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Ananda Development and Mitsui Fudosan Group Aims to Developing Mass Transit Condominium Market

Posted by admin on September 23, 2013


Ananda Development and Mitsui Fudosan Group Aims to Developing Mass Transit Condominium MarketAnanda Development having set up a joint-venture firm with Mitsui Fudosan Residential, plans to transfer know-how from the Japanese partner in order to develop its construction process and reduce costs by at least 20% in the next three years.

The listed company is also studying the development of a rental-income business, including the office and retail segments, and may launch a real-estate investment trust (REIT) within the 2014.

Such a move would help maintain its business growth in the long term, said president and CEO Chanond Ruangkritya.

The establishment of the joint venture, Ananda MF Asia, marks the first step in transferring construction know-how – under a system called Total Quality Project Management (TQPM) – from Mitsui Group to Ananda Development’s business in Thailand.

“We are launching more than 10 condominium projects a year that require a system that will support our construction process, speeding up the construction to delivery time and still producing quality homes. TQPM will be the system that enables us to develop both a speedier construction process and have quality control,” he said.

Meanwhile, the company now uses a sequencing system that focuses on the completion of construction from floor to floor, from the bottom to the top. The system reduces the period for building condominium projects by up to 30%.

“We now take up to 24 months to build a 30-storey condominium using the sequencing system, whereas before it took between 30 and 36 months,” he said.

When the company learns from its Japanese partner about the TQPM construction system, the time taken to build a project should be reduced even further, he added.

This would in turn reduce the company’s construction costs and generate more revenue and net profit, as it would not have to increase residential prices as much as other developers. This is better for both its business and customers, Chanond said.

Sustainable business

Meanwhile, Ananda Development has restructured the management team to facilitate its long-term business expansion.

“Previously, I did business [very much] by myself, which was very hard because there was so much to do. But now I have a new management team who cover marketing, the investment portfolio and the construction system. That helps me to focus on business growth to achieve targeted growth in the long term,” he said.

The overriding business goal now is to generate sustainable income for the long term, he said, adding that the company is studying the development of recurring-income projects such as offices, retail and serviced apartments.

The aim is that such recurring income accounts for at least 20% of the developer’s total income within the next three to five years.

The company also is studying the launch of a REIT in the next year, for which it will put to one side some of its condominium units.

“Our strength is that by using financial tools to manage our costs, we can support our business growth in the long term,” he said.

Chanond believes Ananda Development will be one of the market leaders in the development of condominiums located close to the mass-transit system in Bangkok and its suburbs.

The company is currently developing 19 condominium projects worth more than Bt20 billion in total, with 16 of them under the Ideo brand. The others comprise two Elio projects, plus the Morth 38.

“We target having 23 projects under development by the end of 2013, and also plan to launch six to 10 projects a year by focusing on sites close to the mass-transit system, that is, near to the MRT underground, BTS Skytrain and new mass-transit routes,” he said.

During the second half of the year, the developer plans nine condo launches worth a combined Bt10 billion, with two of them – together worth Bt3.2 billion – having opened last week.

The company will deliver Bt10.2 billion-worth of homes to customers during this half, including Bt1.02 billion in the current quarter. This will result in a net profit for the full year, said the company chief.

Ananda Development posted revenue of Bt1.9 billion and a net loss of Bt91.3 million for the first half.

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