SME developers need to know their limits

Small property developers with little experience need to obtain sufficient information before making an investment, according to industry experts.
Tawatchai Sudtikitpisan, president of Kiatnakin Bank Plc, said big developers have an advantage not only in fund size but also access to information and research from their large client base.
“SME developers that may have completed three or four projects are still limited compared to big developers who have gone through more than 20 projects,” said Mr Tawatchai.
“Developing property from experience alone can be tough because the market changes fast and consumers are knowledgeable.”
Keerati Satasook, head of the Innovative Real Estate Development Programme at Thammasat University’s Faculty of Architecture and Planning, said SME developers need a new attitude.
“New developers who succeeded in other businesses may not be able to use the same methods in real-estate development,” said Mr Keerati.
For example, pricing in real estate is different from other products because if you unknowingly set the price too low, the product and the opportunity is forever lost, he added.
“In investment and loans, some businesses have learned that borrowing is not a good approach. But this is not the case in property,” he said.
Developers also need to know which projects are suited to their resources.
Kiatnakin has joined with Thammasat University’s Architecture department in organising an eight-week seminar, starting July 22, aimed at equipping SME developers with necessary information on property development.
The seminar content includes property development fundamentals, feasibility analysis of all project sizes, the property development process and property management fundamentals. The participants are 20 SME developers who are Kiatnakin’s loan clients.
Mr Tawatchai said the seminar should enable SMEs to compete with the big developers.
“SME developers who survive are those offering competitive products to the big developers,” said Mr Tawatchai. “What worries me is the ones who take up the business in the near future who need to keep up with the market.”
Thammasat University has also introduced an undergraduate programme in Architecture for Real Estate Development this year.
“It’s not enough for new architects to have only architectural design skills. They also need to understand business plans and property management,” said Asst Prof Santirak Prasertsuk, dean of the Faculty of Architecture and Planning.
The faculty aims to enroll about 90 architects in both the undergraduate and graduate programmes in real estate development each year. The graduate programme has been running for three years under the name Innovative Real Estate Development with about 40 students each year.
Source : bangkokpost.com

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