LENDING & CREDIT | Cesar Tordesillas, Thailand

Thai banks set standards on lending to condo developers

Commercial banks in Thailand are more inclined to focus on medium-sized to large property developers, which are less likely to default, bank executives say.


To be eligible for financing, small developers must have projects in prime locations and their presales should exceed 50 percent of target revenue, they said.

Sarut Ruttanaporn, head of the commercial banking division at Siam Commercial Bank, said most banks chose to lend for condominium projects located in areas with high potential, and the developers must have sufficient capital of their own.

Presale volumes should also be are 50 percent of total units, he said.

He noted that SCB provided financing to developers of all sizes but would consider the project, the location and the marketing strategies before approving a loan.

Tinnakorn Boonyakalin, a senior vice president at Krung Thai Bank, said it was selective on lending to developers.

Financing projects near mass-transit lines developed by medium-sized to large firms is the comfort zone for KTB.

"To support such projects, we offer post-financing with special promotions to condominium buyers. This help boost presales for the developers as well as bringing in new lending to the bank," he said.

For CIMB Thai Bank to be comfortable with a project loan, presales should reach 50 per cent of total units on average. Vorakarn Dhepchalerm, its head of corporate banking, said it based its lending decisions on the expertise of developers, and it preferred branded projects because these have enough capital to defend against unexpected situations.

He said the bank set tight conditions for condominium developers because the outlook is for oversupply, while growth of condo presales is slowing.

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