L&H sees core trade in malls
Land and Houses, a major residential developer, wants to see shopping centres, as well as hotels, become its core business in the near future.
Its portfolio consists of mainly Land and Houses Bank, Q-House, and Home Product Centre, the operator of HomePro building-materials stores. They generate revenue of Bt2 billion per year, up from Bt100 million a decade ago.
A few years ago, L&H branched out into developing and managing shopping complexes.
Chairman Anant Asavabhokhin, who presided yesterday over a ceremony marking the 10th anniversary of LH Bank, said the group found that this new shopping-mall business was a gold mine, as these assets can be transferred to leasehold real estate investment trusts (REITs).
For the Terminal 21 shopping plaza, the company invested Bt3 billion but gained Bt6 billion from selling it to a REIT.
The company is interested in shopping malls because there are still not many of them nationwide, Anant said. L&H plans to open at least one mall a year at a cost of Bt6 billion to Bt7 billion each.
The Terminal Korat shopping mall is under construction and Pattaya and Phuket are under consideration for the next locations of Terminal shopping malls, Anant said on the sidelines of the ceremony.
"Small merchants in the provinces want more retailers to invest in shopping malls, since that will create opportunities for them," he said.
The right location with the right segment is the key to success in the shopping-mall business.
Pet shops are another interesting business.
This is a good time to invest in business expansion, as the economic slowdown is bringing down the cost of funds, he said.
Each project requires two years. In two years, the Thai economy should be running as usual, Anant believes.
However, the property industry is expected to recover next year.
This year, the property business will be flat because the economic circumstances do not support the purchase of new homes. Developers have tried to sell existing projects rather than launch new ones.
The government has instituted stimulus packages for home-buyers, but will probably not cut the mortgage transfer fee because that would help developers more than buyers, Anant said.
The problem facing potential home-buyers is the high mortgage-rejection rate of 30-35 per cent.
Banks have become more cautious in approving housing loans amid the economic slowdown, so the government is finding measures to help reduce rejections of loan applications to help home-buyers, he said.