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Homebuyers' patience costs developers dear

Friday, 30 May 2008

The Nation May 28, 2008 Listed developers see lower profits - and some a net loss - as buyers put off property transfers With construction and management costs rising and homebuyers putting off transferring their property to avail of the government's tax package, 19 of the 30 property developers listed on the Stock Exchange of Thailand (SET) reported lower net profit in the first quarter as compared to the same period last year. The government's tax package includes a reduction in the property-transfer fee from 2 per cent to 0.01 per cent, which is why homebuyers opted to wait till the package came into effect. While the package was launched in February, it came into effect from March. Ten of the 19 developers who posted a net profit in the first quarter recorded a net loss for the financial year. (see graphic) The remaining companies managed to increase their revenues by launching new projects to match homebuyers' changing needs and by managing costs better. Preuksa Real Estate president and chief executive Thongma Vijitpongpun said the company tried to reduce construction costs and unveiled projects in line with home-buyers' demands in the first quarter. This led to the developer recording sales of Bt2.23 billion and net profit of Bt308.28 million in the quarter, up 17.89 per cent and 5.54 per cent, respectively, from last year. Property Perfect chief executive Dr Teerachon Manomaiphibul said the company paid the fees for home-buyers who were willing to get their properties transferred before the government's tax package came into effect. The move led to the company's recording sales of Bt2.05 billion in the first quarter, up 105 per cent from the same period last year. The property developers who saw sales drop and posted a net loss for the quarter said rising construction costs had a negative impact on business. They were also unable to meet sales targets as many homebuyers opted to wait for the government's tax package. In a statement to SET, KC Property vice president Somchai Vanavit said the company's total revenue in the first quarter declined 13.86 per cent compared with the same period last year. One of the reasons was the rise in construction-material and labour costs over the past year. The cost of materials rose from 53.49 per cent of revenue to 61.53 per cent. Operating profit declined from 46.51 per cent to 38.47 per cent compared to last year. Prinsiri finance director Namchai Vanapanubet said the company recorded a net loss in the first quarter because the company has high selling and administration expenses that increased Bt24 million in the first quarter when it launched television campaigns to promote its brand. As many customers postponed property transfers so they could wait for the tax-promotion package coming into effect, Prinsiri recorded lower realised income than expected, he said. Rasa Property Development reported a net loss of Bt9.98 million in the first quarter, a decline of Bt11.08 million, or 1,010.95 per cent, from the same period last year. One of the prime reasons for the decline was that the company's revenue from sales dropped 72.17 per cent in the first quarter compared to last year. The company's sales and administrative expenses increased by Bt6.38 million, or 50.61 per cent, from last year due to the launching of new projects which raised expenses, Rasa directors Rapi Pinijchob and Lertmongkol Waravenuch said. Sansiri senior executive vice president Wanchak Buranasiri said the company saw a net loss of Bt254 million in the first quarter. It had posted Bt42 million in profit last year. Its income decreased 4 per cent or Bt112 million - from Bt2.69 billion to Bt2.57 billion. Expenses grew about 9 per cent, from Bt2.56 billion to Bt2.78 billion. The rise in expenses was due to the launching of eleven Condo One projects by Sansiri subsidiary Plus Property. This was also one of the reasons why there was a more than 20-per-cent variance in the profit reported by the company and its subsidiaries as compared to last year.

 

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