In an endeavor to bolster sales and revenue amidst a challenging real estate market, Sena Development, a prominent entity listed on the Stock Exchange of Thailand (SET), has unveiled plans to deploy innovative strategies for the rental and transfer of completed unsold condominium units. The initiative comes in response to a notable surge in mortgage rejections, posing a formidable obstacle to sales progression.
Kessara Thanyalakpark, the Managing Director of Sena Development, unveiled the forthcoming strategies, set to be implemented this month. These strategies encompass renting out units to potential buyers with eventual transfer prospects, alongside a tailored approach for individuals initially inclined towards rental options. Thanyalakpark elucidated, “These two groups represent different generations, each necessitating distinct strategies. Our objective is to leverage these novel tactics to drive sales of our completed unsold units, totaling 5,000, with a collective value of 10 billion baht.”
The rent-to-own strategy, designed to cater to Generation X, is positioned to address the preferences and challenges encountered by this demographic. Notably, this generation exhibits a preference for asset ownership, albeit encountering hurdles in securing mortgage loans due to various financial constraints. Sena Development’s rent-to-own scheme extends a lifeline to such buyers, offering an extended rental period of up to three years. During this tenure, renters will remit payments to Sena, which will subsequently deduct the accumulated rent from the unit price upon transfer.
Thanyalakpark emphasized, “Despite robust residential demand in the lower-end segment, securing mortgages remains a significant challenge. Rather than pivoting towards upper-end segments like other developers, we are poised to tackle this issue head-on through innovative strategies.” Last year, Sena Development grappled with a staggering 50% mortgage rejection rate, primarily attributable to the predominance of lower to middle-end segment units in its portfolio.
Of Sena’s extensive residential portfolio, encompassing 99 projects valued at a staggering 116.4 billion baht, a significant portion caters to income segments ranging from 15,000 to 45,000 baht per household per month. Notably, Sena’s research underscores that 70% of households in Greater Bangkok, totaling 5.61 million, possess an income not exceeding 40,000 baht monthly, rendering them eligible for units priced at 4.9 million baht or lower. Moreover, individuals with incomes of 30,000 baht or lower, constituting 54% of Sena’s target demographic, can afford units priced at 3.6 million baht or below.
In addition to the rent-to-own strategy, Sena Development also introduced a non-bank mortgage loan scheme last year, aimed at mitigating mortgage rejection rates. Although these measures have not eradicated the rejection rate entirely, Thanyalakpark asserts that achieving a 30% reduction represents a commendable success.
Furthermore, as part of its multifaceted approach, Sena Development is poised to tap into the burgeoning rental market, catering to younger generations accustomed to a non-ownership lifestyle characterized by streaming services for music and videos.
