Developers cut back revenue forecasts

Most of Thailand's property developers have revised their 2008 revenue forecasts downwards in the face of a depressed market that began to slide into difficulty several months ago.

Prospective homebuyers, with their immediate future clouded by the twin effects of the global economic crisis and local political turmoil, are shying away from what is to many of them the biggest finan¬cial commitment of their lives - buy¬ing a new home.

Preuksa Real Estate, for example, has revised expected revenue down to Bt13 billion from its early target of Bt14 billion. Land and Houses' revenue forecast for the year is down from Bt21 billion to between Bt16 bil¬lion and Bt18 billion, and Property Perfect has cut its revenue target from Bt8 billion to Bt7.5 billion. Supalai has revised its presale target from Bt10 billion down to Bt9 billion.

Property Perfect's managing direc¬tor Chainid Ngowsirimanee said his company had revised its revenue tar¬get from Bt8 billion down to Bt7.5 billion when homebuyers began delay¬ing their decisions to buy.

Purchasing power has fallen significantly in the final quarter of this year, compared with the first nine months, following protest action by the People's Alliance for Democracy (PAD) in closing Bangkok's airports, he said.

"Normally, the last quarter in every year is a high season for selling resi¬dential projects, but this year we have faced a different environment. The country's political uncertainty has had a greater negative impact on Thailand's economic sentiment than the global crisis," he said.

Preuksa Real Estate's president and chief executive Thongma Vijitpongpun said the number of vis¬itors to the company's residential projects had dropped by 20 to 30 per cent, depending on project locations. They were also delaying their deci¬sions to buy out of concern that the impact of the global economic crisis would cut their future earnings.

"Although the global economic problems have not directly affected Thailand's economy, the value of exports has begun to show a negative impact and the tourism business is suffering because of the PAD's clo¬sure of Bangkok's airports late last month. As a result, some homebuyers are delaying their decisions to buy from residential projects," he said.

Senior executive vice president Naporn Soonthornchitcharoen said demand for residential projects had fallen significantly since October, when homebuyers first became concerned about the twin effects of the global economic crisis and local polit¬ical uncertainty on both Thailand's economy and the level of their earn¬ings.

"If the new government cannot solve the country's political problems, we cannot estimate what will happen to the country's economy and the property market, so we have to be very conscious of our investments and business plan next year," he said.

The Real Estate Information Centre (REIC) believes that the value of the property market this year will be 5 to 10 per cent lower than in 2007, because demand for residential proj¬ects has fallen significantly in the cur¬rent quarter, the agency's directorgeneral Samma Kitsin said.

Although the financial crisis in the United States has not directly affect¬ed Thailand's property market, it is beginning to have a negative impact on the country's economy, with some manufacturers who are dependent on export markets in the US and Europe closing plants, he said. These influ¬ences are weighing increasingly on the concern homebuyers are feeling for their future earnings, and they are delaying decision to buy new homes as a result.