MK Real Estate pivots to healthcare, warehouses

MK Real Estate pivots to healthcare, warehouses

Mr Vorasit Pokachaiyapat, chief executive officer of MK Real Estate Development Plc.
Mr Vorasit Pokachaiyapat, chief executive officer of MK Real Estate Development Plc.

SET-listed developer MK Real Estate Development Plc is playing down its residential development as it sees industrial property and the healthcare business as offering brighter prospects.

Vorasit Pokachaiyapat, chief executive of MK, said the company will maintain its residential development business at 2 billion baht per year, the same amount of annual revenue it recorded over the past five years.

"This amount [2 billion baht] with a margin of 30% is steady," he said. "At this level, we cannot be one of the leaders in the housing business as that position comes with criteria requiring more than 100 projects worth many more billions."

He said the company would evaluate the housing market this year and make a decision on this business by the end of 2022.

M.K. did not launch any new housing projects last year and would have none in 2022, either.

It currently has three existing projects with remaining units for sale worth a combined 5 billion baht, which would be sufficient for the next two years.

"We need to be cautious of the housing business," said Mr Vorasit. "It may be risky if we buy a new plot of land to develop a new project after one of our projects is sold out."

This year M.K. plans to invest 3 billion baht, of which over 2 billion baht will be earmarked to an additional warehouse area of 470,000 square metres at Bangkok Free Trade Zone, a warehouse-for-rent business under its subsidiary Prospect Development Co. This project is expected to take three years to complete.

The company currently manages 400,000 sq m of rental warehouse space and factories, totalling six projects in three locations. It aims to reach a total of one million sq m in the next three years.

Meanwhile, a 1-billion-baht budget would be prepared for housing business and healthcare ventures.

M.K. shifted to health and wellness business in 2020, launching wellness and medical retreat project RAKxa in Bang Kachao under a 50:50 joint venture between RX Wellness - one of its subsidiaries - and VitalLife Alliance, a subsidiary of Bumrungrad International Hospital.

"EBITDA [earnings before interest, taxes, depreciation and amortisation] from non-real estate business last year accounted for 36% and will rise to 70% in the next few years, higher than our earlier goal of 50% due to the growing trend in the healthcare industry globally and e-commerce expansion in Thailand," Mr Vorasit added.

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