Asian Property plans 3 projects upcountry

Asian Property Development plans to launch its first three condominium projects in the provinces, as it sees strong demand upcountry, especially in border areas, ahead of implementation of the Asean Economic Community in 2015.

Chief executive officer Anuphong Assavabhokhin said in an interview with The Nation that at least one of the projects would be in a border province, Udon Thani, to cater to investors doing business in Vientiane, Laos. The company is studying where to locate the other two projects.

"We believe that when the AEC becomes effective it will boost the demand for homes in border provinces, because Thailand has potential to be a residential and hospitality hub in this region," he said.

The three upcountry condo |complexes are part of its busi-|ness plan to launch 20 resi-|dential projects worth Bt22 billion this year. Five of these will be condominiums, five detached-house projects, and the rest townhouse projects.

Anuphong said the property market recovered last year from the flood disaster in 2011 faster than estimated, especially for condos. As a result, real-estate firms including Asian Property enjoyed better-than-expected financial results. The company's presales met the target of Bt20 billion, and it estimates that its 2012 revenue will also meet the target of Bt17 billion.

This year, the company esti-mates that its presales will grow |by 15-20 per cent to between Bt22 billion and Bt23 billion, with re-venue targeted at Bt20 billion |to Bt21 billion. Some revenue will come from its backlog, currently |at Bt27.8 billion, Bt10 billion of which will transfer to its customers this year. Of the remainder, Bt10 billion worth will transfer next year, and about Bt7.8 billion worth in 2015.

Meanwhile, the company has set aside an investment budget of Bt6 billion to buy land on which to develop residential projects next year. This compares with last year's budget of Bt4 billion.

"Our investment budget will come from both our cash flow and issuance of a debenture worth between Bt3 billion and Bt4 billion this year," he said.

Despite the debenture issue, Asian Property's debt-to-equity ratio will not exceed 1:1. This is lower than its debt covenant ratio of not over 2:1.

"We take care to keep our debt from exceeding 1:1 because this will secure our business against any risk from unforeseen situations," he said.

NO SIGN OF BUBBLE

Anuphong believes there is no indication of a property bubble currently even though some locations are oversupplied. Overall, there is enough demand to absorb the supply in the market.

Meanwhile, the real-estate business has been controlled by the commercial banks, which are careful to investigate customers' qualifications for loans, including project loans to developers.

Currently, the company sees about 15 per cent of its customers rejected for mortgages. This is one way to control speculation in the housing market.

"We believe that the property market this year will still be stronger than before the financial crisis in 1997," Anuphong said.

He added that the main problem facing the property sector now was a labour shortage. Asian Property is dealing with this by expanding its prefabrication system from only two-storey townhouses priced at no more than Bt2 million to three-storey units in the same price range. This helps the company deliver completed homes to its customers on time, speeding up the construction process from 200 days per unit to just 120 days.

Currently, the company uses prefabrication for about 30 per cent of its production.

It also signs long-term agreements with its contractors to ensure timely delivery to its customers, he said.