Pruksa to invest in Jakarta-based subsidiary

Pruksa Real Estate is expanding its presence in Asean this year by investing about Bt300 million in a subsidiary to be set up in Indonesia and developing a townhouse project in the country's capital.

The move marks the developer's second regional foray, having entered the Vietnamese market three years ago.

It forms part of Pruksa's springboard to becoming a leading property company in Southeast Asia after the ASEAN Economic Community comes into effect in 2015, president and chief executive officer Thongma Vijit-pongpun said at a press conference yesterday.

The new company will launch a Bt1-billion townhouse project in Jakarta, with homes priced at the equivalent of no more than Bt3 million. "We will establish our new company in Jakarta in the middle of this year with registered capital US$10 million, or about Bt300 million. This will be held 100 per cent by Pruksa Real Estate," he said.

The company decided to invest in Indonesia because of the large population and high demand for housing, especially for homes costing no more than Bt5 million, he said.

Moreover, Indonesia's investment law opens the way for foreign interests to invest in the property sector without the need for a local partner, he added.

"With our experience of investing in Maldives and India, we will start with a maximum investment of $10 million when we expand our investment overseas,"Thongma said.

"If the project succeeds, we will expand by rolling over our investment in the country, as in India where we are still expanding our investment after successfully selling out our first project. Meanwhile, we have withdrawn from Maldives, after seeing that the market was not suited to our investment."

AGGRESSIVE 2013 PLAN

The investment in Indonesia is part of Pruksa's business plan to launch 78 residential projects worth Bt55 billion this year.

Sixty-seven projects will be located in Greater Bangkok, nine in provinces such as Phuket, Chon Buri and Chiang Mai, and one each in Vietnam and Indonesia.

The company has set aside an investment budget of between Bt20 billion and Bt30 billion to construct the 78 projects. Land purchased with a further Bt9.2 billion earmarked for this year will be used to develop residential projects next year, he said.

"Most of our investment budget, about 70 per cent, will come from our cash flow, and the rest from bank borrowings and the issuance of a debenture," said the company chief.

Pruksa plans to issue a three- or five-year debenture worth Bt5 billion in the middle of the year, with an interest rate of not more than 5 per cent.

The company targets overall presales of Bt35 billion from its aggressive expansion, and expects revenue this year to come in at Bt34 billion, up 26 per cent from the estimate for last year.

Some 70 per cent of revenue will come from projects in Bangkok and surrounding provinces, 25 per cent from other provincial projects, and 5 per cent from overseas investment.

"We believe revenue will hit our target as we have a backlog, which is already sold and waiting to be transferred to customers this year and next, worth Bt35.39 billion," said chief business officer Prasert Taedullaya-satit. "More than half of the backlog, or Bt24.77 billion, will transfer this year, and Bt10.62 billion in 2014."

The listed developer transferred homes worth Bt8.36 billion to customers in the final quarter of last year, having posted revenue of Bt18.79 billion and net profit of Bt2.63 billion over the first nine months, he added.