Unfazed by economic gloom, developer plans to launch at least 50 new projects
Despite political uncertainty and prospects for slim economic growth this year, Pruksa Real Estate is still targeting business growth of at least 10 per cent, president and chief executive officer Thongma Vijitpongpun said in an interview with The Nation.
Last year, the company recorded presales worth Bt45 billion and revenue of Bt37 billion.
Pruksa plans to launch at least 50 residential projects worth up to Bt50 billion this year. Although the number of launches will be lower than last year, which saw 55 projects worth Bt55 billion, the company is confident of continued growth thanks to its backlog worth more than Bt43 billion. This will generate income of at least Bt16 billion this year, with the rest coming from sales in its existing and new projects, Thongma said.
Pruksa is also developing its prefabrication system to reduce costs while at the same time speeding up the construction process and ensuring on-time delivery to home-buyers, he said.
The overall property market is expected to see costs rising by 7-10 per cent this year from higher construction-material and land prices, while labour costs and shortages also plague the real-estate sector. All of these factors will boost home prices by 5-7 per cent on average, while the property market will growth by only 5 per cent.
However, Pruksa expects to increase its prices by no more than 3 per cent as its streamlined construction process enables it to manage its costs better than other firms, Thongma said. While attempting to offer customers homes at reasonable prices, the company targets a net profit margin no lower than 15 per cent. This will be a challenge for its shareholders, and its staff.
“We are concerned about distributing the benefits of our business among all parties. As a result, we set a growth target every year,” he said – including times like this when economic prospects seem gloomy.
Quality and brand
Thongma said Pruksa’s business strategy this year was not only to maintain business growth of at least 10 per cent, but also to develop quality homes and after-sale service, both important for the brand’s image.
“After-sale service [includes] solving construction errors as soon as possible after receiving the customer’s complaint, setting up information systems and quality suppliers to support our customers’ demands such as furniture, home appliances, quality home repairmen, and so on. All of these are services that we have learned from our more than 20 years’ experience developing property nationwide,” he said.
For example, the company has joined strategic partners to develop ready-to-use bathrooms designed to match its condominium units. This system will reduce the cost of construction while also allowing quality control.
“We also are studying with our suppliers developing furniture to match our residential designs at reasonable prices for our customers,” he said.
The company’s goal was to establish its brand in the mind of its customers for sustainable growth in the long term, he said.