LPN DEVELOPMENT is investing baht 4 billion to purchase land for new condominium developments to be launched in 2015 and 2016 in Bangkok and the Cha-am area.
The developer plans to launch 12 projects worth baht 20 billion in 2015, 11 in Bangkok and only one in Cha-am, managing director Opas Sripayak said.
50% of the development budget will come from the company’s own funds and the other 50% from commercial banks. This will maintain its debt to equity ratio at 0.6:1 in 2015, he said.
LPN targets revenue of baht 16 billion this year, up to baht 14 billion from its backlog of condos that will be transferred to customers this year, and the rest from new residential projects, he said. Currently, the company has a backlog worth baht 18.6 billion, baht 14 billion of which will be booked as revenue this year, and the rest in 2016.
LPN targets presales worth baht 20 billion this year from both existing and newly launched projects. It bases this target on indications that the economy will recover, after the overall property market declined by about 10 per cent last year compared with 2013.
Amid that decline, LPN’s presales last year missed the target of baht 20 billion, ending up at only baht 17 billion, Opas said. Meanwhile, only baht 11.7 billion worth of homes were transferred to buyers, lower than the early estimation of baht 15 billion, as banks tightened their mortgage lending.
“The company saw its mortgage-rejection rate increase from an average of 10 per cent to 15 per cent last year, especially for our condominium projects in the provinces, where the rejection rate was higher than in Bangkok,” he said.
Given the market trend, the company has revised its business plan to focus on Bangkok rather than upcountry. It will open only one project outside the capital, in Hua Hin, where there is demand from both Thai and foreign investors, he said.
Opas said he was confident that the property market this year would recover and his company would meet its presale and revenue targets.
In the first nine months of 2014, LPN Development recorded revenue of baht 8.5 billion and net profit of baht 1.2 billion.
Credit: The Nation