Prinsiri Plc was incorporated on Feb 23, 2000, with initial registered capital of 5 million baht to operate real estate development business in the categories of housing estates and condominiums. In 2001 and 2004, the Company won Awards of Merit from the Pacific Coast Builders Conference (PCBC) held in the US. The company also received an honourable mention and a “Good” class award for the Best Energy-Saving Home Awards in 2007 and 2008, respectively from the Energy Ministry’s Department of Alternative Energy Development and Efficiency. As of Dec 31, 2009, it had registered capital of 1.005 billion baht, all of which was paid-up. Chairat Kovitchindachai, senior vice-president for the MD office, discusses the company’s strategy and outlook.

What is Prinsiri’s business model?

As a property development company, Prinsiri (Prin) focus mainly on building housing projects, as well as townhouses and condominiums in Bangkok. We began 11 years ago and we aim to be among the top 10 developers in Thailand by next year.

What type of products does Prin offer?

We develop single detached house, townhouse and condominium projects. But our focus is mainly on single houses and townhouses, our strengths. For condominiums, we consider projects on a case-by-case basis depending upon market demand and land suitability.

Who are Prin’s target customers?

Our target customers are middle-income families as the cost of our products range from 900,000 to 10 million baht. We have been enhancing our Prinsiri brand recognition over the past few years so that it will be more recognised by customers in the market. You can see that our logo was redesigned to look feminine. In fact, it resembles a mother and a child, reflecting our philosophy that the woman of the household is the key decision-maker when it comes to buying a home for the family.

Does Prin have a land bank?

We do not keep a land bank; our business model is to find locations that would suit our customer type. Within three years after purchasing the land, we would launch a project.

What is Prin’s view on the real estate industry in Bangkok?

The real estate industry in Bangkok is essentially dictated by customers, property developers and commercial banks. Commercial banks today are far stricter with their lending to property developers. They need to see a track record, financial strength and good financial management before approving a loan to a property developer. Property developers also help to ensure that the market isn’t oversupplied. Within the industry, we know who has bought land and where. We can then guess what type of project they will develop on that plot. From there, we look at the timing _ whether or not to launch a project within the vicinity or to delay a project because there are several others being launched in the same area. Finally, the customers tell a story. If there aren’t liquid secondary markets for single houses and townhouses like that for condominiums, it means the buyers have bought single houses and townhouses for themselves and their families and there is real demand.

How has the implementation of the 90% loan-to-value ratio (LTV) affected the property industry?

There were fears a few years ago that there may be a property bubble in Thailand. All major property developers, commercial banks and the Bank of Thailand, after conducting research on this, believed there was one forming in the condominium segment, but not in the housing or townhouse segments. This was why the 90% LTV applies only to the condominium segment. The LTV has reduced the number of condominium launches and ensured that the property market here remains healthy. Bangkok hasn’t experienced high growth in the property sector for several years because of a series of local and global issues. But there is now a trend to expand upcountry and the industry has conducted research on these new markets over the past 2-3 years.

What differentiates Prin from its competitors?

Every property developer will say that their locations, functions and design are good and we also make the same claims. But the key difference is that we understand that when a customer purchases a property, it is an emotional decision, something very personal to them and therefore we have to understand the customer very well. Properties are a consumer product, so when we look at the location and design of the house, our decisions are based on what the woman of the house would want _ a good, sizeable kitchen, a walk-in closet _ these minor details are what we focus on when designing our products and this helps to differentiate us. Also when we seek locations to develop projects, we look for land that is near main roads, despite land being cheaper if it is a kilometre off the main roads. We prefer land on the main roads because if members of the households were to return late at night, safety is a concern. As a parent, you wouldn’t want your partner or child to be driving through a dark soi at night if you can help it. So these small but important details are what set us apart from our competitors. We want to ensure that our customers feel comfortable, happy and secure in the properties that they purchase from us.

How many projects does Prin plan for this year?

We have completed 16 projects to date and this year we have confirmed plans for six launches. We may launch more projects later this year depending on market demand.

Prin’s margins have improved over the past few years. How was this achieved?

The reason for the improvement is because in 2007 and 2008 we had a very large condominium project with sales of 8 billion baht. But due to the global financial crisis and regulatory changes for condominiums, our gross margin decreased for units sold. But we have since been able to sell 90% of the project value and improved our gross margin for that specific project to 30%, which is why our margins have improved.

What are the biggest risks facing your business today?

Our main issue used to be the large condominium development but since we cleared it, we have not seen any major risks facing our business today. Perhaps if the euro-zone crisis gets worse or other issues arise locally that may affect market demand, we will adjust ourselves to them.

Did the floods affect your business and if so, what steps will Prin take to recover?

Only one of our developments in Rangsit was affected. The houses were fine as the land was higher than the main road, but it was like an island and we went to assist our customers in evacuating from their properties. Like all major property developers, we wanted to ensure that our customers were safe during the flood crisis.

Where do you see Prin five years from now?

Within the next five years, we aim to consolidate our position and be among the top 10 developers in Thailand which develop single detached housing and townhouse projects with a few condominium projects. Internally, we are improving the management structure of the company to ensure that we have a strong platform to continue growing from.

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The Executive Q&A Series is presented by ShareInvestor, Asia’s leading financial internet media and technology company and the largest investor relations network in the region, with more than 400 listed clients. This interview was conducted by Pon Van Compernolle, editor of www.thaicapitalist.com.

Originally published in the Bangkok Post 17.02.12