Land and Houses Public Company Limited (LH) has announced its plans for 2018, preparing to launch 18 new projects in Bangkok, the surrounding areas, and provinces, totaling 36.3 billion baht. The average selling price will be adjusted down to 7 million baht per unit, with a stronger focus on townhouses, increasing their proportion to 9%. Meanwhile, the company is set to sign a lease agreement for land at Suan Chuwit on February 1, with plans to develop office buildings, hotels, and retail spaces, investing 6 billion baht. They also aim to acquire 1-2 more plots of land in the city center, targeting sales of 31 billion baht in 2018 and total revenue of 36.7 billion baht.

Mr. Nopporn Sunthornjitjaroen, Chairman and CEO of Land and Houses Public Company Limited, revealed the company's operational plans for 2018, stating that they will launch 18 new projects worth a total of 36.3 billion baht, consisting of 16 projects in Bangkok and surrounding areas and 2 projects in other provinces. The breakdown by type of residence includes 14 single-family home projects (including duplexes), 7 townhouse projects (counting separately by product type), and 4 condominium projects, which is an increase from the 10 projects launched in 2017, valued at 10.08 billion baht. This brings the total number of projects in operation in 2018 to 86, up from 68 at the end of the previous year.

The average selling price of the company's residences this year will decrease to 7 million baht per unit, down from 7.5 million baht last year, as the company focuses more on launching townhouse projects priced between 2-4 million baht, shifting from their previous emphasis on single-family homes priced from 5 million baht and above. The increased focus on townhouses and other horizontal projects is due to positive sales in the horizontal project market in 2017, while the launch of horizontal projects last year was negative. The company believes that the demand for horizontal projects, especially townhouses, remains strong, contrasting with the condominium market, where last year's launches were positive but sales were negative.

“In 2018, the company will prioritize expanding into the townhouse market more significantly, increasing its proportion from 3% to 9%, with price levels between 2.01-4.0 million baht. Meanwhile, single-family homes and duplexes will account for 68% at price levels below 2.0 million baht, and condominiums will represent 23% at price levels between 4.01-6.0 million baht,” Mr. Nopporn stated.

Additionally, on February 1, 2018, the company is set to sign a lease agreement for 6 rai of land at Suan Chuwit, located on Sukhumvit Soi 10, owned by Mr. Chuwit Kamolvisit, for a duration of 4+30 years at a price of 700,000 baht per square wah. The company plans to develop this area into a real estate project for lease, consisting of 20,000 square meters of office space, approximately 400 hotel rooms, and 3,000 square meters of retail space, with an investment budget of 6 billion baht. Construction is expected to begin in early 2019 and will take about 3 years to complete.

At the same time, the company is negotiating to lease 1-2 additional plots of land in the city center for future real estate development projects. They expect to finalize the lease agreements for the new plots currently under negotiation within 2018. The company also has 5 service apartment buildings in the United States, with over 1,000 rental units valued at more than 18 billion baht.

Mr. Adisorn Thanananurapool, Managing Director of LH, stated that the company is still considering the feasibility of selling projects to raise funds for further investments. This year, following the U.S. tax reform that reduced the corporate tax rate from 35% to 21%, there are positive opportunities for selling projects that could increase profitability due to the 14% tax reduction. If the company sells projects in the U.S., it will lead to higher profits.

“We are still studying new project opportunities in the U.S., but this year we will focus on domestic investments more than international ones to strengthen our rental real estate business base and increase the revenue share from the current 19%. In 2019, the company expects rental real estate revenue to rise to 4 billion baht from 3.7 billion baht this year, as we will recognize full-year revenue from the Terminal 21 Pattaya project, which is set to open in October,” Mr. Adisorn said.

Regarding the company's bond issuance this year, valued at no less than 14 billion baht, it will be divided into two phases in Q2 and Q4 of 2018, which will be used for investments and debt repayment to financial institutions. The new bonds will have a maturity of 3 years, a period that the company believes will attract investor demand, with expected interest rates between 2.2-2.4% per year. The company's backlog sales value at the end of 2018 is projected to be 10 billion baht, which will be gradually transferred in 2018-2019, supporting the revenue from property sales to meet the target of 33 billion baht, representing a 19% growth from the previous year. The company expects its debt-to-equity ratio (D/E) to remain close to last year's level, with a strong financial position at the end of 2017, where the company and its subsidiaries had a net loan of 43.5 billion baht, resulting in a debt-to-equity ratio of approximately 87% and an average financing cost of 2.35%.

Nonetheless, this year, the company has set a sales target of 31 billion baht and total revenue of 36.7 billion baht, comprising 33 billion baht from property sales and 3.7 billion baht from rental real estate. They have allocated a total investment budget of 13 billion baht for this year, with 7 billion baht earmarked for land acquisition to support project development and 6 billion baht for investments in rental real estate.

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