BOT measure, overall low economic growth will lead to lower profits in 2019, predicts Kasikorn Securities
Listed property firms have continued to show presales growth in the first quarter of this year, according to a survey by The Nation.
The trend was confirmed by a property analysis that forecasts listed property firms will see their total revenue grow in the first quarter of this year when compared with the same period of last year, due to most of their customers speeding up property transfers before the Bank of Thailand’s landtovalue (LTV) measure came into effect on April 1.
According to announcements by listed property firms for their presales in the first quarter of this year, AP (Thailand) recorded high presales of Bt12.58 billion in the period, pushing the company above 30 per cent of projected presales of Bt41.8 billion for the whole of 2019.
Sansiri Plc recorded presales of Bt6.6 billion in the first quarter, or 18.33 per cent of its presale target of Bt36 billion for the year (for other firms, see graphic).
AP (Thailand) Plc’s chief for corporate strategy and creation, Vittakarn Chandavimol, said the company recorded high presales in the first quarter thanks to strong demand in the market for both lowrise and high-rise products.
The overall picture of the property market during the second quarter suggests that demand for new residences will continue to be there, Vittakarn said, despite the LTV measure taking effect.
The company is confident that the BOT’s actions will not affect the whole market. The positive effect of the measure is that it will make residences with reasonable prices more affordable for real-demand customers, and is good for the industry outlook in the long term, Vittakarn added.
Origin Property Plc’s CEO Peerapong Jaroonek said that the company had launch an additional promotion campaign to boost its presales to achieve Bt5.6 billion in this year’s first quarter.
“We see real demand in the market that will not be negatively impacted by the LTV measure that is now already in effect,” he said.
Meanwhile, Kasikorn Securities Co Ltd forecasted that the nation’s top nine listed property firms will show net profit of Bt7.15 billion in the year’s first quarter. That’s up 12 per cent from the same period last year, and follows the launch of special promotion campaigns by all listed property firms to boost their quarterly results before the LTV kicked in.
However, Kasikorn predicted that the LTV measure would affect the property market over the rest of this year. The securities company forecasts net profits for the top nine listed property firms at the end of 2019 will be Bt37.2 billion, a 3.2 per cent drop from Bt38.4 billion last year.
Meanwhile, property agency firm Nexus Property Market Co Ltd noted increased stability in both residenฌtial and commercial property markets in the first quarter. The recent election should boost the longterm confidence for both investment and real demand, it said.
Nexus managing director Nalinrat Chareonsuphong said their survey found a new supply of 11,300 units from 30 projects in Bangkok’s condominium market in the first quarter of 2019, a 20per cent decrease from the same period in 2018.
The firstquarter new supply focused more on the midmarket. The average price in Bangkok was Bt139,400 per square metres, down slightly by 1 per cent from Bt140,600 per square metre. The average price of condominiums in other locations also declined slightly. However, the lower price did not affect the overall market significantly, because those new supplies were located far from the city’s centre, she said.
This year’s trend in new supply will see developers continue to focus on city condominiums and the mid-market. However, the market will see more projects of luxury and highend condominiums from those listฌed developers who acquired prime land in the past year. The luxury and highend market remains attractive as developers compete in creating new concepts that focus on user experience and technology.
Real demand will lead the sales this year, due to the LTV measure and stricter loan approval, and city condominiums and midmarket units are the most attractive for real demand. The highend market needs to be cautious this year, as it can expect to attract fewer Thai investors. The average price in this market should experience a bump not more than 56 per cent. More condominium projects with longterm leases will be developed on government lands as well as on private-owned land plots in prime locations, Nalinrat added.
More new projects to launch in Q2
Following the market trend, listed property firms have continued to expand their new residential project launches in the second quarter with the aim of boosting sales while commercial banks begin to restrict loan approvals.
AP (Thailand) Plc is planning to launch 13 new projects worth Bt19.72 billion in the second quarter as it tries to drive presales to continued growth, before the LTV measure is in full effect, said the company’s chief of corporate strategy and creation, Vittakarn.
Sansiri Plc plans to launch eight new residential projects worth Bt16.5 billion to boost its presales and revenues in the quarter.
Ananda Development Plc plans to launch four new residential projects worth Bt13 billion in the same period, as it targets Bt36 billion in presales by year-end.
Origin Property Plc has also planned the launch of three new projects worth Bt5.4 billion to drive its pre-sales to achieve the Bt26 billion target for 2019end, company CEO Peerapong said.
“We continue to have confidence in the market demand, even though the LTV is in effect and the country’s economy has low growth. We believe that the market will recover after the successful election of a new government in the second quarter,” he said.