PACE 2013 Year in Review
The year 2013 saw PACE listing on The Stock Exchange of Thailand (SET), and welcoming a new group of investors who now own
shares in PACE. We sat down with PACE CEO Sorapoj Techakraisri and PACE CFO Natha Kittiaksorn to understand more about the
results achieved over the last financial year.
Q - In short, what has been the focus for the last 12 months?
CEO – At a strategic level, we have been focused on building the
organization needed to maintain our position as Thailand’s leading
luxury developer, and to achieve our longterm goals in terms of
being able to launch, market and construct up to 3-4 developments
at the same time. This requires expanding the core team who
created our MahaNakhon and Saladaeng Residences, so the total
company size has expanded considerably.
CFO – From a financial perspective, SET regulations are very strict
for property developers in terms of revenue recognition, and our
annual results for 2013 were in line with our expectations.
Q – Budgeting and controlling costs are major components of
business management – how has PACE fared over the last 12
months?
CFO – With the expansion of the company’s size, and commencement
of construction of MahaSamutr in 2013, our costs have increased,
as planned in our budget. Our line managers have been focusing
on cost control, and with our increased size, we have also been
able to achieve cost savings in various aspects of marketing, public
relations and sales as a result of increased negotiation power with
our suppliers.
CEO – We stay focused on understanding our markets, which leads us
to make the right longterm decisions, rather than just cost control
alone. For instance, when we saw the opportunity to sell abroad,
we went to Dubai and Singapore with roadshows in 2013. Maintaining
sales momentum now, during the construction process, is vital.
Q – Did the political issues of late 2013 affect your annual
results?
CEO – The luxury sector of Thai real estate tends to appeal to both
affluent Thai buyers as well as international investors who are
familiar with the Thai market. The longterm fundamentals for the
Bangkok real estate market remain highly positive, and our buyers see
the substantial upside for MahaNakhon. While it has perhaps pushed
back a few isolated purchase decisions slightly, we did not see
any real impact on sales. Our sales process relies on generating
a substantial number of high potential leads through marketing,
then converting those leads into sales. Perhaps the one group that
might arguably have been affected are the international investors
who are solely purchasing to invest for rental, and are less aware of
Thailand’s hurdles in our developing democracy – this group size
is different to quantify, and might have reduced slightly. However,
given that our total number of leads has continued to grow each
year as MahaNakhon construction progresses, 2013 was still a very
strong year for us.
Q – When can we expect to see MahaSamutr and Langsuan
coming to market?
CEO – MahaSamutr’s main selling point is the safe, 800m
man-made lagoon which all the villas and Country Club enjoy
direct access to. As this is the first time for Asia to have such a
centerpiece for a development, we want to complete the lagoon
and the first 2 homes within the third quarter of 2014, and then we
start sales, although we have started building the awareness and
profile of the development already. Because it is a villa development,
we can sell the actual villas rather than investing in a temporary sales
gallery onsite. Langsuan will be sold in a more traditional manner,
we anticipate it will be right at the top end of the Bangkok luxury
market both in terms of quality as well as the price point, and we
aim to start selling around quarter 3 of 2014.
Q – How does the decision to make MahaNakhon freehold
affect finances of PACE?
CFO – For all sales of residences from now, a price increase of
approximately 15% covers the cost of the freehold conversion. In
addition we have been able to convert almost all existing buyers
to freehold at a fixed fee. The main benefit is not only for the
purchasers, but also in successfully marketing the remaining
larger 3+ bedroom residences which should see a faster sell
through rate.
Q – Looking forward, when will we see revenue recognition from
the various PACE developments?
CEO – We start to see revenues from MahaNakhon CUBE retail
space leased this year 2014, which is now ongoing. Our club
membership revenue for MahaSamutr will also start to be recognized
within this year. The big revenues from residential sales for MahaNakhon,
MahaSamutr and Langsuan start from 2015 onwards.
Q – Finally, for shareholders wishing to hear more, when is the
Annual General Meeting?
CEO – We welcome all shareholders to join us at Pullman Bangkok Hotel
G on April 29, 2014 starting at 2 p.m., to learn more about PACE at
our AGM.