Pruksa Real Estate Plc (PS) concentrates on developing townhouses, single-detached houses and condominiums within Greater Bangkok. PS uses its own technology and modern international construction technologies to build and manage its own developments. Chief executive Thongma Vijitpongpun discusses the company's strategy and outlook.
Thongma: Precast provides an edge
How did PS make the move from a low-cost housing developer to a full-range property developer?
The transition for PS from a townhouse developer to a fully fledged property developer was a carefully planned execution by the management. We began as a townhouse developer focusing on customers who were price-sensitive and over time were able to expand our ability to build and deliver more units through our own precast concrete factory that we built in 2004.
Precast at the time was a new technology in Thailand that allowed us to control the quality and speed of construction and gave us the ability to deliver up to 260 units a month. We built a new factory in 2011 that allowed us to deliver 430 more units per month.
Concurrently we focused on broadening our portfolio and expanding our customer base, which required us to understand other segments in terms of products and customers. We also had to develop our own internal capabilities to develop, market and deliver projects in both the single detached housing and condominium market, which we did in 2005 and 2007, respectively. Thus, today PS offers properties ranging from townhouses and single detached houses to condominiums from prices as low as 1 million baht a unit to 10 million and higher, covering the entire range of customers within each segment.
In 2013, PS plans to launch 78 projects. How is business progressing?
For the first nine months of 2013, our presales were 33.8 billion baht or 96.6% of our full-year target of 35 billion, and we have been very pleased with the reception of all of our projects. The 42 projects launched over the first nine months accounted for 80% of our total project value target, and we'll open 10-20 projects in the fourth quarter.
PS has expanded both throughout Thailand and internationally. Why is this, and what opportunities do you see?
Bangkok still accounts for 90% of our business, as its property market size is about 300 billion baht, while the upcountry market is about 200 billion. However, we have seen that the upcountry provinces have grown and there is now customer demand and appetite for new residential projects. Our international business is very small even though we have projects in the Maldives and India, with a potential project in Vietnam and perhaps Indonesia in the future. Our goal internationally is to take small and steady steps in each market to understand the markets appetite and how they operate before considering expanding further.
What differentiates PS from its competitors?
The key difference is that our mission as a company is fully to dedicate ourselves to our customers' dreams of owning a home so they can enjoy a family life. Thus, we focus very strongly on our customers to ensure that the design and quality of our product provides to our customers a lifestyle that they deserve. As a property company, we ensure everyone within our organisation has it in their hearts that they want to help PS's customers and are proud to do so.
With land prices in Bangkok at high levels, how do property developers manage?
We view the increasing land prices as a function of how customer demand has changed in Bangkok over the past decade. People's lifestyles have changed, and they are focusing on their time, their lifestyle and the price of a home.
In the past, people were willing to drive 25 kilometres to and from work, but with the advent and improvement of public transport such as the skytrain and subway and with the growing use of technology, people demand to be closer to their offices or closer to public transport. This is why we've seen land prices increase and why the condominium segment has grown faster than the townhouse and single detached house segments.
Going forward, we must ensure we can deliver a project that matches our customers' needs, and we see there will be a trade-off between the size, location and price of a property.
How will the government's proposed 2-trillion-baht infrastructure programme affect the industry?
The infrastructure plans could have a very strong positive effect on the outer Bangkok regions. With the plans to create an additional rail system connecting outer and inner Bangkok, the key element we are looking at is ticket prices. For example, if it costs someone 50 baht a trip to travel via train to inner Bangkok, then we can expect to see opportunities to develop additional projects in outer areas.
What are the biggest risks facing your business?
The sentiment of the property market is something we have to monitor closely and the probabilities of each economic scenario _ for example, if a recession occurs, is PS prepared to manage through it? So we observe closely how each segment of the market is performing, follow the customer behaviour in each of our segments and, importantly, manage our cash very well on a project basis and on an overall business basis.
Where do you see PS five years from now?
Our plan is to grow the business continuously by 25% over the next four or five years, and by 2017 we expect to achieve annual revenue of 100 billion baht. To achieve this we must ensure everything grows together _ our products, design, service, quality, brand and construction _ so our customers will continue with us and new customers will feel PS is the right company to provide them with a house.
The Executive Q&A Series is presented by ShareInvestor, Asia's leading financial internet media and technology company and the largest investor relations network in the region, with more than 500 listed clients. This interview was conducted by ShareInvestor. For more information, email admin@shareinvestor.com or visit http://www.thailistedcompany.com