Sansiri raises land budget, capacity plans

Full-year allocation depleted in first half

SET-listed developer Sansiri Plc (SIRI) has raised its land investment budget and will spend 200 million baht to expand precast production capacity in the fourth quarter after low-priced townhouse presales in the first half tripled.

Varangkana Artkarasatapon, assistant executive vice-president for finance and new business development, said the company will spend an additional 4 billion baht in the second half to buy new plots, mainly for townhouse development.

“In the first half, we used up our fullyear land investment budget of 14 billion baht,” she said.

“We didn’t think the low-priced townhouse projects we launched in the first half would get such good feedback.”

Sansiri reported yesterday 24 billion baht in presales in the first half, up by 62% from the same period last year. Of this amount, 2.3 billion baht was from townhouses priced below 3 million baht a unit, up by 175% from 833 million baht in the same period last year.

The company plans to launch three new projects in this segment in Bangkok and Phuket in the second half and will seek more plots for new development in the future.

However, a shift to develop more lowpriced townhouses with units priced from 1.69 million baht increased the company’s average bank mortgage rejection rate from 5.6% last year to 8%.

To reduce it, the company uses preapproval screening before allowing customers to book units. In some cases, it extends the instalment period to six months to help customers build their financial statement.

Booming presales for low-priced townhouses and a shift to develop single houses and townhouses in all pricing segments this year led Sansiri to expand precast production capacity by 60%.

With an investment of 200 million baht, an additional production capacity of 300,000 square metres be in place by the fourth quarter. The seven-year-old precast factory on a 100-rai site in Pathum Thani has a full production capacity of 500,000 sq m, which is fully used.

“We need to outsource facade precast production to other producers,” she said. “If the additional 300,000 sq m we expand to is used, we will spend 500 million baht to increase it next year.”

Ms Varangkana said the company will raise the annual presales target from 45 billion baht it set early the year if presales in the third quarter are higher than expected. Of the target, 60% will be from condos and 40% from single houses and townhouses.

“Presales this year will likely be higher than the target as the high season for residential sales is in the fourth quarter,” she said. Of the first-half presales, 6 billion baht was from overseas buyers, mainly from China and Hong Kong.

In the second half, the company will launch 15 new projects worth a combined 36.9 billion baht, which will comprise six condo projects, four single detached house sites and six townhouse projects.

Of the new condo projects, two in the Ekamai area and Sukhumvit Soi 50 will be joint ventures with Japanese partner Tokyu Corporation worth a combined 5.5 billion baht. One will be a joint venture with BTS Group Holdings in Saphan Mai area worth 2 billion baht.

Revenue in 2018 is expected to total 30 billion baht, which will comprise 23 billion baht from residential developments and 7 billion baht from others.

SIRI shares closed yesterday on the SET at 1.57 baht, up one satang, in trade worth 92.8 million baht.