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Luxury Condominium in Sukhumvit Developer Review – Land & Houses

By on Feb 03, 2016 in Property News, Residential

The luxury condominium in Sukhumvit,Developer  Land & Houses Plc (LH) summarised 2015 as disappointing and 2016 to be better.

LH held a meeting to alert analysts that both presales and revenue will drop YoY in 2015 on the postponement of new launches, no luxury condo launch and cancellations. LH is looking forward to a better 2016 with mid-teens growth in presales and revenue.

For 2016 the focus is on high-end condo launches – The Bangkok Sukhumvut 38 in March and The Bangkok Thonglor in May. Selling prices are expected to be more than THB350K per square metre for Thonglor and between THB 300-350K per square metre for Sukhumvit. It is thought there is indeed demand for high-end condos, but increasing the supply will cut the take-up rate for each project.

Our view. 2015 transfers look likely to miss our forecast by ~5%, but this will be made up for by a higher gain than expected from spin-off Grande Center Point Terminal 21 Hotel at Bt960mn (we forecast Bt800mn). Its 2016 presales target is only 5% below us, but its revenue target is ~10% below partly due to putting off the transfer of The Bangkok Sathorn to next year. Despite this, we believe LH’s net profit will grow in the double digits this year and next. A recently acquired apartment in the US (cost US$100mn) will raise rental income and partly offset the lower real estate income. The Bangkok Sathorn raises next year’s visibility (backlog revenue up from Bt10.6bn end-September 2015 to Bt12.0bn, which fully secures our condo revenue forecast) and next year’s earnings growth outlook.

Focus is on high-end condo launches. LH will launch two high-end condos – the Bt1.5bn The Bangkok Sukhumvit 38 in March and the Bt4.0bn The Bangkok Thonglor in May. Selling price is expected to be more than Bt350K/sqm for Thonglor and Bt300-350K/sqm for Sukhumvit 38 or unit price >Bt20mn. Both of these compete directly with SIRI, which will launch Thonglor in May and Sukhumvit 38 in 2H16. In our view, there is indeed demand for high-end condos, but increasing the supply will cut the take-up rate for each project. We note that PS also has land in Thonglor area, but when it will open a project is unknown.

According to AREA there has been little supply of high-end luxury condominiums in the Sukhumvit 21 to Sukhumvit 63 area in the past few years. New supply coming in is a good thing for the area.

Source: The Nation, 25th January 2016
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