LAND and Houses Plc plans to invest Bt10 billion on property developments in 2019, with Bt7 billion earmarked to buy land for housing and the rest going on projects to serve the rental market.
The Thai-based real estate company has 70 active projects, 42 of which are in Bangkok and surrounding areas and 28 in the rest of the country.
This year, the company plans to start a further 16 projects with a total value of Bt26.96 billion, with 14 projects in and around Bangkok and two elsewhere in the country, the chairman of the board of directors of Land and Houses, Naporn Sunthornchitcharoen, said yesterday at a press conference.
Adisorn Thananan-narapool, managing director of Land and Houses, said that this year the company expects to earn Bt33 billion from sales reservations, Bt32 billion from project development businesses and Bt5 billion from rentals.
Naporn said: “An increasingly promising business will be rentals, both from apartments and hotels, which have seen significant growth in the past five to six years. Last year, our rental businesses saw an approximately 35 per cent year on year growth.”
Of the total sales for this year, 72 per cent is expected to come from twin-houses, 8 per cent from townhouses, and 20 per cent from condominiums, he said.
With regards to the Bank of Thailand’s (BOT) new measures to tighten credit underwriting standards for mortgages, Land and Houses has adopted a wait and see approach, he said.
“The BOT’s new measures are sure to have an impact on the real estate market. We will have to keep a close eye on the market direction throughout the year and respond accordingly,” Naporn told reporters.
The central bank on October 4 announced measures to tighten credit underwriting standards for home loans. Under the new rules, the maximum loan-to-value (LTV) ratio will be restricted to 80 per cent on new mortgages for homes worth more than Bt10 million. The same LTV restrictions will apply for the purchase of a second home, irrespective of the property’s value. Banks will also be prohibited from providing advances that exceed the value of a property.
In 2018, Land and House had a net loan debt of Bt43 billion, a debt to equity ratio of 86 per cent and an average funding cost of 2.46 per cent. The company’s investment expenditure stood at Bt10 billion, with Bt6 billion going to land purchases to develop homes and Bt4 billion going to rental businesses, according to Adisorn.
Last year, the company sold The Domain Residence in the United States, California, for US$140 million or Bt4.48 billion, with a profit before tax of $41.17 million, or Bt1.317 billion, he said.
“In 2019, the company expects the net debt ratio to remain at the same level as last year,” Adisorn said
From January to November 2018, the company's market share for single-houses stood at 10.6 per cent, twin-houses at 13.7 per cent, townhouses at 3.5 per cent, and condominiums 1.2 per cent, he said.