Property Perfect Plc has had to reduce its budget for purchasing land in Bangkok from Bt1.3 billion to Bt500 million, as the government-approved Bt150-billion project to build three new light-rail lines has resulted in land becoming more expensive in the capital.

"We have to wait and see the locations that benefit from the project, and whether land prices reach a level where we cannot develop residential projects," said managing director Chainid Ngow-Sirimanee.

The company also plans to reduce its debt and operational costs, moving part of its investment budget into paying back its loan.

That will reduce Property Perfect's debt-to-equity ratio from 1.1:1 now to 0.8:1, and reduce its interest payments this year.

The company currently has 2,000 rai of undeveloped land in several Bangkok and suburban localities such as Bang Yai, Chaeng Wattana, Pattanakarn, and Bang Na and near the new Suvarnbhumi Airport.

This is sufficient land for it to work on its residential projects for the next four years. Chainid said that the company would increase its investment in land next year, when prices should stabilise.

Property Perfect is also adjusting its business plan. Having long concentrated on developing detached housing projects, it now wants also to build condominiums and get into town-house projects.

It will launch three projects worth a combined Bt4 billion in the second half: the Bt1.4-billion phase II of a condominium project on Sathorn Road, known as Metro Park; Bt1.2 billion on the Perfect Park Bang Yai detached housing project for units priced between Bt2 million and Bt3 million; and Bt1.4 million for the Perfect Master Piece Rattanathibet detached housing project for homes priced up to Bt7 million.

The company plans a town-house project worth Bt1.2 billion in the next year's first quarter, Chainid said.

"We have to change our business policy because people's purchasing power dropped as the price of oil and interest rates went up. They still want houses but they have to be smaller and affordable," he said.

According to research conducted by the company, the real-estate industry has seen the average price of a home fall from Bt3.8 million at the end of 2004 to Bt2.4 million this April.

Property Perfect's own customers are paying considerably less for a house: from an average of Bt6.4

million in 2004 to Bt3.7 million in April.

The company expects the condominium and town-house projects to account for 30 per cent of its total sales in 2007, with detached housing providing the rest.

This year, 10 per cent of sales will come from the condominium project and 90 per cent from those for detached housing.

Property Perfect expects pre-sales of Bt8 billion this year: Bt6 billion from detached housing and Bt2 billion from condos.

Meanwhile, 80 per cent of its pre-sales will be booking to be the company's revenues this year.

Chainid said sales would achieve target after the company succeeded in recording pre-sales of Bt3.5 billion in the first five months of the year - Bt2.6 billion from detached housing and Bt900 million from the Metro Park condo project.

Somluck Srimalee

The Nation