Pruksa Real Estate, noting changing demographics in Thailand, is looking to diversify its business strategy and develop hospitality projects, serviced apartments and even hospitals in order to supplement its property revenue, local media noted. The developer believes this will help it generate additional recurring income over the long term.
While the company is expecting residential sales to be strong in 2016 and for the rest of the decade, Pruksa chief executive officer Thongma Vijitpongpun explained to The Nation that these trends could reverse course in the long term as Thailand’s population ages.
Research from the developer showed that an average of 100,000 units per year are purchased in Bangkok and its suburbs. This demand comes from the influx of people moving to the city for work. An average of 450,000 to 500,000 people come to Bangkok each year.
However, the research revealed that the country will have an aging population during the next 10 years and this could significantly impact Bangkok’s property market. Demand could shrink from its current 20 percent mark to single digits between now and 2036.
This has caused Pruska to develop a new business strategy and set aside THB1 billion to create and develop projects that will generate recurring income for the company. Thongma told the newspaper that the developer is considering entering the hospital business in the next two years.
“Hospital is potential business for the next decade to serve the ageing population of the country,” he noted. “The demand for healthcare will be rising and there will be a shortage of hospitals.”
Apart from developing the hospital company, Pruksa also is investigating possibilities in the serviced apartments and hospitality industries. However, if the developer does decide to enter these segments, it will be done on its own terms.
“We will invest on our own instead of taking over an existing company. This is our strategy to diversify,” Thongma pointed out. “We are studying the hospitality business that offer potential for business expansion but we will proceed step-by-step.”
