Firm ready for shift from middle rank to a market leader in condominium sector
LPN Development sees 2014 as a year of transition, forming a key stage in the listed company’s shift from being a middle-ranking developer to the market-leading firm in the condominium sector.
The company has to use the next 12 months to prepare the business to support its growth in the long term, managing director Opas Sripayak told The Nation in a recent interview.
“Having successfully driven our sales over the past three years to more than Bt10 billion annually, we now have to develop our business structure, system and staff to support our long-term growth. We see 2014 as a year of transition for the company,” he said.
Having taken 16 years to fully recover from the financial crisis of 1997 and become a healthy property firm, Opas said the first priority at this time was to develop the efficiency of its staff, and especially those in the middle-management team.
“We have set up a training system for middle-management staff to become the company’s top management for the future. We also recruit staff straight out of university … If we want to be a sustainable firm, we have to concern ourselves with staff that will be the next generation for driving our business growth,” he added.
Meanwhile, the company is studying the establishment of a property-agency business that would focus on the secondary market for condominiums. Such a unit would support demand in this segment of the market.
“The idea is being studied, but we have to wait until our customer portfolio doubles from the current level,” said the MD, adding that LPN’s business structure of four subsidiaries is currently sufficient to meet demand under the “Liveable Communities” concept.
The four units are Pornsanti, which develops town-home projects; Lumpini Project Management Service, which focuses on the construction process; Lumpini Property Management, which concentrates on real-estate management; and Lumpini Property Service and Care, which is responsible for the developer’s property cleaning and care business.
Growth of 10% eyed
Meanwhile, the company this year targets growth of 10 per cent via plans to launch at least 12 condominium projects worth Bt21 billion combined in Bangkok and the provinces, including Pattaya’s Jomtien Beach area in Chon Buri, and Hua Hin in Prachuap Khiri Khan.
LPN already has the land for these new projects, having spent Bt4 billion last year on acquiring suitable plots, he said.
He added that the company’s policy this year is to launch condominium projects only after they have received both environmental-impact-assessment and construction licences.
Taking this new strategy into account, LPN targets presales of Bt26 billion and total revenue growth at least 10 per cent from last year’s level. It expects 2013 revenue to come it at Bt15 billion, after posting Bt10.27 billion for the first nine months of the year.
Opas said that although the developer in the current quarter still faced a business risk from the country’s ongoing political crisis, it believed demand for homes costing no more than Bt2 million would continue to grow as this segment represented real demand rather than being a speculative market.
Meanwhile, LPN has a Bt21-billion backlog of homes already sold and waiting to be transferred to customers once construction is complete. This will contribute to revenue both this year and next.
“Most of our customers have their homes transferred to them when a project is completed,” he said.
The company now has a rejection rate of less than 10 per cent, due to commercial banks declining to provide mortgages to customers without a satisfactory financial history, he added. “We also estimate the property market this year will grow by between 5 and 10 per cent, depending on whether the political situation is resolved,” said the managing director.
LPN, which is the market leader for condos costing up to Bt3 million, achieved presales worth Bt24.5 billion last year.