C.P. Land halts offices, condos
C.P. Land Plc, a property arm of Charoen Pokphand Group, plans to freeze new office and condo projects next year and focus on hotel development targeting local travellers.
President and chief executive Sunthorn Arunanondchai said Thailand's economic outlook will remain unfavourable in 2021 and could possibly worsen from this year as many people continue to face difficulties earning income.
"Government should help low-income earners boost their income. They should assist farmers and the grassroots segment by helping them have regular income," he said.
Though there is optimism about a Covid-19 vaccine by mid-2021, Thailand's economic recovery might not occur until the end of 2022, said Mr Sunthorn.
"In 2021-22, we will scale down our investments and be more cautious unlike the previous five years. We will focus on the hotel business, where we have expertise," he said.
C.P. Land plans to develop at least 5-10 new hotels in the provinces next year, targeted for tourism destinations, provinces with border trade and industrial locations where local demand remains strong.
All the projects are small, with around 70 rooms each, requiring an investment of 100 million baht. This scale is less risky and quicker to complete. To minimise cost, all will have the same design.
"Our speed will slow down from running to walking, but we will not stop," said Mr Sunthorn.
Last Friday the company opened Fortune Saeng Chan Beach Hotel Rayong, comprising seven storeys and 107 rooms with an investment of 200 million baht. It marks the company's 13th hotel, with the Grand Mercure Bangkok Fortune Hotel its inaugural effort in 1992. The Rayong project is C.P. Land's first new hotel this year.
"Our hotel in Bangkok saw a severe drop in occupancy, as 80-90% of guests were foreigners. The occupancy rate dropped to 20% when a major chunk of customers, airline crew, could not fly inbound," he said.
But its hotels in nine provinces reported robust traffic, driven by domestic travellers and the government's local tourism subsidies. They resumed operations in June 2020 after the lockdown.
For the company's rental office business with a total lettable area of around 500,000 square metres at 10 locations in Bangkok and major provinces, some tenants reduced their spaces and demand from new tenants waned.
Mr Sunthorn said C.P. Land is forgoing new condo development as the mortgage rejection rate is 30% for its customers.
"We lowered office rents to mitigate the impact for tenants. This affects our turnover this year by more than half," he said.
C.P. Land has condo units for sale at 10 projects in the provinces.