SET-listed Land & Houses Plc (LH), the country's largest developer, will shift its investment focus to non-residential development, citing weak domestic housing demand.
Managing director Adisorn Thananan-narapool said the company would double total investment to 14 billion baht this year, with 7 billion for new plots for housing development, up from 4 billion in 2015.
The other half will be for acquisitions and development of the rental property business, up from 3 billion baht in 2015. This part will comprise US$100 million to buy an apartment building for rent in San Francisco and $10 million to renovate it.
"Investment in US rental apartments is attractive. Last year we gained a 50% profit from our first apartment. We sold it for US$18 million last year after buying it for only US$12 million in 2012," he said.
To date, LH has spent 10 billion baht in the US for three apartment projects with a total of 600 units in the San Francisco Bay Area. All are completed and had tenants before it invested. The initial return rate is projected at 12-15%.
LH has budgeted 1.2 billion baht to continue construction of a 440-room hotel on Soi Thong Lor and 800 million to develop a shopping mall, Terminal 21, in Pattaya. It will also invest 1 billion baht on a new rental property business, said Mr Adisorn.
Last year LH gained 2.3 billion baht in revenue from rental business, up from 2 billion in 2014. It expects rental income will grow 28% to 2.6 billion baht in 2016 thanks to a 5% increase in rents at three hotels in Thailand and rent from a US apartment.
Revenue from housing development last year was slightly below its target of 28 billion baht because of weak demand. Presales in 2015 also dropped 21.6% to 24.7 billion baht from 31.5 billion in 2014.
"The property market this year will be flat again as the country's economy still cannot rely on exports," said president Naporn Sunthornchitcharoen.
This year LH will launch 14 residential projects worth a combined 23.5 billion baht and targets 28 billion in both presales and revenue. Last year it had a sales backlog of 21 billion baht and over 7 billion is expected to be realised in 2016.
The new projects will include nine single house projects worth a combined 13.3 billion baht, three townhouse projects worth 2.7 billion and five condo sites worth 7.52 billion.
"The middle- to upper-end housing market will continue growing from last year as the economy is really hurting the lower-income segment," said Mr Naporn. The company's presales last year comprised 63% from units priced 6 to 100 million baht.
LH shares closed yesterday on the SET at 8.55 baht, down 30 satang, in trade worth 165 million baht.