Pruksa Real Estate is different from other developers in Thailand. Our business model is fully integrated, combining three business together: developer, contractor, and manufacturer of precast steel-reinforced concrete panels. We outsource only labour through subcontractors.

Precast concrete is used in a prefabrication technique to build walls for both low-rise housing and condominiums. This fully integrated model allows us to lower construction costs and shorten construction periods, which provides us a great competitive advantage.

What customers does PS target and what products do you offer?

Initially we targeted the low- to middle-income segment but we have been able to expand the product mix to include both low-rise housing and high-rise condominiums, and also products for wealthier homebuyers. Low-rise housing comprises 75% and high-rise condominiums 25% of total revenue. In the near future, condominiums will account for 30-35% of revenue.

How long does it normally take PS to develop a project?

Originally it took 75-90 days. Now we can improve the process to 60 days, and we aim to reduce it to 45. The improvement is not easy because other parties in our supply chain have to shorten all their processes as well. For us, each part of a house should be like a finished product to be assembled at the site. This employs less time, involves less waste and saves on overhead expenses.

How did you successfully move to the condominium segment, which is totally different from your low-rise housing segment?

We spent about two years conducting in-depth research and developing a strong business plan. We also expanded our executive management team, hiring professionals from the condominium sector and external consultants to assist us.

How is your international project going forward?

Three years ago, we set up an international business unit, and we will start full operations in Bangalore, India, and in Haiphong, Vietnam, this year. We acquired land in Bangalore last year, and construction will begin in the second quarter of 2010. For Vietnam, we have a joint-venture agreement with a Vietnamese manufacturer, and we plan to begin construction in the second quarter of 2010. We also have another plan to develop residential units in the Maldives.

Do you have enough capacity to support your aggressive expansion in both domestic and international markets?

At present, we are utilising our first precast-concrete factory at full capacity and have to outsource some parts of production to other factories. A second precast-concrete factory will be completed at the end of this year. By 2011, our capacity will be 2.5 times the present figure in order to accommodate future growth.

How many more projects do you have in a pipeline?

As of Dec 31, 2009, we had 95 active projects, and in 2010 we plan to launch 48 to 50 projects. The figure seems to be aggressive yet achievable because PS has 10 business units. This means one unit has to develop only four or five projects a year. Our product portfolio will be more diversified.

INDUSTRY:
What are PS's views on the property industry in Thailand?

Normally, the market supply in Thailand is 70,000 units per year, and PS represents 15-20% of new supply. Some people say the sector has excess supply but this may pertain only to certain sectors. Because banks and the major developers work very closely with one another, there is less likelihood for potential property bubbles. Both sides have developed a better business sense since the 1997 crisis, and furthermore, with low borrowing rates and low deposit rates, property is a natural investment for people.

What is PS's competitive advantage?

Our fully integrated business model allows us to be the low-cost leader in Thailand. With the same specifications, we can offer selling prices that are 10-15% lower than other developers with the same quality and service. Our products cover all housing types with various location and prices.

Can your competitive advantage and technology successfully be transferred to overseas markets?

With our strength in low-cost housing, we choose to expand to countries with large populations of low- and middle-income earners. There is high demand for low-priced housing but none of the major developers have satisfied them yet. Major developers always pick luxury segment first as the margin is more appealing.

MISCELLANEOUS:
What do you feel are the biggest risks facing your business today?

We view the domestic political situation as the biggest risk because it is highly unpredictable. For the international market, changes in local regulations as well potential terrorism, such as what had happened in India in the past, could affect our future operations.

Where do you see PS five years from now?

Apart from international business, PS will offer more variety in Bangkok and expand to other provinces such as Chon Buri, Ayutthaya or Nakhon Pathom as their local economies is growing due to the expansion of industrial estates. Moreover, revenue from the international market would comprise 20-25% of our total.