in the 20,000 (US$558) – 25,000 baht range and 24 in the 25,000-45,000 baht (US$1,256) range.
Sena’s research shows that 70% of households in Greater Bangkok (a total of 5.61 million) had an income of 40,000 baht or lower per month, allowing them to afford units priced at 4.9 million baht or lower. This demographic, along with those earning 30,000 baht (US$837) or lower who can afford units priced 3.6 million baht (US$100,512) or lower, are Sena’s primary targets, making up 54%, reported Bangkok Post.
“The rent-to-own strategy and our non-bank mortgage loan, which was launched last year, may not have reduced the mortgage rejection rate from 50% to zero, but achieving a rate of 30% is considered a success,” Kessara added.
The second strategy caters to younger generations who have adopted a non-ownership lifestyle, akin to streaming music and videos.
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