CPN eyes 20 residential projects over next 5 years

  • Published: 15 Dec 2017 at 04:00 0 comments
  • NEWSPAPER SECTION: Business | WRITER: Pitsinee Jitpleecheep & Nuntawan Pholkwamdee

An illuminated tunnel at CentralWorld, Central Pattana's flagship shopping mall. WICHAN CHAROENKIATPAKUL

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Central Pattana Plc (CPN), the retail property development arm of Central Group, has set its sights on developing a combined 20 residential projects by 2022 as part of a strategy to branch out from shopping malls and sustain revenue in the long run.

According to a CPN executive who asked not to be named, the new residential projects to be developed during 2018-22 will come under various formats, including condominiums and townhomes.

Investment figures were not disclosed.

"Although CPN is a new player in the residential development business, we have seen a successful performance in each project we have launched because they are all located in prime locations," the executive said.

CPN started developing residential projects last year in a bid to diversify away from shopping complexes.

The company has launched three residential projects this year in Chiang Mai, Chiang Rai and Nakhon Ratchasima worth a combined 2 billion baht.

CPN is scheduled to transfer units from its first three condo developments in Chiang Mai, Khon Kaen and Rayong to buyers next year.

Property development is expected to contribute 7% of CPN's overall revenue next year. Revenue contribution from the segment is expected to rise to 10% if the company develops the 20 projects as planned by 2022.

In May this year, vice-president for investor relations Pattamika Pongsurayamas said CPN would set aside 11 billion baht to develop additional residential projects during 2017-20 despite fierce competition in Bangkok and sluggish housing demand upcountry.

Of the total budget, the company planned to spend 1.7 billion baht to develop additional residential projects next year and 2.6 billion, 3.2 billion and 3.5 billion in 2018, 2019 and 2020, respectively.

For 2018, CPN is forecast to generate 2.35 billion baht in sales revenue from the first three residential projects in Chiang Mai, Khon Kaen and Rayong.

CPN also operates 12 condominium units for rent with a total area of 1,568 square metres near CentralPlaza Bangna.

In addition, CPN will budget 55.9 billion baht to develop new retail projects and renovate existing projects from now until 2020.

Of the total, 15.6 billion baht will be spent in 2017 and 12.8 billion, 13.1 billion and 14.4 billion in 2018, 2019 and 2020, respectively.

This year, CPN anticipates revenue growth of 6-8% from 52 billion baht last year, with a far more robust 20-25% rise forecast for 2018.

Chief executive Preecha Ekkunagul said CPN will continue developing shopping centres regardless of whether the economy is in good or bad shape.

The company intends to set aside 10-15 billion baht a year to develop and renovate existing projects, he said.

CPN plans to open two shopping complexes next year, including Central Phuket. Mr Preecha did not disclose the location of the other retail project.

In related news, CPN Retail Growth Leasehold Property Fund (CPNRF) yesterday announced a transfer of its main assets and additional investments in two CPN projects worth more than 11.9 billion baht to CPN Retail Growth Leasehold REIT (CPNREIT).

CPNRF has invested in leasehold rights of properties and equipment in four projects: CentralPlaza Rama II, CentralPlaza Rama III, CentralPlaza Pinklao and CentralPlaza Chiangmai Airport. After transferring its assets to CPNREIT, total asset holding increased to roughly 46 billion baht.

CPNREIT, which mainly invests in department stores, has become the largest investment asset in Thailand after the conversion and transfer of CPNRF assets, together with existing investment assets such as the Central Festival Pattaya Beach project and the Hilton Pattaya.

CPN shares closed yesterday on the Stock Exchange of Thailand at 81 baht, unchanged, in trade worth 533.9 million baht.

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