Thai residential property developer Preuksa Real Estate is banking on 10-15 percent growth in 2009, and in addition to 15 new residential projects at home, the company is planning to launch its first overseas project in Bangalore, India.

Despite forecasting a drop in the domestic property market of between five and ten percent this year, Preuksa’s chief executive Thongma Vijitpongpun believes the company’s strategy of focusing on low-rise residential projects, including townhouses and detached houses, will prove successful, allowing the developer to go ahead with its planned overseas expansion.

“City condominiums will be hard to sell, with most buyers believing that residential prices should drop following the fall in the cost of construction raw materials and lower demand,” said Thongma.

“However, there is continued growth in demand for detached houses and townhouses priced between Bt2 million and Bt3 million, mainly because home-buyers have reduced the amount they are prepared to spend and have settled on a lower price.”

The switch to low-rise residential projects will also allow the company to generate faster returns on investment – within four to six months, compared to two to three years for condominiums, says Thongma.

To further shore up cash flow, Preuksa has reduced its inventory stock from enough to last two or three months to just one month’s worth. The company’s land stock is also being reassessed, and in the last quarter of 2008 cancelled the purchase of two new land plots worth nearly Bt1 billion.

Preuksa’s overseas investment, however, is going ahead as planned. “In the first quarter of this year we will launch a first residential project, worth nearly Bt300 million, in Bangalore, India. We will also restart research towards the development of residential projects in Vietnam and China, because this is a good time to buy land overseas, after its price has fallen as a result of the global crisis,” said Thongma.

“As for our present financial health, we have total assets amounting to Bt14.3 billion, total liabilities of only Bt5.1 billion, and last year we recorded revenue of nearly Bt14 billion and made a net profit of nearly Bt2 billion. This is enough to support our business risks when expanding our investments overseas.”

Thongma remains resolutely upbeat therefore about the company’s prospects for what most see as an extremely difficult year ahead.

“When the property market drops, a number of small- and medium-sized property firms will move out. This means we will have fewer competitors than last year, so our business will grow by taking the share of those that drop out of the market, along with a share from those larger property developers that have decided to delay new residential projects in 2009.”

source : www.property-report.com