AP forced to think smaller
Developer reduces projects, downsizes
The sluggish condo market this year has prompted SET-listed developer AP Thailand Plc to take smaller, more precise steps, shifting to the mid- to low-end segment, reducing the number of new projects and downsizing buildings.
The cumulative effect should reduce the sales value by half from last year.
Vittakarn Chandavimol, chief of corporate strategy and creation, said the combined sales value this year will be 12.1 billion baht, down by 55% from 27.1 billion in 2019. Launches will slide from six projects in 2019 to four this year.
He said condo developers must be precise in choosing appropriate locations with the right target buyers.
"There are a lot of negative factors challenging the condo market this year," said Mr Vittakarn. "We need to study target customers more deeply before buying plots for a project."
He said all new projects will have units priced 180,000 baht per square metre or lower as the company wants to shift towards the mid to lower-priced segment, which is a mass market.
Condos priced lower than 180,000 baht per sq m are affordable for those earning 100,000 baht per month or lower, said Mr Vittakarn.
"The location doesn't need to be close to a mass transit station as unit prices will be higher," he said. "We will also avoid the red ocean market where there is condo oversupply."
Mr Vittakarn said the company also plans to scale down condo development to less than 400 units per project from up to 1,000 units because of the weak market. Unsold units would be burdened by the new land and building tax.
As the condo market is unfavourable, it is unlikely there will be sell-outs in a single day or during the launch period, he said.
A good sales rate for a new condo project is 40% for the three months after it was put up for sale, said Mr Vittakarn.
Last November, AP launched a new condo project, Rhythm Charoenkrung Pavillion, worth 4.7 billion baht.
It will be located on a 4.5-rai plot on Charoen Krung Road with 421 units sized 35-228 sq m and priced 150,000 baht per sq m on average.
The sales rate of the project was 40% as the project met customers' requirements, including being only 100m from Shrewsbury International School, and having a parking lot that could accommodate 100% of unitholders.
AP shares closed yesterday on the Stock Exchange of Thailand at 7.60 baht, down 20 satang, in trade worth 87.3 million baht.