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Thailand Property Market – Government Stimulus Measures Needed?

By on Oct 09, 2013 in Property News, Residential

The residential property market continues to show strong growth despite an economic slowdown in the second half of the year, Sansiri president Srettha Thavisin said this week during an interview with The Nation. “We do not need the government to launch any stimulus measures to boost the property market at this time,” he said.

Three property bodies, the Thai Real Estate Association, the Business Housing Association and the Thai Condominium Association, had earlier proposed that the government should introduce a stimulus package for the sector. This would include a reduction in transfer and mortgage fees, and in special business tax, for people purchasing a first home costing up to Bt3 million.

Sansiri’s business strategy for next year is to maintain its presales target of up to Bt40 billion, close to what it expects to achieve this year, while at the same time focusing on boosting overall revenue growth to between 10 and 15 per cent – to Bt38 billion-Bt40 billion – Srettha said. This year, the listed company targets revenue of Bt36 billion, up 20 per cent from the Bt30.08 billion achieved in 2012.

He added that even though the company had achieved strong presales growth last year and in the first half of this year, it had faced high marketing costs, which resulted in net earnings of less than 10 per cent of annual revenue. Next year, however, Sansiri targets boosting net profit to more than 10 per cent of income, which is why the new focus is on revenue and net profit rather than presales. “This strategy will balance our costs and revenue to the point where we can show a high profit and generate the best return for our shareholders,” he said.

The revised strategy also ties in with the developer’s attempts to resolve capacity problems resulting from the labour shortage in the construction sector, he added.

The company also plans to launch residential projects in new locations, as the government’s Bt2-trillion infrastructure mega-project will open up new areas for development by property firms, Srettha said. Sansiri will launch projects next year in Nakhon Ratchasima, Phisanulok, Chiang Rai and Rayong, which are all new provinces for the developer. Meanwhile, it will also launch more projects in Hua Hin and Phuket, where it sees strong demand.

“We believe the economy will continue to grow next year, with interest rates being maintained or, if they do rise, increasing by just 50 basis points, which would have relatively little impact on home-buyers. “As a result, we believe our 2014 revenue and net profit will grow by between 10 and 15 per cent from this year’s target,” he added.

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