Raimon eyes luxury options near trains
Firm stays conservative and focuses on premium locations. By Charoen Kittikanya
While many property developers are speeding up launching new development projects along the extensive new mass transit routes, SET-listed Raimon Land Plc (RML) remains committed to its ingrained principles: premium freehold locations, quality and a somewhat conservative approach.
Chief executive Adrian Lee says for future property development projects the company will stay focused only on the central business district and freehold properties.
“We’d like people to see our brand in the same light as Gucci,” says Mr Lee. “Our prime focus is the quality of our products, something customers are willing to pay for.”
Despite rapidly expanding mass transit developments and a recovering economy, Raimon Land only wants to launch 2-3 new condominium projects a year worth a combined 8-10 billion baht, exclusively in the premium segment.
“Despite the continuous increase in overall land prices and intensifying competition in luxury developments, we are still upbeat that the prospects of Thailand’s high-end condo projects remain promising, dependent on appropriate locations and the project quality,” he says. The company has earmarked about 2 billion baht a year to acquire new land plots, apart from annual capital expenditure worth 1 billion baht a year.
The company is also looking for partnerships with potential foreign investors from Japan and Europe to develop new high-end property projects.
“We’re talking with prospective partners from Japan and Europe,” says Mr Lee. “But our focus is not so much about money, but the quality of our partners.”
Raimon Land plans to launch two new condo projects this year worth a combined 8.7 billion baht, one of which will be located on Sathon Soi 12, worth a total of 3.9 billion baht, and another located in Phrom Phong, worth a total of 4.8 billion baht.
The Sathon Soi 12 project, with unit prices of more than 250,000 baht per square metre, is scheduled to be launched in the fourth quarter of this year. The Phrom Phong project, priced over 300,000 baht per sq m, is due to be launched in the third quarter of this year.
The two projects will take two years to be completed and the company expects to be able to recognise revenues from them by 2021.
Raimon Land is also scheduled to realise partial revenue from a 60-floor office tower in Phloenchit in 2021, with a net lettable area of 61,000 sq m.
With an estimated value of 23.5 billion baht, the office tower will be the tallest tower in the Phloenchit area and is expected to generate 700 million baht in rental income a year.
Full revenue for the Phloenchit office tower is expected be generated by 2023.
“We expect the company’s revenues from residential developments will stay flat at 3 billion baht a year over the next three years, but after that the company is fully confident annual revenue will exceed 5 billion baht a year,” says Mr Lee.
Residential properties represent the bulk of the company’s revenue, making up 95%, with the remaining 5% coming from recurring income.
“As the residential property segment is topsy-turvy, we aim to develop recurring income projects to generate at least 20-30% of total revenue over the next five years,” says Mr Lee.
“Under our five-year strategic plan starting from this year, we’ve added new core businesses, commercial properties, food and beverage and a digital marketplace on top of the existing residential developments, with an aim to produce 10-12 billion baht in revenue over the next five years.”
Commercial properties include offices, hotels and serviced apartments.
In the five-year investment budget, more than 10 billion baht will be spent on commercial properties, a rising-star segment. Raimon expects to have at least 100,000 sq m in net lettable area of office space within 2022.
Earlier in the year, Raimon Land unveiled strategic plans to invest at least 25 billion baht during 2018-22 in four core businesses, in its biggest diversification since establishment.
Late December last year, Siam Spoon Co, one of Raimon’s subsidiaries, signed a joint venture agreement with Bangkok Wooden Spoon Co, the owner of Baan Ying restaurant, which has been in the Thai eatery business for over two decades and operates 12 sites.
The joint venture firm, Baan Ying Pte Ltd, was registered in Singapore with registered capital of S$1.4 million (33.4 million baht), with Raimon holding 51% and Bangkok Wooden Spoon 49%. It aims to expand the Baan Ying brand and others in Asia.
The first two overseas branches under Baan Ying and Dink Dink brands are already in operation in Singapore. Baan Ying is a flagship 200-seater Thai casual dining restaurant, while Dink Dink is a 60-seater Thai noodle house. The expansion strategy calls for at least 10 restaurants throughout Asia by 2020. Raimon Land expects to generate 1 billion baht in revenue in 2022.
Mr Lee says Raimon Land is also branching out to hotels and serviced apartments. The company is planning to build highend serviced apartments and branded residences with a local partner with a strong brand.
It is also looking to invest in new and existing hotels.
The new projects are still in the planning phase.
Raimon operates in the upscale hospitality segment under the Klapson brand, which generated 40 million baht in revenue last year.
The hospitality business in the future will include an expansion of Klapson using four-star hotel chains, Mr Lee says.
Raimon is also investing in the digital business, aiming to create an online property platform, for which it expects 10 million users across Southeast Asia annually.
The company expects to launch an online property platform by August this year.
He says the company is also looking at development opportunities in the government’s flagship Eastern Economic Corridor, notably around the digital park and Exxon Mobile Corporation’s refinery at Sri Racha, Chon Buri.
“Raimon Land has been laying the foundation for a steady diversification strategy over the past two years, while staying invested in our core business. The Lofts Silom, a 4-billion-baht project that was launched last year, has been one our greatest successes — to date we are about 80% sold. This year we are on track to launch another two condo projects worth about 9 billion baht, which I am certain will be equally as successful. Our recurring income projection for existing projects is expected to reach 1.8 billion baht in 2023, in line with our goal to achieve 10-12 billion baht in the next five years,” says Mr Lee.