Raimon Land Public Company Limited (RML) supposedly became the latest property developer to advance in other business sectors along with its core business to build recurring income.
The business that RML hopes to rely on earning recurring income (possibly its future core business) is a health and wellness business. Looking at how the global trend is going and seeing people start to take care of their health even more, this business seems just right.
Which is the reason for RML’s 1.3 billion baht investment on Medical and Wellness Center to advise on fertilization, as well as Ageless Center to fulfill the lack of services in these categories. This new investment will be constructed on a 40 rai area in “Toscana Khao Yai,” Nakhon Ratchasima province.
However, this type of advancement from property developers to health and wellness business is not new in the market. M.K. Real Estate Development Public Company Limited (MK) had been working on this business since the beginning of 2018 by establishing Munkong Life Company Limited to develop a project on an integrative medical science center for anti-aging and rehabilitative. In this establishment, MK joined hands with Bumrungrad Hospital Public Company Limited (BH) to penetrate premium both Thai and foreign customers. Moreover, MK had recently established Health And Wellness Village Co., Ltd, a subsidiary to operate MK’s medical facilities.
Before MK even started to invest in this business, Nusasiri Public Company Limited (NUSA) had done it before for the same reason. As for Pruksa Holding Company Limited (PSH), even though the company has property business as its main source of income, it also has Vimutti Hospital as a supporter, aiming to open in late 2020.
There are several reasons for these property developers to turn to other business, hoping for recurring income. Since the financial institutions are stricter on home loans, deceleration of foreign and domestic buyers, an oversupply of condominium in some areas, and more importantly the new regulation of BoT on house loans effectively Apr. 1 onward, property developers are forced to expand its business to other sectors.
The evident sign that it is the time to concentrate more on some other businesses for RML was when Mr. Lionel Lee, CEO of Raimon Land, asserted in his statement that the property market would decelerate in the next two to three years. Which was why the company had to develop other projects for recurring income, including hotel businesses, health centers, F&B.
Moreover, RML’s revenue has been constantly decreased as well. Since it’s highest peak of profit in 2015 at 900 million baht from a total of 5,145 million baht in revenue, RML’s profit decreased to 850 million baht in 2016, 192 million baht in 2017 and 98 million baht deficit for the first nine-month of 2018.
This is more than enough to answer the question of why does RML have to advance to other businesses for recurring income. While there are only two news project this year from RML.