Infrastructure spending set to boost top firms

Leading construction companies are targeting business growth of between 15 per cent and 20 per cent for 2015, due largely to the government planning to spend more than Bt500 billion on infrastructure investment during the year.

Meanwhile, leading property developers are expanding their investment in new residential projects located close to the new mass-transit rail routes that will be completed in greater Bangkok over the course of the next 12 months – especially the Purple Line from Bang Sue to Bang Yai, and the Bearing to Samut Prakan province extension of the Green Line. 

This is on top of residential development along the mass-transit lines currently under construction, such as the Red Line from Mo Chit to Rangsit and the extended Blue Line from Hua Lamphong to Tha Pra. 

There are also four rail routes that will open for bidding next year, worth Bt245.87 billion combined. 

The four lines are: the 36-kilometre Pink Line from Kae Rai to Min Buri; the 20km Orange Line from the Thailand National Culture Centre on Ratchadaphisek Road to Min Buri; the 30.4km Yellow Line from Lat Phrao to Samrong in Samut Prakan; and the 21.8km extension of the Airport Rail Link, from Phayathai to Don Meuang.

Market-leading construction firm Italian-Thai Development targets winning 25-30 per cent of the government’s new infrastructure bidding next year, which would help boost its revenue from this year’s level, said a company source.

The company has already won the Bt15.27-billion contract for the 12km Green Line route extension from Mo Chit to Saphan Mai, with construction set to commence next year.

Ch Karnchang is targeting a share of between 20 per cent and 25 per cent of new transportation infrastructure bidding in 2015, or about Bt100 billion of new work, said its CEO, Plew Trivisvavet.

“We believe the government will speed up the opening of bidding for mass-transit routes, motorways and other transportation systems to drive the country’s economic growth next year. 

“This is the challenge for contractors seeking to drive their business growth in 2015 compared with this year,” he said.

Sino-Thai Engineering and Construction managing director Pakpoom Srichamni said the company stood ready to join the bidding for mass-transit projects next year. It targets winning between 15 per cent and 20 per cent of the overall value of the projects.

Meanwhile, Sino-Thai is expanding its business to develop residential projects located close to existing and new routes of the mass-transit system, after seeing strong demand for such projects.

“We have had to diversify our business due to the slow growth of construction business this year,” he said.

Sino-Thai’s joint venture with AS Associate Engineering (1964) is one of two contractors to have landed contracts for the extended Green Line, from Mo Chit to Saphan Mai.

The Bt6.8-billion contract is for construction of a maintenance and parking centre, and a rail control system. Construction will commence next year.

Research and analysis by Asia Plus Securities has concluded that contractors will benefit from the government’s policy to invest in the country’s infrastructure system next year.

 

Developers track rail lines

Given the government policy to spend more than Bt500 billion on mass-transit routes next year, major residential developers plan to launch new projects close to rail lines and stations, on both existing and extended routes.

Vitakarn Jantavimol, chief marketing officer of AP (Thailand), said the company’s launches in the next 12 months would focus on locations close to mass-transit routes, and especially the extended routes set to open for operations during the year.

“We got positive feedback after opening our Aspire Sathorn Thapra project, which is located close to Talat Phlu station on the BTS Silom Line and has achieved sales success. This means that demand for homes near to the mass-transit system is still strong,” he said.

Pruksa Real Estate president and CEO Thongma Vijitpongpun said the company would launch up to 80 projects worth about Bt80 billion next year, with some of them – especially condominium projects – being sited close to the mass-transit rail system, both existing and new routes.

Quality Houses president and CEO Rutt Phanijphand said the company planned to launch 30 residential projects worth Bt50 billion in 2015. 

Land has already been purchased for 27 of them, with the majority of the projects located near to the current and to-be-extended mass-transit system.

According to research by the Government Housing Bank’s Real Estate Information Centre (REIC), there were 72 residential-project launches – worth Bt37.8 billion for a total of 34,400 units – within a kilometre of the under-construction Purple Line from Bang Sue to Bang Yai between the middle of last year and October 2014. 

Seventy-five per cent of the combined project value was sold during the period.

In the same period, the Red Line from Bang Sue to Rangsit – from Phaholyothin Road to Klong 1-4, in particular – recorded 44 new projects, comprising more than 20,000 units worth over Bt50 billion, the centre found. 

Some 50 per cent of the combined value has been sold, with the projects due for completion over the next two years.

From the middle of last year through to May, 12 condominium projects were launched along the extended Blue Line from Hua Lamphong to Bang Khae, and from Bang Sue to Tha Pra. 

They were worth more than Bt10 billion in total and comprised 4,659 units, with nearly 50 per cent of them already snapped up, REIC’s research found.

“Sites close to the mass-transit routes are prime locations for property firms to launch their new residential projects to match customer demand. When the government kicks off opening the bidding for new mass-transit routes, it will drive developers to expand their locations to build projects to serve the demand,” said REIC director-general Samma Kitsin.