April 11, 2014 00:00 By Somluck Srimalee The Nation
Although the economy is expected to grow by less 3 per cent this year and residential presales dropped by between 3 per cent and 10 per cent in the first quarter, listed property firms are maintaining their business-growth targets for the full year, a sem
At the "Thai Property Day" seminar, organised by SCBS Investment Research, Land & Houses (L&H) assistant vice president Siribhorn Laophaekit and Pornchan Suwanprakorn, who is the company’s budgeting and investor relations manager, said the company was sticking to its full-year presales target of Bt32 billion, up 6 per cent from last year.
Sixty-two per cent of the presales will be from detached housing, 32 per cent from condominiums and the remainder form townhouses.
This implies year-on-year presales growth of 9 per cent for detached housing and 29 per cent for townhouses, while condominium business is expected to see a fall of 3 per cent.
They said that in the first quarter, L&H’s presales had come in more than 10 per cent below target for both the low-rise and condo segments, due to weak demand.
Despite this, presales grew substantially month on month in February and March. Low-rise inventory has fallen to 800 units from 900 units in November-December 2013, nearing the usual 700 units.
In the first quarter, the company launched four projects worth Bt6.2 billion, well below the original plan to launch seven projects in the period. However, it will launch the other three projects in the current quarter, and then maintain the planned launch of 21 residential projects in total over the course of the year.
L&H is also maintaining its revenue target of Bt25 billion for the year, up 9 per cent from last year’s level, despite missing its presales target in the first quarter.
LPN eyes 10% growth
LPN Development managing director Opas Sripayak said the company was maintaining its presales target of Bt26.4 billion for this year, up 10 per cent from last year, despite recording presales worth Bt3.2 billion in the first quarter.
Most presales income was from the Lumpini Ville Onnut 46, Lumpini Ville Onnut-Pattanakarn and Lumpini Mega City Bang Na projects, and from the resale of Lumpini Park Rama 9.
Meanwhile, the number of new launches has been adjusted to eight projects worth Bt16.6 billion this year, with four worth Bt4.2 billion deferred to next year due to an unfavourable market climate in Cha-am and Hua Hin. In addition, the Lumpini Ville Onnut-Lat Krabang 2 project overlaps with an existing project.
The company will replace some of these five projects with a number of other developments, he said.
Despite the cut in new project launches this year, LPN is maintaining its overall full-year revenue target of Bt15.2 billion, which represents a 10-per-cent rise from income generated in 2013.
This is divided into Bt2.2 billion for the first quarter, Bt3.4 billion for the current three months and Bt4.8 billion for each of the remaining quarters.
Opas added that the current quarter would be the developer’s most challenging period this year. With no new projects completed, most revenue must come from the sale of inventory.
As of March 31, the company had a backlog of Bt21.7 billion, securing 74 per cent of its full-year target.
Supalai managing director Tritecah Tangmatitham told the seminar that the company was adhering to its presales target of Bt22 billion for the year, up 8 per cent from last year’s presales income, led by more new launches, especially of low-rise projects.
First-quarter presales of Bt4 billion accounted for 18 per cent of the full-year target, while the take-up rate for the Supalai Loft Chaengwattana exceeded the target by more than 70 per cent – and take-up rates for the four launches during the three months were also above target.
Tritecah said the selling rate for Bangkok was now back to a more normal level, after falling 20-30 per cent in January and February, but provincial sales were still down 10-15 per cent.
Supalai continues to launch residential projects in accordance with its 2014 business plan, which contains 26 new projects worth Bt32 billion – up 81 per cent from last year.
Overall revenue is expected to achieve the target of Bt20 billion this year, some 56 per cent higher than last year’s level, with 35-40 per cent being booked in the first half.
Strong first-quarter revenue growth of 55 per cent compared with the same period last year was due largely to transfers of Supalai Permier Ratchathewi units, he said.
"Our cancellation and rejection rates [in the first quarter] were unchanged at 1 per cent and 7 per cent, respectively. That is lower than the overall market," he added.
New housing supply to drop 22%
Agency for Real Estate Affairs (AREA) president Sophon Pornchockchai said new housing supply was now expected to fall 22 per cent in terms of units and 23 per cent in value terms in 2014.
The market correction will reduce the risk of oversupply, and the agency is not concerned about the housing market at present, as the ratio of unsold outstanding stock to housing stock is only 3.6 per cent, below the 5 per cent seen during the 1997 financial crisis, he said.
He cited the main factors influencing property prices as infrastructure, including new mass-transit routes; the expanding economy; and the upcoming Asean Economic Community, which is helping to push up land prices.
For example, the price of land on Sukhumvit Road near the BTS Skytrain route more than tripled from 1994 to 2012, versus an increase of only 50-60 per cent for land on Rama IV, which is far from the BTS route.
In AREA’s view, politics and financial crises do pull land prices down, but natural disasters such as flooding and tsunamis do not.
It also noted that so far, the political crisis and slowing economy had not affected land prices.
Prime land prices have hit Bt1.65 million per square wah (4 square metres), said Sophon. This includes land at and around Siam Square, Ploenchit and Chidlom, where only commercial development is economically feasible. Land prices as a whole in Bangkok and its suburbs have grown 4-5 per cent per annum since the 1997 financial crisis.
AREA expects land prices to be stable amid the current sluggish economy and political unrest. At the same time, prices could drop in some areas that shot up on speculation of a high-speed rail route passing through, he added.