Thai homebuilder LH sees weak demand, no sales growth

Land and Houses

Land & Houses, Thailand’s biggest home builder, expects no revenue growth in 2009 for the first time in more than a decade, due mainly to weak consumer confidence in an economic slowdown, a senior executive said.

“This year we should maintain our sales at the same level as last year. It is the first time in more than 10 years that we will have no growth,” Senior Executive Vice-President Adisorn Thananun-narapool told Reuters in a telephone interview.

Twelve analysts polled by Reuters Estimates forecast a 5 percent fall in revenue in 2009 as people delayed decisions to buy new homes due to the bearish economic outlook plus recent political instability.

Land and Houses, which builds detached homes and city condominiums aimed at middle-income buyers , planned to adjust selling prices in line with falling prices of building materials, which should push its 2009 gross profit margin down to 30 percent this year from 31-32 percent last year, Adisorn said.

launch 12 new housing projects worth about 16 billion baht ($459 million) in 2009The company, which is cautious on spending due to the weak outlook, planned to launch 12 new housing projects worth about 16 billion baht ($459 million) in 2009, and aimed to spend 3 billion baht to buy land, down from 3.9 billion in 2008, he said.

The new projects included 4 townhouse projects, whose selling price per unit was cheaper than detached houses, he said.

[relatedposts]“We have to adjust our strategy to cope with the economic slowdown, and we expect consumers’ purchasing power to drop by 20 percent,” Adisorn said.

The company, 12.6 percent owned by the Government of Singapore Investment Corp, should benefit from the Thai government’s property measures to boost the economy in the face of the global financial crisis, he said.

Last week the government approved a 40 billion baht tax relief package, which included a new tax allowance for people who buy a new home this year, the extension of a tax allowance for mortgage interest payments and property tax breaks for companies.