Developer goes upmarket for presales boost
Asian Property Development is expanding into the luxury residential market at prices above Bt10 million per unit in a move that it expects will boost presales to between Bt23 billion and Bt25 billion this year.This would represent presales growth of up to 25 per cent from the Bt20.23 billion achieved last year, chief executive officer Anuphong Assavabhokhin told a news conference yesterday.
"We will launch detached housing under the Soul brand on Ekamai-Lat Phrao and a condominium called Galerie Rue de 39 on Sukhumvit 39. They are a new market segment [for us] that will drive sales to achieve this year's target," he said.
Soul is the developer's new detached-housing brand for the central business districts (CBDs) of the capital at a time when demand for such homes is outstripping supply. The brand will offer housing priced at more than Bt10 million per unit.
Galerie will be a super-luxury condominium project with homes designed to provide usable space of 100 square metres. It is targeted at families wanting to live in a CBD.
Prices will be offered at between Bt250,000 and Bt300,000 per square metre, which is higher than other condominiums currently on the market. The project has only 88 units, worth Bt3.2 billion in total.
Anuphong said the two ventures were among the 23 residential projects being launched by Asian Property this year, with a combined value of Bt24.74 billion.
Ten of them are townhouse projects worth Bt8 billion, eight are condominium projects worth Bt12 billion, and the other five are detached-housing projects worth Bt4.74 billion.
Three of the condo projects will be in the provinces. One will be in Udon Thani, while the locations of the other two is still to be decided.
They will be Aspire brand condominiums costing no more than Bt2 million apiece.
The CEO said the company had decided on upcountry expansion because of the demand in those areas. However, it wants to select locations where there is less competition now that a number of property firms have also decided to expand their investment outside Greater Bangkok.
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 the 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, he said, adding that this was 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 currently no indication of a property bubble, even though some locations are oversupplied. Overall, there is enough demand to absorb the supply in the market, he said.
Meanwhile, the real-estate business is in effect controlled by the commercial banks, which are careful to investigate customers' qualifications for loans, including project lending to developers.
Currently, Asian Property 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 area.
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.
The company uses prefabrication for about 30 per cent of its production.
It also signs long-term agreements with contractors to ensure timely delivery to customers, he said.