Thai property developers stuck with $30-billion oversupply

Property developers in Bangkok offer substantial discounts on new properties to clear their inventory

Residential property developers in Thailand are facing heavy headwinds on the market as the number of new projects is exceeded market demand by far, according to analysts of Bangkok-based investment firm Asia Plus Securities.

Development projects represent the highest level recorded in more than a decade and unsold inventory could exceed one trillion baht ($29.8 billion), putting the market under price pressure, Therdsak Thaveetheerathum, deputy director of Asia Plus Securities’ research division, said.

Currently, 342 projects worth a total of nearly 448 billion baht of new residential supply are scheduled to be launched in 2022, derived from 18 listed developers. Combined with ongoing projects under development, which represent unsold inventory worth a total of 557 billion baht from 14 developers as of the end of 2021, the amount of available supply “would exceed one trillion baht for the first time in history,” he noted.

“Supply will be too great, even though purchasing power still remains in the market. Developers should be wary as demand will be not as high as in 2018,” Therdsak warned.

Presales dropped significantly during Covid-19

In 2018, the 18 listed developers had combined presales of 354 billion baht, the highest level ever recorded. Three years later, presales fell to around 260 billion baht per year. Presales in 2022 are expected to bounce back to 319 billion this year in the wake of a gradual recovery from the Covid-19 pandemic.

However, “there remain a lot of uncertainties today which will disrupt demand,” Therdsak said, hinting at the Russia-Ukraine conflict that is shaking the world’s economy.

Another issue for the 18 listed developers are their debt levels which showed a net gearing ratio of 0.9 times on average as of the end of last year, which already nears risk territory.



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[caption id="attachment_38338" align="alignleft" width="300"] Property developers in Bangkok offer substantial discounts on new properties to clear their inventory[/caption] Residential property developers in Thailand are facing heavy headwinds on the market as the number of new projects is exceeded market demand by far, according to analysts of Bangkok-based investment firm Asia Plus Securities. Development projects represent the highest level recorded in more than a decade and unsold inventory could exceed one trillion baht ($29.8 billion), putting the market under price pressure, Therdsak Thaveetheerathum, deputy director of Asia Plus Securities’ research division, said. Currently, 342 projects worth a total of nearly 448...

Property developers in Bangkok offer substantial discounts on new properties to clear their inventory

Residential property developers in Thailand are facing heavy headwinds on the market as the number of new projects is exceeded market demand by far, according to analysts of Bangkok-based investment firm Asia Plus Securities.

Development projects represent the highest level recorded in more than a decade and unsold inventory could exceed one trillion baht ($29.8 billion), putting the market under price pressure, Therdsak Thaveetheerathum, deputy director of Asia Plus Securities’ research division, said.

Currently, 342 projects worth a total of nearly 448 billion baht of new residential supply are scheduled to be launched in 2022, derived from 18 listed developers. Combined with ongoing projects under development, which represent unsold inventory worth a total of 557 billion baht from 14 developers as of the end of 2021, the amount of available supply “would exceed one trillion baht for the first time in history,” he noted.

“Supply will be too great, even though purchasing power still remains in the market. Developers should be wary as demand will be not as high as in 2018,” Therdsak warned.

Presales dropped significantly during Covid-19

In 2018, the 18 listed developers had combined presales of 354 billion baht, the highest level ever recorded. Three years later, presales fell to around 260 billion baht per year. Presales in 2022 are expected to bounce back to 319 billion this year in the wake of a gradual recovery from the Covid-19 pandemic.

However, “there remain a lot of uncertainties today which will disrupt demand,” Therdsak said, hinting at the Russia-Ukraine conflict that is shaking the world’s economy.

Another issue for the 18 listed developers are their debt levels which showed a net gearing ratio of 0.9 times on average as of the end of last year, which already nears risk territory.



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

 

 

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