Contractor Pre-Built Plc plans to expand its residential development business to reduce risks from volatile high-rise building construction, with an aim to gain an equal profit split with its construction business in a few years.
Chief executive Wirot Charoentra said the construction of high-rise buildings, including hotels, offices and condos, slowed during the past three years as these sectors were affected by the pandemic.
"Our key customers for construction are condos, which froze new developments for three years," he said. "Fortunately we diversified into the low-rise residential development business four years ago, so we will launch more of these projects this year."
The company plans to launch two new single detached house projects this year worth a combined 1.5 billion baht, comprising 77 units priced between 5.5-7 million baht in Sala Ya district, Nakhon Pathom, as well as 51 units priced between 15-19 million baht in Bangkok's Thawi Watthana district.
Pre-Built has two plots of land, including a 1.5-rai site on Sukhumvit Soi 24 and a 300-square-wah plot on Sukhumvit Soi 26, where it previously planned to launch low-rise and high-rise condo projects, later shelving them because of the pandemic.
Since 2020 Pre-Built Development, the company's subsidiary for residential development, has launched a total of four low-rise housing projects worth a combined 3.4 billion baht.
The subsidiary recorded 128 million baht in revenue in 2020, 495 million in 2021 and 900 million in 2022. Its revenue is expected to increase this year, reaching 1.15 billion baht.
A key growth driver is using a construction team from its parent firm Pre-Built, which helped reduce costs by 10%, making unit prices more competitive in the market.
Using an internal team for construction also helped to ensure on-time completion and delivery of residential units to customers, as other developers struggled with a shortage of contractors during the pandemic.
"Net profit from residential development is 13-15%, while for construction it is around 5%," said Mr Wirot.
"We expect profit from residential development to match the contribution from the construction business by 2026, with 2 billion baht in residential revenue that year."
During the first nine months of 2022, Pre-Built recorded 4.4 billion baht in consolidated revenue.
This total comprised 3.3 billion baht from its construction business, 747 million from property development and 390 million from precast floor manufacturing.
The firm's gross profit-to-consolidated revenue stood at 14%. The biggest chunk was from residential development (30%), followed by precast (24%) and construction (9%).
