L.P.N. planning eight developments

Most to appeal to low-end buyers

The condominium developer L.P.N. Development Plc plans eight projects worth 12 billion baht with an expectation of 11 billion baht in sales by the end of the year, according to managing director Opas Sripayak.

Among the new projects, four will be low-priced developments under the Condo Town brand, with two condo projects each marketed under the company's midmarket brands, Lumpini Ville and Lumpini Place.

''We will use Condo Town as a flagship this year to tap demand from the lower-income segment at a time of

[economic] uncertainty and the anticipation of more negative factors that will affect consumers' purchasing power,'' Mr Opas said yesterday.

Condo Town features unit prices lower than one million baht. The brand is expected to help the company maintain market share, along with revenue growth of at least 20% and a gross profit margin of 30% this year.

Of the 55,000 newly launched condominium units last year, with 39% growth from 2006, 46% were from SET-listed developers, 36% by non-listed developers and 18% by L.P.N., according to Real Estate Information Centre and the company's research.

The number of newly registered units last year was estimated at 16,000, lower than an earlier expectation of 20,000, due to delays in construction last year.

Mr Opas said the number of newly registered condominium units would double to about 30,000 this year, and as a result the competition in the post-finance market would be tougher. However, the number of mortgage loan rejections is likely to increase due to the sub-prime problem in the United States and higher demand for post-finance.

Apart from stricter loan approval procedures, the condominium market would face other negative factors including higher oil prices and new two laws related to condominiums.

The long-delayed Escrow Account Law, likely to take effect this year, will affect small developers and projects that require high downpayment percentages, as the amounts must be deposited with escrow agents instead of going directly to developers.

Also of concern to developers are amendments to the Condominium Act, which will impose new building management requirements.

However, Mr Opas believes there will be some positive factors including the resumption of overseas investment once the new government is formed, and progress on state megaprojects.

As well, he said, the gradual reduction in bank deposit guarantees would encourage people to think about shifting some money to property.

L.P.N. next month will launch its 1.25-billion-baht Lumpini Ville Ramkhamhaeng 26, situated on a 10-rai site near Hua Mark stadium. The condominium will have 998 units sized between 28 and 62 square metres with prices starting from 37,000 baht per sq m. Construction will start in April and is scheduled to be completed in June next year.

Mr Opas said the company's subsidiary, Pornsanti Co, would soon launch a 350-million-baht townhouse development in Lat Phrao 21, with units priced from 6-8 million baht. It also has four small plots of land at L.P.N. sites to develop shophouses and townhouses worth a combined 100 million baht.

Last year the subsidiary generated 40 million baht from sales of five shophouses located in Lumpini Ville Cultural Center. Pornsanti expects to generate 450 million baht by the end of the year.

L.P.N. last year posted sales of about nine billion baht and realised 6.5 billion baht in revenue from transferring 3,000 units. It aims to maintain revenue and sales growth of at least 20% per year. The company has a sales backlog of 6.2 billion baht to be realised by the end of this year and 3.3 billion baht in 2009.

LPN shares closed yesterday at 5.70 baht, down 20 satang, in trade worth 78.7 million baht.

Source: Bangkok Post by Kanana Katharangsiporn
Saturday January 19, 2008