Press Releases

    LAND & HOUSES UNFAZED BY FLOODS

    BackJan 16, 2012

    The government has to be clear about its short- and long-term plans on managing floods so it creates confidence in both local and foreign investors and encourages them to expand their investments and home-buyers regain trust in the market, Land & Houses senior executive vice president Naporn Soonthornchitcharoen said.

    "It is too early to say what will happen to the property market in the aftermath of the floods that hit Bangkok and its suburbs last year. But, we believe that home-buyers will not move their locations from flood-hit to new areas because up to 80 per cent of our customers are willing to transfer their residential projects located in a flood-affected area," he told The Nation last week.

    He added that only 20 per cent of its customers in flood-hit areas have delayed their decision to transfer their residential units. He said it would be wrong to assume that home-buyers will abandon flood-hit areas.

    The company has only five residential projects for sale in flood-affected western Bangkok. The other 26 projects are already sold out.

    "We believe that home-buyers are concerned not only about floods. When they decide to buy a residence, they have to take into account their community, family and lifestyle," he said.

    Meanwhile, most home-buyers know that last year's floods were not just a natural disaster but there were other factors involved. That's the reason home-buyers will not change their residential location immediately, he said.

    Naporn said the company had fallen 10 per cent short of its total revenue and pre-sales targets because of the floods. The effect was less from buyers delaying their decision to transfer the residences as from the impact of buyers delaying their decision to buy residences during the two months of flooding.

    The company had set itself a revenue target of Bt25 billion for 2011, an increase of 25 per cent over 2010.

    Land & Houses recorded total revenue of Bt17.5 billion and net profit Bt3.9 billion in the first nine months of last year.

     

    Q2 will clear picture

    Naporn believes that the country's economy, investment and property market will need three or four months before it becomes clear whether confidence is returning to the market or not. This depends on the government's policy and plan of what it will do in the short- and long-term to manage the country's floods.

    Meanwhile, the company plans to launch more residential projects in keeping with its business plan.

    Land & Houses, on average, launches 15-20 residential projects a year worth between Bt20 billion and Bt25 billion.

    "However, we cannot say what we will do now because it is too early to estimate customer behaviour. It will take three or four months from now, but we have continued to launch our new projects following our plan," he said.

     

    Buying land

    Naporn said the company would be careful in buying undeveloped land for residential projects, ensuring that they match market demand.

    "We cannot say we will avoid flood-hit areas because some of the inundated areas last year still have demand, but we will be careful in selecting locations that are safe for our customers and also meet the demand," he said.

    The launch of some residential projects, for which land was bought last year, may be delayed this year because of labour and construction raw-material shortage as the floods had hit manufacturers of construction raw materials.

    "We have to find new suppliers for raw materials to replace our regular suppliers who were hit by the floods. But we cannot find 100 per cent replacement. This directly impacts our construction process and may delay the launch of some projects this year," he said.

     However, he believed that the labour supply and raw-material supply would return to normal in the second quarter of this year.

     

    Property fund

    Meanwhile, the company plans to launch a Bt5-billion property fund this year after delaying this plan since last year.

    He added that the company would sell three Bangkok serviced-apartment projects - at Thong Lor, Wireless Road and Phrom Phong - to the fund, raising Bt5 billion. The buildings have occupancy rates of between 80 and 90 per cent.

    Naporn said the company's strategy continued to focus on its three business arms - real estate, investment in other businesses and rental income. More than 80 per cent of revenue currently comes from real estate.

    Land & Houses now holds a stake of about 24 per cent in Quality Houses, 21 per cent in Quality Construction, 30 per cent in Home Product Centre and 35 per cent in LH Bank, and 60 per cent in L&H Property that owns Terminal 21 shopping centre at Asoke.

    Last year, the company sold a major stake in Bangkok Chain Hospital to Bumrungrad Hospital, part of its holding in Quality Construction to SCG Group, and its investment in Indonesia. This generated a return on investment of more than 100 per cent from the deals.

    "We will continue to seek new businesses for investment in the long term, both domestically and overseas, depending on the opportunities that arise," he added.

     

    THE NATION
    16 January 2012