LENDING & CREDIT | Cesar Tordesillas, Thailand

Thai banks tailor loans for real estate

Adjust strategies for real estate developers.

Thai Banks found it necessary so that developers can run their projects on schedule.

Kiatnakin Bank has made its lending conditions more flexible so that developers that choose to build prefab houses can tap their credit line from the beginning of construction, which gives developers more liquidity.

Kiatnakin Bank's customer base comprises mainly small and medium-sized developers, which may have a tougher time due to scarce labour.

Compared to larger developers, SMEs are at a disadvantage in terms of financial footing and brand names, but their market understanding, locations and engineering capabilities are the same.

To manage the risk of unexpected events swamping SMEs, the bank will help set the credit limit for each project in line with developers' ability.

The bank plans to expand its condominium project loans next year to 40 per cent of the portfolio from 30 percent currently.

"Condominiums are the trend in the residential market. We also want to balance the portfolio between single family homes and condos," said Vissarut Panyapinyopon, Kiatnakin Bank vice president of real estate lending.

The bank plans to focus on developers in the North because residential demand there is growing. In the provincial market, its portfolio is based in the South and East.

The bank is confident its outstanding loans this year will rise by 15 per cent to Bt20 billion, he added.

Vasin Vanichvoranun, executive vice president of Kasikornbank, said KBank has launched a pilot project with Supalai, a residential developer, to design a credit line for SME contractors. Developers can help screen contractors for the bank, which would help eliminate those that abandon construction sites, he added.

KBank targets loans of Bt300 million from the programme.

The bank considers property as one area that needs to be monitored because the low interest rate trend might fan speculation.

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