"Quality Houses is in the process of concluding its fund-mobilisation plan and is waiting for favourable timing. If the market is good and the return is attractive enough, the fund will be put on sale by October," a source close to the fund management industry said.

Because local demand might not be strong enough to match the fund's large size, the property developer will appoint UBS Warburg as lead sales agent for the international market, said the source on condition of anonymity.

SCB Securities will serve as the fund's financial adviser.

Late last year, Quality Houses created a Bt4.47-billion property fund to invest in QH Lumpini Building, but the project was shelved because it had failed to attract the minimum number of retail investors required by the Securities and Exchange Commission (SEC). The failure was blamed on the fund's unattractive return.

The source said the fund is expected to receive an overwhelming welcome from foreign investors as so many of them have expressed interest in subscribing to the fund's unit trusts.

The source declined to say what kind of real estate would be targeted for investment by the soon-to-be-set up property fund.

SCB Securities recently said in a research paper that Quality Houses was planning to launch two property funds, one of which would invest in an office building, the other in a serviced apartment block.

The fund to be invested in the office building is expected to be launched this year. It is expected to receive a strong response from investors due to the 5-per-cent return seen for this year. This is expected to grow to 7 per cent next year, well above the return on 10-year bonds, which earn 5.2 per cent per annum.

The higher returns are based on the assumption that rental rates will be raised to Bt700 per square metre per month from Bt675 per sqm, the source said.

Quality Houses' real estate assets are divided into two categories - landowner and land-lease rights-holder.

The company owns QH Ploenchit, Centrepoint 1-Petchaburi, Centrepoint 3-Sukhumvit, and Centrepoint 5-Saladaeng, which had a combined book value of Bt1.75 billion at the end of last year. The company also holds lease rights in QH Convent, QH Asoke, QH Sathorn, QH Lumpini, and Centrepoint 4-Lang Suan, representing a combined book value amounting to Bt5.14 billion at the end of last year.

The source forecast that Quality Houses' profit from core businesses this year would increase by 9 per cent year-on-year to Bt940 million this year, and then 16 per cent year-on-year to Bt1 billion next year.

Quality Houses' second-quarter net profit fell to Bt73.83 million from Bt255.25 million in the same period last year. The property saw its first-half profit fall to Bt224.86 million from Bt403.09 million in the same period last year.

Despite the sharp decline in first-half net profit, the source estimated that Quality Houses' net profit in the second half would increase significantly after its entry into the Bt4 million-to-Bt5 million single detached house market.

Quality Houses has already introduced two projects under the Casa Ville brand name, which features an average price per unit of Bt4 million. The project received a warm welcome from homebuyers, who bought 50 units at Casa Ville-Watcharaphon and another 30 units at Casa Ville-Ratchapruk Rattanathibet this year.

These sales will be accounted for in the third quarter this year. The company's gross profit for the period is expected to average 33 per cent-34 per cent, which is well above the 25.6 per cent seen in the first quarter this year.

Siriporn Chanjindamanee

The Nation