Pruksa to pounce if prices plummet

SET-listed developer Pruksa Real Estate's chief executive Thongma Vijitpongpun (Bangkok Post file photo)

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SET-listed developer Pruksa Real Estate Plc (PS) is revving up land purchases, vowing to offer as much as 17 billion baht a year as prices for plots cool down.

said with the land and buildings tax set to come into force next year, land prices should drop as some landowners, particularly those in prime areas, sell to avoid paying the tax.

"The market mechanism will make land prices fall. We will slow our land purchases and wait until next year," he said.

Under the new tax, the ceiling tax rate will be 0.2% of the appraisal value for land used for agricultural purposes, 0.5% for residences, 2% for commercial use and 5% for vacant or undeveloped land.

The tax will be levied on first homes and land used for agricultural purposes with appraisal prices starting at 50 million baht, with the rate applied to the amount exceeding 50 million baht.

The tax will also apply to second homes on a progressive basis, with rates of 0.03% to 0.30% for homes appraised from less than 5 million baht to over 100 million. For vacant or undeveloped land, the tax rate will be 1% for land left vacant or unused for 1-3 years, 2% for 4-6 years and 3% for over seven years.

Mr Thongma said Pruksa set an annual budget of 15-17 billion baht for land purchases during 2017-19 and would likely spend up to 20 billion in the future. This year it has spent 7.5 billion.

Last year it spent 16.71 billion baht on land, exceeding its budget of 14 billion because of a change in land appraisal prices that affected transfer fees.

Pruksa is the country's largest land developer, followed by Sansiri Plc spending 9 billion baht and Ananda Development Plc 8.7 billion.

Mr Thongma said it is upbeat on property market growth this year as the bombings in southern provinces had a minimal impact on housing demand in Greater Bangkok. The market should grow by 8% this year, driven by the property tax incentives that ended in April, he said.

"There are several positive factors, including the country's economic recovery and government investment in infrastructure projects, that should boost the property sector," said Mr Thongma.

Despite a year-on-year drop in first half presales to 21.63 billion baht from 23.93 billion, Pruksa maintained presales and revenue targets of 51 and 53 billion, respectively, this year.

The company's second-half launches should exceed the first half, with 38 projects worth a combined 34.4 billion baht in the former compared with 27 worth 19 billion in the latter.

Pruksa reported a first-half net profit yesterday of 3.14 billion baht from revenue of 23.88 billion, up 2.6% and 9.7%, respectively, year-on-year. As of June it had a sales backlog of 23.68 billion baht, of which 11.15 billion would be realised in the second half.

PS shares closed yesterday on the SET at 27.50 baht, down 25 satang, in trade worth 193.3 million.

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