RML Unveils Strategy to Target High-End Customers, Accelerates Foreign Customer Transfers

Mr. Lionel Lee, CEO of Raimon Land Public Company Limited (RML<\/span>) a leader in luxury real estate development in Thailand stated that the overall real estate market in the second half of 2020 is expected to improve compared to the first half of the year, driven by a gradual recovery in domestic economic activities. The real estate market still has supportive factors, such as measures to reduce transfer fees and mortgage fees for residential properties not exceeding 3 million baht (ending December 24, 2020) and promotional campaigns from real estate developers, which may present opportunities for consumers ready to purchase housing.

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Regarding the direction of residential transactions in the luxury market, the company believes that high-end customers still possess strong purchasing power. The luxury condominium market has prices ranging from 80,000 to 110,000 baht per square meter, with only a 2-3% reduction in selling prices. This market is highly competitive, but not as intense as the mid-to-low market competition, allowing the luxury segment to maintain its purchasing power and continue selling to domestic customers. This presents an opportunity for these customers to invest due to the value in terms of price and project quality, which positively impacts the company to offset the transfer volume from foreign customers who are unable to travel to the country.

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For the business plan in the second half of the year, the company aims to target high-end customers residing in the country while redesigning each project under the concept of "Design for Living," adding diverse functional spaces. It will also implement marketing innovations through O2O (Online to Offline) channels by introducing Raimon-iConnect, a platform that allows customers to visit projects virtually in a 360-degree format (Virtual Tour), making it easier to reach customers. This strategy will help build relationships with both Thai and foreign customers continuously, even during lockdowns or travel restrictions.

Additionally, the company continues to expedite the clearance of remaining project stock while managing costs efficiently to strengthen its cash position. The company is confident that this strategic adjustment will enable it to gradually recover strongly after this crisis passes.

In the second quarter of 2020, the company reported total revenue of 625.8 million baht, down from 887 million baht in the same period last year, a decrease of 261.2 million baht or 29.4%. The company recorded a net loss of 130.4 million baht, down from a net profit of 54.7 million baht in the same period last year, a decrease of 185.2 million baht or 338.3%.

In the second quarter of 2020, the company achieved presales of 1,322.6 million baht, an increase of 241.8 million baht from the same period last year, resulting from the Hot Sales promotion in May, in line with the policy to focus on increasing revenue and maintaining a stable cash position. The company has been expediting the clearance of ready-to-move-in condominium stock, such as The Lofts Asoke, The Diplomat 39, The Diplomat Sathorn, The River, and Unixx. Additionally, The Lofts Silom, a newly completed project, has started transferring ownership to customers who are gradually moving in. The company continues to focus on sales for The Estelle Phrom Phong, TAIT12, and The Lofts Ratchathewi, resulting in first-half presales of 1,881.2 million baht, an increase of 17.3% from the same period last year, which had presales of 1,603.4 million baht.

For the first six months of 2020, the company reported total revenue of 1,049.4 million baht, down from 2,349.6 million baht in the same period last year, a decrease of 1,300.2 million baht or 55.3%. The company recorded a loss of 269.9 million baht, down from a net profit of 150.8 million baht in the same period last year, a decrease of 420.7 million baht or 279%.

While the company's performance has declined, particularly total revenue in the second quarter of 2020, this is attributed to a high base of special income in the same period last year, where the company had revenue from land sales and profits from the sale of investments in subsidiaries totaling 92 million baht and other income of 88 million baht, which was higher than other revenues. When comparing core revenue in this quarter, it came from recognizing revenue from four real estate projects: The River, Mews Yen Akat, The Lofts Asoke, and The Lofts Silom, totaling 588.9 million baht, down from 685.5 million baht, a decrease of 14.1%. This is due to The Lofts Silom project, which is expected to have most of its revenue recognized this year, having foreign customers accounting for about 49% of the project value, leading to delays in transferring ownership due to the impact of the COVID-19 situation, both in terms of the financial readiness of some customers affected by the economic situation and the inconvenience of transactions from abroad.

As of June 30, 2020, the company had a backlog of sales awaiting transfer (Backlog) amounting to 8,379.1 million baht across 11 projects, including Tait12 at 30.8%, The Estelle Phrom Phong at 26.6%, The Lofts Silom at 21.7%, The Lofts Ratchathewi at 8%, The Lofts Asoke at 7.1%, The River at 3.7%, and other projects at 2.2%.

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