Bangkok Post

As the coronaviru­s crushes global and national GDP growth, property-related firms are rolling out emergency measures.

Pandemic strategies include cost cuts, down payment delays and rental fee waivers, writes Kanana Katharangs­iporn


As the coronaviru­s crisis crushes global and national GDP growth, propertyre­lated firms are rolling out expense controls and business continuity plans while seeking new revenue sources and ways to minimise the impact on their customers. With the prospect of a market slowdown as presales and revenue at many developers continue to drop, 2020 is likely to be worse than last year.


Chaiyuth Chunnahach­a, chief finance officer of SETlisted Ananda Developmen­t Plc, said the company is using three key strategies to cope with the Covid19 consequenc­es.

“Our worst-case scenario is 18 months [for the virus to last],” he said. “We need to control expenses and will reduce cost by 40%, double the earlier target of 20%, as the situation is getting worse,” he said.

If this strategy is successful, Ananda expects to save 400-800 million baht by the end of the year, Mr Chaiyuth said.

Despite an expected economic recession, the company is maintainin­g its 2020 revenue, transfer and presales targets.

It will continue using last year’s campaigns to boost sales of unsold, completed condo units this year.

Online will be another key channel after recording more than 4 billion baht in presales in the first quarter, higher than the target of 3.9 billion baht, driven by online sales.

Vittakarn Chandavimo­l, chief of corporate strategy and creation for SET-listed developer AP Thailand Plc, said the company is optimising expense control and trying to cap the debt-to-equity ratio at no more than 1.

“Our cash flow is sufficient for business operation, but we will closely monitor it,” he said. “We also have a reserve to cope with the emergency situation to minimise any impact on financial statements this year.”

Mr Vittakarn said the company doesn’t plan to revise down presales and revenue targets at the moment, as business operations are running as planned.

From Jan 1 to March 15, AP reported 5.69 billion baht in presales and a sales backlog of more than 53.4 billion baht.

“We also set up a Covid-19 crisis management team to cope with abrupt changes,” Mr Vittakarn said. “We will use measures to keep our business continuing.”


Supamas Trivisvave­t, CEO and president of SETlisted contractor Ch. Karnchang Plc, said the company has prepared a business continuity plan to cope with the pandemic.

“The business continuity plan will be used in case we need to temporaril­y close our headquarte­rs or constructi­on sites or we cannot operate during usual hours,” Ms Supamas said.

To minimise risks from the virus spread and cope with its impact, the contractor has set up a temporary office with sufficient staff to continue working operations. Precaution­ary measures to prevent the virus spread are also applied at the temporary office.

Phongthon Tharachai, chief executive of MAIlisted engineerin­g consultant and project management firm Project Planning Service Plc, said there are some constructi­on sites that limit entry.

“This will be a risk for constructi­on firms, as they may be fined for delay,” he said. “If the virus effect is prolonged, it may create an impact on contractor­s.”

Last Wednesday, the Thai Contractor­s Associatio­n submitted a letter to its members and contractor­s about the impact of the spread of Covid-19, asking them to evaluate the fallout.

“The impact on the constructi­on industry includes import of tools, machines and equipment from China and other countries where production lines needed to shut down,” the associatio­n said in the letter.

There have also been closures of constructi­on sites after infections were found in the sites or nearby areas.

In addition, the shortage of staff and labourers who returned to home provinces or countries is leading to constructi­on delays.

The associatio­n suggested contractor­s submit a letter requesting leniency or compensati­on to project owners and send a copy to the associatio­n so that the associatio­n can propose ideas to related agencies to help solve the problem.


Chayaphon Hunrungroj, chief executive of Altitude Developmen­t Co, said the company will take turnkey projects through both joint ventures and project developmen­ts during the economic downturn.

“We will have a joint venture with landlords or owners of non-performing buildings or buildings that gain low income and are not worth the current value,” he said. “Most of these landlords do not want to make an investment or build debt.”

These kinds of investors will also include those seeking a business opportunit­y that generates a higher return than their existing business or a return on equity of more than 15% a year.

Kajonsit Singsanser­n, chief executive of Siamese Asset Co, said the company has shifted to recurring income businesses, including hotels, food and beverage, cloud kitchens, serviced residences and wellness centres.

“The new ventures will boost attractive­ness for our condo projects,” he said. “Revenue from recurring income will account for 5-10% of total revenue in the next few years, up from 0.5% last year.”

Siamese Asset is also interested in developing a rental office tower and a serviced residence.

Satid Sudbuntad, chief executive of SET-listed roof tile maker Diamond Building Products Plc (DRT), said the company will expand to the homebuildi­ng market and government agencies to maintain production capacity of 90-95% this year.

“We will introduce our product mix of roof tiles, wall sidings and ceilings, artificial boards and equipment for installati­on of roofs and house structure to maintain production capacity and lower manufactur­ing cost,” he said.

DRT will also boost export sales to 19-20% from 18% last year after the first two months saw good signs of export to CLMV markets, particular­ly Myanmar.


SET-listed developer Supalai Plc announced this month an assistance measure for any customer in trouble from Covid-19.

“We offer a suspension of down payment for a period of three months, as the virus spread has a strong impact on the country’s economy,” said Supalai managing director Tritecha Tangmatith­am.

He said the measure can lessen the burden of customers affected by the virus or those working for airlines, hospitalit­y businesses or tourism-related firms and others.

Eligible customers must be those who are making a down payment for a unit at Supalai’s residentia­l projects nationwide. This suspended amount will be paid on the transfer date, Mr Tritecha said.

Also this month, SET-listed property firm Singha Estate Plc announced support measures for retail tenants to minimise layoffs due to Covid-19 impact.

Singha Estate chief executive Naris Cheyklin said the company will either waive rental fees for retail tenants that avoid layoffs or reduce rentals by 50% at all of its commercial projects to ease the impact.

At Singha Complex, Metropolis Building and The Lighthouse, rental fees will be waived for retail shops that keep the positions of all employees.

At Sun Plaza, a 50% rental discount or rental waiver will be given to those who maintain their staff.

Meanwhile, SET-listed Asset World Corp Plc has issued temporary measures to offset declining guests at AWC’s commercial properties.

“We are monitoring the size of the impact very closely on a month-by-month basis so tenants at our properties can receive benefits appropriat­ely for each case,” said Wallapa Traisorat, chief executive of AWC.

For Asiatique The Riverfront, AWC has offered a 25% reduction on the March rental fee for all tenants and has maintained the same rental rate for tenants renewing their contracts in April 2020.

AWC is providing support to each retail property, depending on the impact seen for different zones and properties, such as rental discounts from 5% to 20%.

 ??  ?? An artist’s rendition of Rhythm Charoenkru­ng Pavilion, a new joint venture condo project by AP Thailand Plc and Mitsubishi Estate Group worth 4.7 billion baht. Real estate developers have Covid-19 crisis management teams in place to cope with abrupt changes.
An artist’s rendition of Rhythm Charoenkru­ng Pavilion, a new joint venture condo project by AP Thailand Plc and Mitsubishi Estate Group worth 4.7 billion baht. Real estate developers have Covid-19 crisis management teams in place to cope with abrupt changes.
 ?? Source: Compiled by Bangkok Post BKPgraphic­s ??
Source: Compiled by Bangkok Post BKPgraphic­s

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