Chief Executive Officer, Mr. Lee Chy Tek Lionel discusses the company’s strategy and outlook in The Executive Talk (TET) by ShareInvestorThailand.com.
TET: RML’s strategy has undergone some transformation. Could you explain the details of the company’s new strategy?
RML: We found ourselves a good Thai partner with KPN Property to assist in the knowledge of attracting local customers. RML has been consistently been strong with foreign customers, so together with KPN we can bring more value to our shareholders going forward. We have diversified our real estate business to be segregated as luxury, ultra-luxury, and super-luxury because each segment has a different customer target. In addition to this we are diversifying into recurring income projects which we target to represent 30% of our revenue. Our first commercial property, One City Center will be launched in the Third Quarter of 2022 and we want to further build the recurring income model from our F&B, medical suits and this is where we are using our developments as a launchpad to help us with recurring income.
TET: How are existing projects progressing and what is the pipeline in the future?
RML: In 2018 we launched THB 9 billion worth of projects and are launching an additional THB 11billion this year, over the next few years we have a pipeline of THB 30billion projects (around 10 billion each year). We are also investing THB 10 billion into our recurring income which is split into THB 7 billion into our commercial project, THB 3 billion into hospitality and F&B. With the commercial project it will have 61,000sqm of leasable area and we will bring something different that Thailand has not seen before, a 3,000 sqm area of Sky Dining providing customers a great view of all of Bangkok. In addition to this we are targeting to reach 100,000sqm of leasable area by 2021 therefore within the next year we target to launch a second commercial development. With Hospitality we launched a new concept, a food hotel, called KITCH Hotel where we bring in food from all the regions of Thailand for our patrons to enjoy all the different cuisines that Thailand has to offer. The first location will be 72 rooms, 200 meters away from Icon Siam and this will be ready in the first quarter of 2020. We are targeting a total of 5 hotels in Thailand in Bangkok, Pattaya, Phuket, Krabi and Chiang Mai. The hotel is being run by Klapsons Management which itself has performed very well winning serviced residences of the year for 2017 and 2018 consecutively. We are also looking at launching a
second hotel brand as we see a gap between the 4 star hotels and the boutique hotels, a simple luxury segment that has yet to be tapped. The second hotel is launched under “New Age” hotel concept and will be on Sukhumvit Road with 250 rooms. For F&B, because of our existing retail spaces we have been very exposed to Food and its one of the best ways to bring your own brand into your development to entice other F&B outlets to join as well. Personally, it’s a business that my brother and I know very well and we will see the revenues at RML grow from THB 0 to THB 100 million and we hope to expand further in Singapore, Cambodia and two more in Taiwan has a launchpad into the China market.
TET: Who are RML’s target customers for its residential real estate projects?
RML: We are putting our customers at the forefront whenever we are developing a product. And we ensure that each product caters to different markets, its analogous to how automotive firms have multiple vehicle models for their current and future customers. We understand that we have a diverse customer base in terms of needs whether it be a purchase as a home, a second residence, and investments and have listened to their needs and necessities. The industry norm today with a condominium purchase in Thailand one has minimal choice and accepts what the developers provides, however we offer flexibility in terms of bathroom, living room and kitchen design, our first showcase kitchen will be built at the Chao Phyra River project demonstrating the customisation choices available at our projects. By applying such a methodology to the room designs, each customer has different tastes of design whether it be modern, contemporary and so forth and we aim to meet the needs of our customers. Another recent example in our latest projects is that the projects had pet friendly schemes with different lifts as the customers demographics, behaviours and lifestyles have changed.
TET: What may investors misunderstand about RML?
RML: The company has been quiet for a while launching perhaps 1 or 2 projects every year or every 2 years, and only now are investors beginning to recognise what our long-term aims are with RML with our new partner, our commercial developments, our hotel expansions and the F&B model. With a total project value of over THB 10billion per year which will build up the largest backlog in the company’s history in the next few years and that we are coming from a small base there’s an opportunity for investors to participate in the long-term future of RML.
TET: What are the biggest risks facing your business today?
RML: The main issues are the global economy because over the next three to five years we believe that a lot of growth will be dependent upon other countries and not just Thailand. And therefore, we hope that the issues between the world’s two largest economies and Brexit dissipates as we aim to continue growing throughout the region and the world. Internally we have built and brought in strong management experience for the hotel, office, and F&B teams to ensure that each business segment may efficiently execute our long-term vision.
TET: Where do you see RML in five years from now?
RML: Over the past few years we have taken the steps necessary to execute our long-term vision for RML, which is that the business is diversified with THB 10 to 15 billion in revenues with 30% coming from recurring income and F&B which partly are from our international businesses.