Developers shift focus to smaller projects

Preuksa Real Estate

Firms revise business plans to boost sales and cash flow

Property companies have revised their strategies and will develop smaller residential projects to speed up their sales in the last quarter of the year until next year because of the negative impact of the country’s political turmoil and global economy slump, property experts said.

Preuksa Real Estate chief executive Thongma Vijitpongpun said the company will revise its business plan to launch small residential projects with 100,150 units.

“We want to speed up our sales and shorten the construction process to generate more cash flow, which will help us develop other projects. This seems to be a better option than developing large-scale projects,” he said. He said the company’s presales might be lower than the estimated target of Bt20 billion for the year, because the first nine months recorded presales of just Bt14 billion.

Due to the political uncertainty in the country, homebuyers have delayed their decision to purchase residences in the third quarter of the year. The global economic decline has also affected their confidence and the trend is likely to continue until the next year. As a result, Preuksa has had to change its business strategy and shift focus to developing small-sized projects , he said.

Land and Houses senior executive vice president Naporn Soonthornchitcharoen said his company would continue with the launch of 15 residential projects worth Bt12 billion in the coming year but build in areas located close to mass transit. It will develop small projects to boost sales and maintain cash flow, he said.

“Growth in demand for residential projects is expected to slow down following the country’s political turmoil and the bubble burst in the global economy. Thus, we have to concentrate more on what our customers want and develop projects to match their needs. We believe our business will continue to grow despite the country’s economic slowdown because of a shift in our business focus, new product designs and selecฌtion of new project locations,” he said.

Asian Property Development senior vice president Visanu Suchartlumpong said his company had changed its plans for its new project scheduled for launch next year. It will focus on homebuyers’ requirements and pick a location close to mass transit.

Although the global economic recession has not directly affected Thailand’s economy, its negative impact on the country is now visible with the delay in homebuyers’ decisions to purchase residences in the last quarter of the year. As a result, Asian Property has to be careful before developing residential projects, he said.

“Our policy will focus on what our customers want and develop small-sized projects to generate faster returns than from large-scale projects,” he said.

Property Perfect chief operating officer Teerachon Manomaipibul said the result of the bubble burst in the United States had not only affected the US, but also Europe and Asia, particularly Japan and South Korea.

The Thai property market has also suffered from the economic slowdown in the US. Thai developers have realised that cash flow is the key to surviving the financial crisis. To maintain sufficient liquidity, they will need to adjust construction procedures, and make them shorter and faster.

“Our business strategy will focus on minimising inventory and launching small projects in the final quarter and the next year, which will help us boost sales and generate more cash,” he said.

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