Real estate has been significantly impacted by the COVID-19 crisis, similar to many other businesses, leading to policies of "downsizing - layoffs" in hopes of reducing costs for survival, while also facing the risk of being "disrupted" after the COVID crisis.

Real estate is another sector that has been heavily affected by the COVID-19 crisis, just like many other industries. Overall, the real estate market in Bangkok and its surrounding areas during the first half of the year saw a total value of 128.457 billion baht, a decrease of 36%. Meanwhile, the transfer of ownership in the first five months (January-May) amounted to 145.969 billion baht, down 8%. It is also predicted that the overall condominium sales this year will drop by 50%, while landed properties will see a 10% decrease compared to the same period last year.

The ongoing sales situation, which has not yet returned to normal, has led many real estate development companies to adopt policies of "downsizing - layoffs" to reduce operational costs for survival, while also preparing for the changing landscape and the risk of being "disrupted" after the COVID crisis.

Piya Prayong, CEO of Pruksa Real Estate Public Company Limited, stated that the company has shifted its direction from an "Operation Company" to a "Thinking Company". Even without the COVID-19 crisis, Pruksa had plans to change its business model, but acknowledged that COVID acted as a "catalyst" that accelerated the need for change to make the organization more agile and able to focus on developing new businesses instead of managing operations. At the same time, this also serves as a way to reduce expenses.

"This concept is similar to businesses abroad that have rapidly grown to be among the top five in the world, which are Thinking Companies. They are organizations that use fewer people but can solve problems, create new things, and innovate to meet consumer needs, deriving value and worth from the design thinking process," he added.

This model has been gradually implemented since 2019, before the COVID-19 outbreak, as the company recognized the "weaknesses" of the organization if it did not quickly adapt to a smaller size, which would hinder operational agility. Thus, they reduced the workforce in construction and some operational areas from 3,000 to 2,000 employees.

However, the company does not refer to this approach as a complete downsizing but rather as a "model adjustment" from the old days when the company handled everything itself, including construction, manufacturing, and real estate sales, to a model that hires major contractors for condominium projects. For construction processes, they will use partners, while for landed projects, they will have their own teams, as it requires fewer employees. This business model adjustment will allow the company to cope with the volatile economic situation, especially during the COVID-19 crisis, which is seen as a good opportunity to adapt to a highly uncertain environment.

"This is a significant adjustment in 27 years since Pruksa was founded, aiming to eliminate excess fat within the organization to enhance agility, flexibility, and efficiency," he emphasized.

Piya also assessed that moving forward, the real estate market will face even greater volatility. Therefore, restructuring the organization is essential to strengthen resilience against changes while also enhancing competitiveness amid a continuously contracting market, impacting the company's revenue. It is expected that this adjustment will enable the organization to operate more agilely and return to profitability and sustainable growth in the future.

Previously, there was a hot topic regarding the social media news that Plus Property Co., Ltd., a subsidiary of "Sansiri," laid off 600 employees. In this matter, Settha Thavisin, the CEO of Sansiri Public Company Limited, tweeted via @Thavisin, clarifying that 5% of the total employees at Sansiri and Plus were laid off, which is fewer than 600 people. He views this as a normal adjustment in the business sector to align operations with the situation and business strategies, which is done every year.

Currently, in addition to the downsizing policy, selling projects to increase liquidity is another approach for real estate operators seeking cash to enhance organizational liquidity. Recently, Ariya Property Public Company Limited sold the Mega Space 1 and Mega 2 projects on Bangna-Trad Road, which are residential and commercial condominium projects, to Real Asset Development for a total value of 1.1 billion baht for resale.

Previously, Bodin Thongruangkit, a director and CEO of Real Asset Development Co., Ltd., stated that they are in negotiations to purchase condominium projects to add to the company's portfolio to meet customer demand. However, the phenomenon of employee layoffs has already begun in the tourism industry, manufacturing sector, and is now moving into real estate as several companies face liquidity issues due to declining revenues while operational costs remain stable or are increasing.

SOURCE: www.bangkokbiznews.com/news/detail/898897