PACE PLANS
Following the success of 2012, with Saladaeng Residences sold
out, and ongoing success in sales of MahaNakhon’s Ritz-Carlton
Residences, 2013 marks the first time when members of the public
can not only enjoy owning property from Thailand’s leader in high-end
real estate, but also to actually own a piece of PACE itself.
This issue, we sit down with PACE CEO, Sorapoj Techakraisri,
to understand more about PACE from an investment perspective,
and also to learn what 2013 and 2014 will bring for the company.
First of all, congratulations on the listing. Tell us about how the
process went?
It’s been a long road, we began planning for the listing in 2012,
and our trading commenced on 7 August, 2013, and while it is
early days, we think this marks a significant step forward for us
as a company.
Why do you say that?
At PACE we specialize in the high-end of the property sector. We
believe that with the growth and development of Thailand, the
luxury sector of the market is under-served, making it the most
recession proof within the overall market. We have always been
looking for a way to ride out the times when the market turns
bearish, a way to ensure longterm, sustainable growth through
focusing on a niche of the market at the high end which is less
prone to a boom-bust cycle.
Entering the stock market for us is a way to sustainably increase
our growth rate. It opens up the opportunity to raise funds for
our new developments such as MahaSamutr Hua Hin and our
upcoming development in Langsuan, as well as being able to
consider and acquire new plots of land more readily.
Additionally, the profile and visibility of a publicly listed company
also helps us in marketing, a larger company inherently has an
advantage when marketing new developments through having
a larger network of clients, investors and people who know us.
It also means that for some of our buyers, who for instance love
our developments but want to see us doing something in a new
area, or a new type, that we are more active and thus more able
to respond to the changing market.
How do you handle the increased issues of disclosure?
A publicly listed property company must be more open in terms of
sales rates, progress and cost control, but we have always prided
ourselves on speaking openly regarding each of our developments.
We take the long term view, to make sure that our customers
have trust in our brand, that everything we do is of the highest
standard.
For investors in PACE, this requires the same mindset and openness
in keeping our shareholders updated, so we welcome this.
Thailand’s regulations for property companies mean you cannot
recognize revenues of ongoing sales until each property is complete.
What impact does that have on your financial statements?
Whereas abroad, ongoing revenues can be recognized and feed
into the P&L as each development is being constructed, Thailand’s
laws mean that property companies incur the expenses of construction,
with a single time windfall gain at the end, even for a development
which has sold well during the construction period. We cannot
recognize that revenue as profit until the building is complete. All
property companies are the same, but perhaps this has a more
substantial effect for companies like PACE which have a few large
developments, compared to a developer with more small projects
which are being completed every year. While it is a hurdle which
the market somewhat understands, this is perhaps the biggest
point for us to explain, as some investors ask why MahaNakhon
is selling so well, and yet that revenue cannot be recognized as
profit until 2015. In future, we will be spending time on investor
relations, ensuring that our shareholders understand the constraints.
Getting back to the future. So the first development you are using
public funds for will be MahaSamutr. How is progress for this
new development?
We unveiled MahaSamutr in late July, and MahaSamutr’s main
contractor is the highly regarding Thai Obayashi Group. Construction
work for infrastructure has already begun onsite, and will be preparing
for sales to commence in 2014.
With PACE, we pride ourselves on innovation. The Hua Hin Country
Club will be the city’s first country club concept. With the new
rail link proposed for the area, airport improvements and ongoing
development of Hua Hin, we think the timing is right for a prime
luxury villa development for Bangkokians too, alongside the club.
So where will PACE choose for the next developments?
We are always open and considering new development possibilities.
We’ve been looking at new land plots and each one is considered
using the same criteria of choosing the best locations, unique
features which enable us to innovate in terms of design and
livability and of course bottom line for PACE which means there
must be true longterm underlying demand.
For this reason, we will focus on locations which have longterm,
sustained demand.
Such as?
PACE specializes in the high-end segment of the market. We
understand our luxury clients’ discerning demands and put highest
priority in choosing long-term strategic locations. We look at two
essential factors. First we look at locations close to infrastructure
e.g. easy access to BTS, MRT, expressway and main roads. Second
the locations must have great environments, e.g. they must be
clean, green and safe. We want to ensure that our clients get the
best experience in living in our developments and their assets will
have a longterm sustainable value over time.