Demand for luxury condos rising apace, developer says

Real Estate June 24, 2014 00:00

By Somluck Srimalee
The Nation

2,577 Viewed

Demand for luxury condominiums is still growing among foreign buyers after the coup on May 22, Sorapoj Techakraisri, chief executive of Pace Development Corporation, said yesterday.

“From May 22 until June 20, we were able to sell [units of] our luxury condominium MahaNakhon, worth Bt200 million, to foreign buyers from Europe and the US,” he said.
This boosted its presales in the MahaNakhon project to 60 per cent or Bt6 billion as of June 20.
The company also plans to launch a Bt6-billion luxury condo project in the  Langsuan area in the final quarter of this year after it opens presales for its Bt3-billion luxury villa project, MahaSamutr, in Hua Hin in September. 
Both MahaNakhon and MahaSamutr will generate revenue from 2015-17, while Langsuan will generate revenue from 2018-19. 
To support its expansion this and next year, the company plans to issue debentures worth Bt1.5 billion in the fourth quarter of this year after it issued debentures worth Bt1.5 billion in the first five months. 
The company also is studying raising capital by selling its retail business to a real estate investment trust (REIT).
“If the rules for forming a REIT are finalised, we will launch one as soon as possible,” he said.
The company’s new chairman, Kraithip Krairiksh, said this would support the company’s expansion plans and maintain its debt-to-equity ratio at not over 2 times.
“Although the country’s political uncertainty ran from last year until the coup on May 22, demand to buy a luxury condominium is still growing from both the domestic and foreign markets,” Sorapoj said.
From January 1 to June 20, the company recorded presales worth Bt1 billion, of which 60 per cent was made by foreign buyers for occupancy and investment, as residential prices are rising an average 5 per cent a year. 
Prices at MahaNakhon have climbed by more than 20 per cent since presales began three years ago, from starting prices of Bt200,000-Bt300,000 per square metre to Bt250,000- Bt400,000. 
Pace believes its revenue next year will double compared with this year, which targets a total of Bt300 million from rental income of its retail business. 
The company lost Bt55.74 million on revenue of Bt5.51 million last quarter.