Vilailux plans big foray into realty market

Vilailux Development's executive vice president.

Property company Vilailux Development has set aside an investment budget of Bt2.8 billion to develop three property projects in Bangkok, Rayong and Khao Yai, starting this year to 2010, executive vice president Oraphan Laoprapassorn said.

Part of its investment budget will come from the company's cash flow while the rest will be borrowed from banks. The company currently has a debt-to-equity ratio of 2:1 for its three projects.

Vilailux Development is the property arm of telecom-holding company Samart Corporation which was established in 2006 with its registered capital of Bt300 million.

The company has started developing its first residential project, worth Bt2 billion, in Rayong province called Phupatara. It has successfully sold 70 per cent of the project value.

Oraphan said the three new projects will comprise residential untis for sale as well as hotels. The first project will be a luxury hotel in Rayong province located close to the Phupatara project. The company is in the process of closing a deal with a hotel-management chain from the United States. It will sign the contract by the third quarter of the year. After that, the company will start construction of the 205-room hotel, worth Bt1.5 billion, in the fourth quarter. It expects to complete construction by the third quarter of 2010.

The company will also develop a condominium project worth Bt1 billion on a 10-rai plot on Chaeng Wattana Road. The project will target the middle market and will be timed with the opening of the Government Centre on Chaeng Wattana Road this year.

"Our research shows demand for residential units, especially condominiums, on Chaeng Wattana Road is set to grow even though purchasing power is still lower than for the customers buying property in the Central Business District. However, the Chaeng Wattana location has attracted fewer property developers which makes us more confident about launching our condominium project in this location," she said.

The company will start pre-sale and construction next year.

The third project will be a boutique hotel, worth about Bt300 million, at Khao Yai. Construction will start next year, Oraphan said.

She said that although the company has entered the property market later than other property developers, the company is confident about developing quality residential units in line with customer demand.

The company is also developing hotels and resorts as part of the business strategy to list on the Stock Exchange of Thailand soon.

"Although customers don't know us, we are proud for the fact that customers do  remember our first residential project, Phupatara on Rayong. Our next step is to build our corporate brand from one that is known only for the telecom business to become one that has a good name in the property business as well by developing quality residential projects and hotels," she said, adding that the parent company, Vilailux International Holding, has a land bank of more than 1,000 rai of undeveloped land across the Kingdom, which will help support the company's future expansion in the property business.

The company will also buy more land for development after these projects start construction next year. Selling residential projects and rental income from the hospitality business is expected to drive the company's cash flow.

Oraphan said the company expects about 40 per cent of its revenue to come from the rental business while the rest is expected to come from the sale of residential projects over the next three years.

At present, all of its revenue comes from selling residential projects and the company has recorded revenues of Bt100 million last year.

The company expects revenues of Bt1 billion this year from the Phupatara residential project. The company expects sales of Bt1 billion next year after the Phupatara residential project is completed and delivered to customers.

At a glance:

- Vilailux Development will invest Bt2.8 billion to develop three property projects in Bangkok, Rayong and Khao Yai.

- The company expects about 40 per cent of its revenue to come from the rental business, the rest from sale of residential properties.

- It expects revenues of Bt1 billion next year after the Phupatara project is completed and delivered to customers.