Thai Developer Property Perfect plans cautious strategy
SET-listed developer Property Perfect is taking a more cautious approach this year, focusing on debt reduction and launching fewer new projects because of stricter funding rules for both supply and demand.
Managing director Wongsakorn Prasitvipat said negative factors affecting the property market remained severe, particularly high household debt, difficulties for homebuyers in obtaining loan approval and challenges for developers in raising funds.
“Financial institutions are stringent not only in lending for mortgages but also for project finance,” he said. “The debenture market has not been favourable since last year due to many companies defaulting, which diminishes investor confidence.”
As of the end of 2023, the company and its subsidiary Grande Asset Hotels and Property Plc had consolidated debentures of 11.4 billion baht and debt of 16 billion baht. The cost of funds was 7% per year.
It aims to reduce debt by 11 billion baht within three years and reduce interest bearing debt-to-equity ratio to 1:1 by the end of 2024 from 1.7 times as of the end of last year, up from 1.32 in 2022.
About 7 billion baht will be cut this year, comprising 2 billion baht from the sale of land plots owned by Property Perfect and 5 billion baht from the sale of some of the hotels in Bangkok owned by Grande Asset.
At present, Grande Asset has five hotels, including Hyatt Regency Bangkok Sukhumvit in Nana, Royal Orchid Sheraton by the Chao Phraya River, The Westin Grande Sukhumvit in Asoke, Sheraton Hua Hin Pranburi Villas and Sheraton Hua Hin Resort & Spa.
“We are in talks with foreign investors in the hotel business from the Middle East, Japan and China who are interested in acquiring whole and part of our hotels in Bangkok as their profit was 10% higher than the pre-pandemic level,” he said. “The deal will be finalised in the first half.”
About 2 billion baht of debt will be reduced each year in 2025-26 through Property Perfect’s land sales and earnings from joint venture investments in 10 residential projects with three partners worth a combined 28 billion baht.
They comprise two projects worth 13.8 billion baht with Hong Kong-based investment group Hongkong Land, three projects worth 10.6 billion baht with Japanese firm Sumitomo Forestry and five projects worth 3.6 billion baht with Sekisui Chemical from Japan.
This year, Property Perfect plans to launch seven new projects, all of which will be low-rise houses, worth a combined 7.7 billion baht, down from nine projects worth 10 billion baht last year.
“We will select only projects that can achieve quick sales to generate cash flow and avoid liquidity issues,” he said.
It targets to have consolidated presales of 20 billion baht, which will comprise 9.75 billion baht from low-rise houses, 2.54 billion baht from condos, 4.46 billion baht from joint venture projects and 3.25 billion baht from hotels.
Revenue is expected to tally 18 billion baht, including 8.6 billion baht from low-rise houses, 2.38 billion baht from condos, 3.77 billion baht from joint venture projects and 3.25 billion baht from hotels.
Source: https://www.bangkokpost.com/property/2749554
