Ratanakorn looks to diversify
Ratanakorn Asset Co saw the warning signs of a Pattaya property glut, diversifying to help the Chon Buri-based developer survive the pandemic.
Managing director Jugkarut Ruangratanakorn said the company prepared its liquidity for a possible crisis in the property sector since 2018.
“We diversified into other sectors that can contribute to the property business, such as lifestyle, services, healthcare, wellness, spa, food and beverage, coworking spaces, education centres, and now we are starting with warehouses,” he said.
The company redefined itself as a business development operator at its own properties, ranging from land, hotels, condos, low-rise houses, fresh markets, wholesale and retail to factories, schools and community malls.
Mr Jugkarut said the shift creates an ecosystem for sustainability and maximising utility for alternative income.
The cross-operating model creates more flexibility and resistance to natural disasters and crises.
He said the company was aware of negative signs in the Pattaya condo market since 2014.
It drained its whole condo stock and shifted to low-rise houses, retail and fresh markets after local, Bangkokbased and foreign developers jumped into the condo market in Pattaya.
“Oversupply in the condo market was attributed to an influx of investment from foreign developers during the boom period several years ago, with an expectation to sell their units to compatriots,” said Mr Jugkarut.
While local developers foresaw unfavourable signs five years ago and slowed investment, foreign developers kept launching new projects regardless of the market.
The oversupply in the Pattaya condo market eventually caused a slowdown among foreign buyers, as they were mostly investors unable to book capital gains after a price war and the large number of unsold units.
Thai buyers were limited by the lending curbs effective since last year, slowing purchases of a second unit.
In Pattaya, Phuket and Samui, foreign buyers were mostly European, Russian and Chinese, all of whom limited their investment.
Earlier this year, the unsold condo inventory in the three eastern provinces comprising the Eastern Economic Corridor — Chon Buri, Rayong and Chachoengsao — totalled over 60,000 units, said Mr Jugkarut.
“That figure did not include units booked and later dumped by buyers who neither wanted to continue with down payments nor were able to receive unit transfers because they could not enter the country,” he said.
“The latter figure was quite large.” The Thai buyer market was aggravated by the pandemic as tourismdriven destinations like Pattaya and Phuket saw an average hotel occupancy of less than 15% and a decrease by half of the average daily rate, said Mr Jugkarut.
In other words, revenue per available room was lower than 10%, compared with more than 70% in the usual period, he said.
After preparing liquidity for years, Ratanakorn today is ready for acquisition of properties and land, with an investment budget of 4 billion baht, said Mr Jugkarut.
Land prices for hotel and industrial development in the provinces are going down, he said.
In 2016, the company also forecast a slowdown in the Chinese tour group market, so it shifted from hotels catering to visitors from the mainland to serviced apartments for customers from the domestic market.