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Published on November 30, 2007

Well-known property developer Quality Houses is turning to focus more on developing middle-market projects with selling prices between Bt3 million and Bt5 million per unit.

It is also returning to condominium development, once again catering to middle-income earners.

The change of direction, for a company that once focused exclusively on high-end projects, could indicate that Thailand's premium market is becoming saturated.

Director and senior executive vice president Suang Chaisurote, who is recognised as an expert in the property industry, has played a significant role in adjusting the company's business direction.

Suang is one of the founders of leading residential developer Land & Houses and has always worked with another of the big firm's founders, Anant Assavapokin. He oversaw the formation of many joint ventures and new projects for Land & Houses before taking the position at Quality Houses, which is also under the broad Land & Houses umbrella.

The two most frequently asked questions of Suang are how he markets residential projects and how he selects land for development.

He replies that the solutions are simple and have not changed over the past 10 years. One has to be good at forming a mental picture of a location and knowing exactly what kind of project should be developed there. It is also essential to know what projects the company already has.

"We should know what land is good for high-end projects and what is good for middle-market projects," he says.

After launching projects and meeting potential customers, a developer should learn of the customers' behaviour and their purchasing power. It should also survey its competitors' projects. The company should also learn about the history of development in certain areas.

"Those customers are a great information source," Suang says. "Quality Houses has large numbers of customers who have moved from downtown Bangkok to the outskirts of the city. With their purchasing power, they can move anywhere, which helps to drive the property market to the city outskirts."

All of Suang's successes have come came from his own experience and his habit of exploring. He describes his experiences during the 1997 economic crisis as being "like a big storm". He says he learned not to compete with others, but to look closely at the company, identify its areas of expertise, find markets for that expertise, then remain flexible and keep developing the best products.

Although Quality Houses is an affiliate of Land & Houses, it has a different way of thinking, which gives the two companies their uniqueness.

"We exist under the same umbrella, but our operations have been developed in different ways. Therefore customers are able to choose which of us matches their style," he says.

Quality Houses began by thinking that it would build anything that would create value on the surface of the land, from built-to-order homes to developing presale housing projects. Its business direction has since changed. Suang says doing business requires flexibility and ability to adapt to market movements. It's not wrong to have many businesses under one umbrella, because every one of them may face the need to take new directions if the current one is not working.

Suang says the best time to assess the quality of any company is during an economic downturn. If a company is able to remain strong, then it is an interesting company.

Suang's experiences during the 1997 financial crisis drove Quality Houses to the forefront of the industry. The company learned the true nature and the movement of the property business.

He now advises that developers should consider what kind of land they should buy, how they will correctly segment their customers and in which direction they should develop their products.

"Precise segmentation is essential. In times of high competition, you must have confidence that there are markets. If not, you should build to order to reduce your risk," he says.

Over recent years, competition has created better and cheaper products. However, Suang says that in the current economic situation presale houses are a better option than building to order because developers can set their costs, decide what prices will be best and know how much profit they will make. But he stresses that companies should know what housing designs will match consumers' desires.

Quality Houses' strength lies in its ability to preach its working culture and set clear management plans for business expansion. Suang says the more projects a company has, the more operational systems it needs, from planning, setting segments, developing and marketing to managing after-sales service. Every point of the operation must be strong. Companies with weak operations will experience rises and falls in sales and the more projects they have, the greater the problems they will face.

Entering the middle-market is one solution chosen by Quality Houses' management to keep the company's annual sales growth at 20 per cent. This year, its sales should be Bt8.5 billion, increasing to Bt10 billion next year and Bt12 billion in 2009.

To achieve the target, Quality Houses must manage its current backlog and buy new land to create a smooth business plan. This is also a strategy for effectively maintaining its costs.

"It takes six months to find new land and another six months to develop projects on the land. Therefore, we have to continually estimate when our backlog will be totally sold out," Suang says.

Quality Houses also plans to return to condominium development by launching two new projects: Q House Condominium, targeting high-end customers, and Casa Condominium for the middle market. Both are located near Skytrain stations and will be presold. Construction will be complete in 2009.

Q House Condominium, which will occupy three rai (about half a hectare), will have 500 units in 30 storeys. The project is worth Bt2 billion. Casa Condominium, which occupies two rai, will have up to 200 units in eight storeys. It will cost Bt500 million.

Suang believes many small players will fade away from the property industry and the major players will find greater opportunities to expand by picking up their market shares.

"The current economic situation is different from the last round [1997]. We will not suffer an economic shock because many developers have not borrowed offshore. Therefore, we will have more time to gradually adjust ourselves when problems occur," he says.

"We dare to expand because we know that if the economy really gets worse in the next two years, it will go down gradually. By then, we should have products ready for sale. The major companies will steal the market share of small players and then gradually begin fighting among themselves. Eventually, the industry will have fewer than 10 listed companies."

Property reporters

 The Nation