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  4. Business Operation

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Property Development Business

4.1 Business operations of the Company and its subsidiaries

KTP and its subsidiary companies have a main business in property
development for sale and/or lease including office building, commercial
building, and detached housing projects. Details of products and
services are as follows:

4.1.1 Property Development

-   Srinakarin Project

  The Company is developing a 367 unit detached housing project in
  Srinakarin area under the name of “Villa Arcadia Srinakarin” the
  project is located at Moo 16, Soi Pattanachumchon 1, Srinakarin Road,
  Bangkaew Sub-District, Bangplee District. Samutprakarn Province, and
  has a total area of 99-3-97.8 rai. The project is targeted at the
  upper middle market. At present, phase 2 is under planning to be
  developed upon the completion of phase 1.

-   Watcharapol Project

  The Company is developing a 270 unit detached housing project in the
  Watcharapol area under the name of “Villa Arcadia Watcharapol” the
  project is located at Soi Watcharapol, Tharang Sub-District, Bangkhen
  District, Bangkok, and has a total area of 28-0-46 rai. The project is
  targeted at the upper middle market. At present, phase 2 is under
  planning to be developed as detached housing upon the completion of
  phase 1.

4.1.2 Other Operations and Assets

-   Jewellery Centre Building

  A 34-storey commercial building covering a total area of 42,833.78
  sq.m., located at 138 Nares Road, Si Phraya Sub-District, Bangrak
  District, Bangkok. The retained interest under the Company’s name for
  sale and lease as of 31 December 2010 is a total area of 12,145.64
  sq.m. or 28.36% of the total gross floor area.

-   Sukhapiban 3 Mansion

  A 19-storey residential condominium with 1,024 total units, located at
  22/1 Sukhapiban 3 Road, Huamark Sub-District, Bangkapi District,
  Bangkok. The retained interest under the Company’s name for sale and
  lease as of 31 December 2010 is 2 units with a total area of 119.21
  sq.m.

-   The Trio Chiang Mai (formerly known as Chaing Mai VIP Tower)

  A 4-storey commercial building, located at 188/1-2 and 188/5-6 Moo 1,
  Huay Kaew Road, Changpueak Sub-District, Muang District, Chaing Mai
  Province. The retained interest under the Company’s name for sale and
  lease as of 31 December 2010 is 4 units with a total area of 890.88
  sq.m.

-   Land and Factory (Granite Factory)

  The land and factory is located at 1 Moo 5, Phaholyothin (TorLor. 1)
  Road, Mai Ngam Sub-District, Muang District, Tak Province, and has a
  total area of 60-2-70 rai. The factory has ceased operation since 2000
  and the machineries have been divested in early 2002.

Remark: 1 rai = 400 sq.w.

1 ngan = 100 sq.w.

4.2 Marketing and Competitiveness

Property market review

Overall residential supply expanded by 8% in 2010 with an estimated
81,400 developer built units added to the Bangkok residential market
against 75,300 units added in 2009.  Annual supply is at a relatively
healthy level compared to both historical supply and fundamental demand
levels.  Although there are traces of inventory overhang in some sectors
such as the luxury condominium sector, there is no imminent supply
bubble and prices remain stable overall. 

The last 2 years has witnessed a change in the structure of residential
supply, as condominium projects proliferated throughout the metropolitan
area, condominium units have accounted for 69% and 71% of total
developer supply in 2009 and 2010 respectively, as against 55% in 2008. 
Market growth since 2009 has therefore been driven mainly by the
condominium sector.

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Source: Bank of Thailand

To better contain speculation, the Bank of Thailand (BOT) has announced
new rules to regulate residential loans commencing from January 2011,
with the loan to value (LTV) ratio being capped at 80% for all
transactions above Baht 10 million (S$ 435,000).  For transactions below
Baht 10 million, the LTV ratio increases to 90% for condominiums and up
to 95% for detached homes and townhouses.

With the stable economic forecast, near full employment, expanding
household incomes, and with interest rates remaining relatively low, we
anticipate a conducive environment, tempered by government efforts for
sustainability, for a continued growth in the real estate sector in
2011.

Landed Housing

An estimated 25,580 developer-built housing units were registered in the
Bangkok Metropolitan Region (BMR) during 2010, a 18.2% increase from the
21,634 units registered in 2009.

The highest sales rate for detached houses is seen for entry-level units
in the northern suburbs of Bangkok, at about 12 units per project per
month, while for townhouses, the best sales rates were seen for
entry-level units in the northern and western suburbs, registering about
11 units per project per month. Conversely, high-end and luxury detached
houses in all areas saw much slower sales at 6 units and 1.6 units per
project per month respectively.

As the issue of land allocation permits for 2010 rose by 39% compared to
2009, we expect the supply of detached houses to enlarge in 2011.  The
majority of land allocation permits were located in the eastern and
northern zones of Bangkok as developers acquire land for projects close
to the new Airport Rail Link, which has started operation in August
2010.

Condominium

The estimated total supply of downtown freehold condominiums increased
from 62,503 units in 2009 to 68,826 units in 2010, representing an 9%
increase or 5,666 completed units.  Sukhumvit remained the most popular
area for condominiums, representing 36% of total freehold supply.  This
was followed by the Silom/Sathorn area (19%), Rama III (15%), Riverside
(13%), Pathumwan (10%), and Central Lumpini (7%) respectively.

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Source: CBRE

Average prices of future luxury and upper-mid-range freehold
condominiums in the primary market were Baht 158,261 (S$6,706) psm
during 2010, growing 21% year-on-year.  Central Lumpini recorded the
highest asking prices which averaged at Baht 177,857 (S$7,536) psm,
followed by Sukhumvit at Baht 159,125 (S$6,743) psm.  Pathumwan is the
most affordable area in the Bangkok downtown, where average prices were
at Baht 89,333 (S$3,785) psm.

Most new condominium projects are in the one bedroom sector. One-bedroom
units, with sizes typically ranging from 25 to 80 sqm, now account for
58% of units under development; this is followed by two-bedroom units
which account for 31% of future units.  New projects cater to young
middle class professional singles and couples seeking to live near to
the city for work and play, thus, new projects tend to focus on midtown
locations with those closest to mass transit stations seeing the best
demand.