No compromise on quality despite higher costs of construction materials: Cornick

CEO Nigel Cornick said developers at the high end of the residential property market were in a much better position than those focusing on projects aimed at the middle portion and lower end.

"High-end property buyers accommodate higher prices to a greater degree than those seeking lower-end residences, who are much more price-sensitive. Premium real-estate buyers understand the reasons behind the increased costs and absorb them," Cornick said.

He said raw-material costs like steel and concrete were difficult to control, because they were "staples" of the building industry and remained in high demand.

"The price of steel has doubled in the past 12 months and been going up on an almost daily basis, prompting us to hedge by paying up front to secure today's price. This is a very volatile situation compounded by considerable worldwide demand driven by the huge appetites for these materials in China, the Middle East and India," Cornick said.

He said prices for its upcoming 185 Rajadamri project would break through the Bt300,000-a-square-metre price barrier, which would be double the average price budgeted when Raimon Land acquired the site some time ago.

However, he insists the quality of the product and location will be key factors in driving the price up over time, as any developer of premium properties would expect, and not rising construction costs.

He said Thailand still held a strong advantage over other countries in the luxury-condominium sector.

"There will be some convergence on price, but fuel costs overseas are higher than they are in Thailand, and the pricing here for property is still considerably low if compared to regional or international markets. A lot of our buyers still see property here as very competitively priced and of extremely good value," he said.

Some developers, especially at the lower end of the market, may look to changes in design and specifications to lower their costs, especially on final finishes. They may paint external walls rather than use stone or tiles, lower standards on finishes to interiors and public areas or cut corners on appliances, sanitary-ware, glazing and wood-joinery work.

Project director Gerry Healy said as a luxury developer, Raimon Land would not downgrade any of its specifications.

"Although there is a certain price to pay for a high level of design, we are looking at all specifications and designs in great detail, to ensure that there is no wastage. We have addressed and refined our designs so that the end products are not affected," he said.