Thailand developers keep stiff upper lip in bad times

Construction News
Mr Anuphong said large developers should diversify into different market segments and make forays into other developers' territory. No single developer dominates any market.
Mr Anuphong said large developers should diversify into different market segments and make forays into other developers’ territory. No single developer dominates any market.

Despite concerns about the economic outlook and residential demand in the second half, SET-listed developers will continue to launch new projects in the segments they are most confident in.

Anuphong Assavabhokin, chief executive of AP (Thailand) Plc, said the economic situation in Thailand and around the globe is leading the Thai property sector into a new world that few have experienced.

Business has not crashed, but it has underwhelmed. “It’s very difficult these days,” Mr Anuphong said.

“It’s no longer about large developers grabbing market share from smaller ones. Large developers must compete with each other as small developers exit the market.”

“If AP cannot be one of the market’s top three, we will have no point of remaining in the market,” he said.

To achieve such a showing, the company must raise presales and revenue this year to 31 billion baht and 23.7 billion baht respectively, up from 28.2 billion and 22.4 billion in 2015.

The second half will see the launch of 12 new projects worth a combined 25.4 billion baht after the roll-out of just seven projects worth a combined 7.15 billion baht in the first half.

From Jan 1 to June 12, AP had 10.4 billion baht in presales, up 34% from the same period last year.

Mr Anuphong said the company would maintain a debt-to-equity ratio of 0.8 in down times and 1.1 in good periods. At the end of the first quarter the ratio was 1.07.

“Our presales, revenue and new launches will remain on target,” Mr Anuphong said. “If the situation is unfavourable in the second half, we will try to be more cautious, especially in land investment.”

AP spent 6 billion baht out of a full-year budget of 10 billion to buy new plots of land during the first five months of 2016.

Meanwhile, John Millar, head of financial strategy and investor relations at Ananda Development Plc (ANAN), said the economic situation remains weak, citing the downward revisions for GDP growth.

Despite unfavourable sentiment, condos along mass transit lines will continue to see more robust sales than the general market, he said.

Life Sukhumvit 48, a condominium launched in early June by AP (Thailand), sold out during the launch period. The project has 612 units worth 2.26 billion baht.
Life Sukhumvit 48, a condominium launched in early June by AP (Thailand), sold out during the launch period. The project has 612 units worth 2.26 billion baht.

Last year, overall condo supply located within 300 metres of a mass transit station recorded a sales rate of 64%, up from 58% in 2014, while those located farther than one kilometre had a sales rate of 22%, down from 36% the previous year.

Ananda launched a single project worth 2.92 billion baht in the first quarter as it busied itself selling unsold, completed units for transfer during the effective period for property tax incentives that expired in late April.

The launched project was the Ideo Tha Phra Interchange condominium near Tha Phra intersection. Just 14.3% of those units have sold.

“Residential supply and demand near mass transit varied by station,” Mr Millar said. “Some was weak. Some was strong. Some had an oversupply while some had no supply at all. But the market will keep growing.”

Ananda plans to launch 11 new projects worth a combined 18.68 billion baht from June to the end of the year.

In the first quarter, the company had 4.8 billion baht in presales. It aims to have 20.8 billion baht by year-end, down from 26.23 billion in 2015.

AP shares closed yesterday on the Stock Exchange of Thailand at 6.65 baht a share, down five satang, in trade worth 74.6 million baht.

ANAN shares closed at 3.86 baht, down four satang, in trade worth 69.4 million baht.

Source: http://property.bangkokpost.com/news/1012297/developers-keep-stiff-upper-lip-in-bad-times