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Preuksa aims to achieve 90% of target for this year

source: Bangkok Post Oct 23 2008 Preuksa Real Estate, the country's second-largest residential developer, aims to achieve 90% of its annual revenue and sales target by the year-end, despite being 15% under this target on Sept 30, said CEO Thongma Vijitpongpun. He added that the company is confident it can maintain growth through the current turbulence because it has grown an average of 15% per year since 1993. Last year it recorded nine billion baht in revenue and 13 billion in presales. It set a 2008 target early this year of 14 billion baht in revenue and 20 billion in presales. Mr Thongma said political uncertainties that affected consumer confidence along with higher rejection rates due to financial institutions tightening their home loan approval criteria had caused the company to record only 85% of both its revenue and sales targets in the first nine months of the year. He said the global financial crisis had affected the medium- to low-end housing market, with the rejection rate for mortgage applications of under one million baht rising from 25% to 30-35%. Commercial banks have been strictly scrutinising mortgage applications but Preuksa hopes state-run lenders such as the Government Housing Bank and the Government Saving Bank will provide loans to less wealthy homebuyers. Preuksa has responded to tougher lending criteria by providing customers with close consultation and by helping rejected buyers establish a positive financial history. Over the rest of this year, the company also aims to boost sales by offering 5-7% discounts that reflect falling construction costs. Lower construction costs will also help Preuksa bring down the price of old stock built earlier this year when construction costs were at a peak. Construction costs are already down to the level at the end of 2006. As the company did not lock the price of construction materials for low-rise developments, it has no huge inventories and has not missed the opportunity from declining prices, said Mr Thongma. The company will also focus on managing the supply chain of its resale units returned from rejected customers. It plans to build each housing unit within 111 days.Next year, the real estate market will slow by 5-10% due to lower consumer confidence, so developers should focus on serving real demands and tapping more niche markets, said Mr Thongma. He added that the real estate market next year should be boosted by the development of megaprojects and the extension of tax incentives to homebuyers. Preuksa will constantly adjust its plan for next year to fit the rapid changing situation. PS shares closed yesterday on the SET at 5.05 baht, up five satang, in trade worth 6.9 million baht.

 

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