Pruksa Real Estate’s chief executive Thongma Vijitpongpu said with the land and buildings tax set to come into force next year, land prices should drop as some landowners, particularly those in prime areas, sell to avoid paying the tax.
“The market mechanism will make land prices fall. We will slow our land purchases and wait until next year,” he said.
Under the new tax, the ceiling tax rate will be 0.2 per cent of the appraisal value for land used for agricultural purposes, 0.5% for residences, 2% for commercial use and 5% for vacant or undeveloped land.
The tax will be levied on first homes and land used for agricultural purposes with appraisal prices starting at B50 million, with the rate applied to the amount exceeding B50 million.
The tax will also apply to second homes on a progressive basis, with rates of 0.03% to 0.30% for homes appraised from less than B5 million to over B100 million. For vacant or undeveloped land, the tax rate will be 1% for land left vacant or unused for one to three years, 2% for four to six years and 3% for over seven years.
Mr Thongma said Pruksa set an annual budget of B15-17 billion for land purchases during 2017-19 and would likely spend up to B20 billion in the future. This year it has spent B7.5 billion.
Last year it spent B16.71 billion on land, exceeding its budget of B14 billion because of a change in land appraisal prices that affected transfer fees.
Pruksa is the country’s largest land developer, followed by Sansiri Plc spending B9 billion and Ananda Development Plc spending B8.7 billion.
Mr Thongma said it is upbeat on property market growth this year as the bombings in southern provinces had a minimal impact on housing demand in Greater Bangkok. The market should grow by 8% this year, driven by the property tax incentives that ended in April, he said.
"There are several positive factors, including the country's economic recovery and government investment in infrastructure projects, that should boost the property sector," said Mr Thongma.
Despite a year-on-year drop in first half presales to B21.63 billion from B23.93 billion, Pruksa maintained presales and revenue targets of B51 and B53 billion, respectively, this year.
The company's second-half launches should exceed the first half, with 38 projects worth a combined B34.4 billion in the former compared with 27 worth B19 billion in the latter.
Pruksa reported a first-half net profit yesterday of B3.14 billion from revenue of B23.88 billion, up 2.6% and 9.7%, respectively, year-on-year. As of June it had a sales backlog of B23.68 billion, of which B11.15 billion would be realised in the second half.
PS shares closed on Monday on the SET at B27.50, down 25 satang, in trade worth B193.3 million.
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