AP plans land buying spree to suit more condo launches

SET-listed developer AP Thailand Plc will spend 13.5 billion baht to buy new plots of land for residential development this year and next, aiming to launch more condominium projects in 2018 than earlier planned.

Managing director Pichet Vipavasuphakorn said a land investment budget of 8.5 billion baht will be for AP's own development projects and the remaining 5 billion baht for joint ventures with Japanese partner Mitsubishi Estate.

This year AP will launch 35 new projects worth a combined 49 billion baht, comprising 31 single-house and townhouse projects worth a total of 30 billion baht and four new condominium sites worth a combined 19 billion baht.

"We will launch more single-house and townhouse projects than last year because land prices for condominium development are very high and it is more difficult to find land to do it," Mr Pichet said.

In the first quarter, the company launched five new projects worth a combined 7.24 billion baht, comprising three single-house and townhouse projects worth 2.24 billion baht and two condominium projects worth 5 billion baht.

AP recorded 5.2 billion baht in presales from single-house and townhouse projects in the first quarter, a new high for the company and up 64% from the same period last year.

AP launched more projects in the second half last year, with 17 sites worth nearly 20 billion baht.

Despite more launches of single-house and townhouse projects this year, the company is unconcerned about an oversupply, reckoning that low-rise housing will be constructed in line with demand.

In the second half, AP will launch two condominium projects worth a combined 14 billion baht. Both will be joint ventures with Mitsubishi Estate. One of them will occupy a 3.4-rai site near Phetchaburi Soi 14 in Ratchathewi district.

The plot was bought from Ramkhamhaeng Hospital Plc for 2.57 billion baht or 1.88 million baht per square wah. Unit prices for the development will be about 200,000 baht per square metre as floor area ratio is 10, Mr Pichet said.

AP may launch up to 29 billion baht worth of condominium projects, compared with 19 billion baht envisioned earlier, as it is acquiring new land plots.

AP aims to have 28.1 billion baht in revenue in 2018, up from 25.3 billion baht last year. Of the amount, 4 billion baht will come from joint ventures, up from 3.1 billion baht.

Chief executive Anuphong Assavabhokhin said the low-rise housing market will have high growth this year as many developers shift into the sector after supply decreased in the past two years.

"Competition in the low-rise housing market will be higher this year because most large developers plan to launch many more projects in this segment," Mr Anuphong said.

Keys to success are location, segmentation, pricing and product, which should include innovations to align with consumer needs, he said.

AP shares closed yesterday on the Stock Exchange of Thailand at 8.30 baht, up five satang, in trade worth 24.2 million baht.

Source: Bangkok Post – 27 April 2018