With a huge quantity of condo stock in hand, SET-listed developer L.P.N. Development Plc plans to rent out unsold units and focus on low-rise housing development, expected to be the key driver for revenue growth in 2021-24.
Chief executive and managing director Opas Sripayak said the company has unsold condo inventory worth 15 billion baht, of which 9 billion represented completed units.
"We will rent out these completed units to generate a recurring income during an oversupply in the condo market," he said.
"We will also offer tenants these units for purchase which could be transferred in the future or when tenants are ready to secure them. The monthly rents they pay will become monthly instalments once they decide to buy the rental unit."
He said this offer will benefit those who were unemployed or struggling to get a mortgage loan during the pandemic, such as those working in the aviation or hospitality industry.
Last year the company rented out 200-300 units at Lumpini Park Phahol 32, a 2-billion-baht condo project with 546 units on Phahon Yothin Soi 32 which were completed in 2019 and had 80% of units remaining unsold.
He said the Phahol 32 units were the result of a condo glut. Its average prices were 130,000-140,000 baht per square metre or more than 3 million baht a unit. Buyers had the same choices in more attractive locations such as Asoke or Sukhumvit road.
"We will not cut prices to boost sales for this project if discounted prices still remain unattractive to draw buyers," he said. "Lowering prices should occur at an appropriate level," he said.
Other completed condo projects with a large number of unsold units included Lumpini Township Rangsit-Klong 1 Phase 2, which was completed in 2016 and had 36% of 3,674 units remaining unsold.
There were two projects in Cha-am that had a sales rate of only 31%. They were completed in 2018.
Last year L.P.N. had additional completed unsold supply from four newly-completed projects including Lumpini Place Rama 3-Riverine with 73% and Lumpini Ville Sukhumvit 101/1-Punnawithi with 71%.
The other two were Lumpini Park Boromarajonani-Sirindhorn with 68% remaining and Lumpini Ville Pattanakarn-Srinakarin with 52%.
As it had a large condo inventory and 6-8 land plots for condo development to be launched in the future, it will spend a total budget of 4 billion baht this year only for low-rise housing projects worth 8 billion baht to develop in the future.
L.P.N. aims to have 7.5 billion baht, 9.45 billion baht, 12.3 billion baht and 16 billion baht in revenue during the years 2021-24, respectively. A key driver will be low-rise houses which will rise from 2.2 billion baht this year to 2.8 billion baht, 4.5 billion baht and 7 billion baht during the years 2022-24, respectively.
Recurring income from services and rents will grow from 1.35 billion baht last year to 1.5 billion baht, 1.65 billion baht, 1.8 billion baht and 2 billion baht during the years 2021-24, respectively.
Revenue from condos is estimated at 3.8 billion baht, 5 billion baht, 6 billion baht and 7 billion baht during the years 2021-24, respectively.
2024 will see half of revenue from condo and low-rise houses.
This year it will launch nine new projects worth a combined 8.5 billion baht. Six of them will be low-rise houses worth 5.5 billion baht. Two of three condo projects will be on Charan Sanit Wong Soi 22 and Narathiwat-Ratchada.
L.P.N. reported 7.36 billion baht in revenue last year, down 26% from 10 billion in 2019.
Revenue from property development was 6 billion baht and the rest from recurring income including 1.13 billion from property management and 225 million baht from services and rents, which rose by 6.8% and 30% respectively.
Net profit declined by 43% to 716 million baht from 1.25 billion baht. Net profit margin also decreased to 9.6% from 12.5% as gross profit dropped to 30.8% from 32.7%.
Presales last year hit 10.4 billion baht, up 23% from 8.2 billion baht in 2019.