AP slashes revenue target to Bt13 bn

Asian Property Development has revised down its revenue target from Bt17 billion to between Bt13 billion and Bt14 billion following the recent floods.

The company said that only three of its residential projects were affected by the floods, although it was main roads that were inundated and not the residences. The company thanked the emergency warning system set up by its property management subsidiary firm, Smart Service and Management Co (SSM), which provided the flood prevention system that protected all of its residential projects in Bangkok and the suburbs, company CEO Anuphong Asavabhokhin said in an interview on Monday. 

He said the company had spent more than Bt80 million to set up the flood prevention system to protect all its residential sites – about 40 residential projects up for sale now, and the existing 30 projects in Bangkok and the suburbs. The fact that the flood water only inundated the main road leading to some of the project sites, and not the residences, was a proof of the system’s success. 

“We have only three projects that faced floods but we can recover the project site within one week,” he said.

He added that the company is also providing a cleaning system to help its customers after flood waters recede. 

Even during the period of the flooding, in October and November, home-buyers continued to visit its residential projects sites that did not face flooding. Condominium projects recorded sales growth from an average of Bt100 million per week to between Bt200 million and Bt300 million per week. The townhouse market has also recovered in the last three weeks, especially the locations that did not face floods, he said.

Meanwhile, the single detached-house market started to recover last week, especially locations that were not hit by floods, he said.

As the demand to buy residences is below the estimate, the company has to revise down its revenue target from Bt17 billion to Bt13 billion this year. Its presales target has also been revised down from Bt18 billion to between Bt14 billion and Bt15 billion. 

The company has also delayed the launch of its next five residential projects from this year to next year.

Earlier, the company had planned to launch 19 new residential projects this year but is now launching only 14 projects.

However, the company can deliver 946 residential units that have to be transferred to its customers this year and the first quarter of next year of which 700 are single detached houses while 246 units are condominiums.

“Although there is some shortage of construction raw material, we have enough to deliver our residential projects on time,” he said. 

 

Design revision 

Anuphong added that the company also has to revise the designs of its residential projects, especially the landscape and infrastructure, taking into account the flood problem. 

For example, it would have to design water-drainage system and related systems and floodway, and increase landfill to protect residents from flooding. This would increase its construction cost by about one or two per cent. Infrastructure cost accounts for about 20 per cent of total property cost.

The company also has to study buyer behaviour. “Although the demand to buy townhouses may be rising for home-buyers who love to stay in a detached house, they are worried about the recurrence of floods and might decide to move to a location that was not impacted by the floods.

Townhouses may be their choice but we have to be concerned about what the customers want such as architecture, function etc. This is a new problem that we have to tackle in the design for next year,” he said. 

 

Market recovery

Anuphong expects the market to recover in the middle of next year as home-buyers will need time to consider buying residences.

Meanwhile, property developers have to wait for the construction raw materials situation to return to normal as some of the plants manufacturing products like lightweight cement blocks, red blocks, sand etc were hit by the flooding. Currently, the market is facing a shortage of construction raw materials and labour. 

Anuphong added that the recent floods had shown the importance of all concerned parties to be well informed so that all parties can manage their risk. If all related parties know what will happen, they will know what they can do, he said. 

He added that the company has been successful in protecting most of its residential projects – existing and current – because of customers’ warnings. The company reacted instantly to the feedback from its customers even though it did not believe at the time that its project could be hit by the floods. He said the company believes in protecting its customers’ confidence in its projects. 

“When the flood hit the areas where the residential projects are located, we were already prepared for it,” he said.

He said if the government had given the right information to people, they would have been able to protect their residences in time. However, he believed that this flood would be a lesson for affected parties and will also change home-buyer behaviour towards residences in the future.