Bangkok at night
Small and medium-scale property developers in Bangkok are being forced to sell their projects to larger developers as they start to face difficulties in obtaining financial support for construction. This is according to Visanu Suchatlumpong, vice-president of Asian Property Development Plc.
“Financial institutions did not approve project loans as they considered their (smaller developers) branding was not strong and their products might not be saleable,” he said.
But he also played down the role the global credit crunch was having, saying, “Some of them did not meet financial institutions’ conditions that required them to have sales of at least 40%.”
Mr Visanu said another reason was an inability to manage costs and expenses, a core skill of the property business. Some new developers were small and planned to develop only small projects but they had insufficient staff or budgets to do enough marketing.
“Many of them tried to sell projects to larger or more professional developers that have stronger credit standing and better management,- AP was also approached but we considered the location first.”
Among the eight new projects it launched last year, AP bought one from a new developer and launched it under its Life brand. Mr Visanu said AP needed to ensure that the location was right for any development it started. If it was a condominium, for example, it should be located along the current mass-transit routes.
Mr Visanu also said that tougher environmental impact assessment (EIA) rules would cause the cost of condominium developments to rise by 3-5% and reduce developers’ gross margins by one or two percentage points, along with net profit, which would have a greater impact on the smaller developers.
AP this year will launch 13 new projects worth a combined £228 million: six townhouse developments, five condominiums blocks and two single-housing estates.
AP aims to achieve £24 million in presales and revenue growth of 15% in 2008.
The Asian Property Company Limited was established in 1991 by Mr. Anuphong Assavabhokhin and Mr. Pichet Vipavasuphakorn to develop residential projects in Bangkok Metropolitan Area. In mid-2000, the company merged with PCM Public Company Limited (PCM) and has changed its name to Asian Property Development Public Company Limited. Prior to the merger, PCM – a pre-cast concrete floor producer – was majority owned by Land and Houses and has been listed on the Stock Exchange of Thailand since 22 September 1992.