DEVELOPERS LURED BY INCENTIVES

       Property firms are lining up to apply for Board of Investment (BoI) tax privileges on construction of residential projects - benefits that could help them reduce costs by 5 to 6 per cent, industry analysts said.
       Preuksa Real Estate director and chief operating officer Prasert Taedullyasatit said that following the BoI's implementation of more generous qualification criteria, the company had applied for tax privileges on 21 projects worth Bt5 billion. Most are townhouse projects.
       Currently, the company has 17 BoI-supported residential projects. Combined with the projects for which applications are pending, that rises to 38 residential projects out of the firm's 105 in total.
       Prasert added that if the BoI agreed to relax the criteria to include mixed-condominium projects, which would have one section comprising at least 50 units priced at not more than Bt1 million per unit, with the rest of the condominium units priced above Bt1 million, the company might submit applications for its condo projects to receive BoI tax breaks.
       LPN Development managing director Opas Sripayak said the company would be interested in applying for BoI support, especially on condominium projkects, if the BoI relaxed the rules to include mixed projects.
       "If the BoI relaxes the rules, we have products that would meet the criteria. This would help us cut costs by between 5 and 6 per cent," he said.
       The BoI announced new regulations for property developers seeking tax support on June 10. They feature revised prices and space requirements to match the country's current economic environment.
       The new regulations require property firms who want tax privileges on single-detached houses or townhouses to set a price of not over Bt1.2 million per unit, up from Bt600,000 per unit, and utilise space of not less than 70 square metres. In addition, the project must feature not less than 50 units, down from 150 units.
       Condominium projects priced at not more than Bt1 million per unit and with not less than 28 square metres of utilisation space now qualify for support, down from 31 square metres. In addition, the project must feature not less than 50 units.
       Developers who earn BoI privileges will have corporate income tax waived for five years if they build the projects in Zone 1 (Greater Bangkok) and for eight years if the projects are in zones 2 or 3, which are in the provinces.
       Zone 1 covers Bangkok, Samut Prakan, Samut Sakhon, Pathum Thani, Nonthaburi and Nakhon Pathom.
       Zone 2 covers Chon Buri, Chachoengsao, Samut Songkram, Nakhon Nayok, Saraburi, Ayutthaya, Ratchaburi, Angthong, Suphan Buri, Kanchanaburi, Phuket and Rayong.
       Zone 3 covers the remaining 58 provinces and Lam Chabaeng Industrial Estate.
       According to the BoI's records, from 2000 until March 2009, tax privileges were sought for 185 residential projects worth several hundred billion baht.
       Since the announcement of the new criteria, the board has received applications for tax privilages for 258 residential projects with a combined investment value of Bt1.8 billion, comprising 8,500 units.