The SET-listed Major Development Plc (MJD) will build more rental properties next year after a new accounting standard by the Stock Exchange of Thailand regarding revenue recognition stands to affect its performance.
"We should have recurring revenue to recognise in order to have stable earnings each year," said the company's chief executive Suriyon Poolvoralaks.
The SET's new accounting standard calls for revenue to be recognised only from project sales via ownership rights transfer.
Previously, the company was allowed to recognise down payments by clients and a percentage of the project's completion as revenue.
Mr Suriyon said the rental projects will be put into a real estate investment trust (REIT) upon completion of construction and 90% occupancy.
Invesco Ltd, the Atlanta, Georgia-based investment giant, is also keen on teaming up with MJD through either REIT or a new property project, he said.
Invesco last year bought the American International Group's Asian real estate unit AIG Global Real Estate Investment (Asia), which has had a joint venture with MJD since early 2008 called MJAI Development Co.
That joint venture developed the 3-billion-baht luxury condominium Royce Private Residences.
Mr Suriyon said MJD will record recurring hotel revenue from its Marrakesh Hua Hin Residences for the first time this year but in a smaller amount representing less than 2% of the total.
The Hua Hin hotel and condominium opened in February and recorded 16.2 million baht in revenue in its first nine months.
A new 3-billion-baht rental property planned for next year will be located on 30 rai on a soi opposite Bangkok's Ramkhamhaeng University and comprise condominium units, shophouses and retail facilities.
"The condominiums will be launched first, in next year's first quarter," said Mr Suriyon.
Unit prices have not been finalised, but similar projects' prices are priced at 70,000 to 80,000 baht a square metre.
Siam Commercial Bank will finance the project. It will be MJD's second mixed-use project following Equinox at the Vibhavadi Rangsit-Phahon Yothin intersection in Bangkok's Chatuchak district, which the developer launched late last year.
Located on six rai, it will comprise 490 condo units, 80% of which are already sold; 20,000 square metres of office space going for 500-600 baht per sq m per month; and 2,000 sq m of retail space at 1,000 baht per sq m per month.
Shares of MJD closed yesterday on the SET at 2.80 baht, down 6 satang, in trade worth 1.19 million baht.
About the author
- Writer: Kanana Katharangsiporn
Position: Business Reporter