SET-listed developer M.K. Real Estate Development Plc will spend 1.2 billion baht from this year to 2018 to develop 135,000 square metres of rental space for warehouses and factories in the Bangkok Free Trade Zone in Samut Prakan.
Chief executive Vorasit Pokachaiyapat said the investment would be partially funded by the company's shareholder equity, with some funding available from the two bond issuances this year that generated around 1 billion baht.
"The investment in the rental warehouse and factory business is the company's strategy to shift to non-residential property that generates recurring income," he said.
M.K. aims to increase the net profit proportion gained from non-residential property to 50% of the total in five years, up from 10% now. By that year the company expects to have 10 billion baht in consolidated revenue and 1.2 billion in net profit.
Late last year M.K. acquired Prospect Development Co, the owner and operator of the Bangkok Free Trade Zone, through share swaps.
Located on a 994-rai plot on Bang Na-Trat Road KM 23, the zone has remaining plots of 138 rai for future development. M.K. plans to spend 1.2 billion baht to develop 135,000 sq m for rental warehouses and factories.
The 994 rai comprises infrastructure and utilities on 296 rai and a development area of 698 rai. Of the development area, plots of 138 rai remain for future development.
In the first half this year, Bangkok Free Trade Zone generated 80 million baht in income, expecting double that for the full year. The full amount will be contributed to M.K.
When development is completed, the zone with a total area of 250,000 sq m will be valued at 6 billion baht, said Mr Vorasit.
Pornsarin Maethivacharanondh, managing director of Prospect Development, said the company is looking for new plots to develop its next project of warehouses and factories for rent as there is rising demand, particularly from Chinese manufacturers. The Bangkok Free Trade Zone is nearly fully developed.
"Warehouses and factories are our long-term business strategy as they are less sensitive to the political environment," she said. "We've also explored opportunities in special economic zones in border provinces, but it is too early because of underdeveloped infrastructure there. There are no facilities in the areas to draw demand."
MK shares closed yesterday on the Stock Exchange of Thailand at 4.06 baht, up two satang, in trade worth 5.52 million baht.