Diversification key to navigating downturn
SET-listed contractor EMC Plc plans to launch two new condominium projects worth a combined 2 billion baht this year. The company hopes to boost revenue from its property development business to 50% from 30% last year.
Kittiphun Ouiyamaphun, managing director for real estate, said EMC would focus more on property development as it could help pull in revenue when its construction business slows.
“In a good economy construction jobs boom, giving contractors more bargaining power in bidding on property projects,” he said. “But once a country plunges into an economic downturn, construction jobs slow. Our revenue, however, can be sustained if we concentrate on property development.”
EMC last year raised its registered capital from 8.43 billion baht to 12.5 billion baht in a move to expand construction and invest in property development.
The company will spend 200-300 million baht to buy a new one-rai plot of land, mainly in the Sukhumvit area, to launch a new condo project in the second half of this year.
It will focus on low-rise condos with no more than eight storeys as buildings this size can be completed within 24 months — a lower-risk period than high-rise developments.
He said low-rise condos in prime locations with unit prices from 150,000 to 180,000 baht per square metre had better rates of capital gain and rental yield than high-rise condos due to lower unit prices.
On April 2, EMC will launch Urbitia Thong Lo. The eight-storey, 930 million baht condo will be located on a 395-square-wah plot on Sukhumvit Soi 36, 230 metres from BTS Thong Lo station. It will comprise 130 units sized between 28 and 65 sq m. The units will be priced 130,000 baht per sq m or start at 4.39 million baht per unit.
It expects to have 70% of the units sold by the launch date.
The company currently has three residential projects with units up for sale including Landmark Mahachai, a community mall and shophouse project in Maha Chai, Samut Songkhram worth 1.2 billion baht. The shophouse of 100 units remains 50% vacant.
In the first nine months of last year, EMC recorded 811 million baht in revenue with a net loss of 3.9 million baht, down from 1.43 billion baht and a net loss of 189 million baht in the same period in 2014.
About 70% was from construction and 30% from property development, which EMC expects to be 50-50 by year’s end.
EMC shares closed yesterday on the Stock Exchange of Thailand at 0.17 baht, down 1 satang, in trade worth 4.48 million baht.