Bangkok’s property developers offer deep discounts on new properties to clear inventory Residential property developers in Thailand are facing huge headwinds in the market as the number of new projects far outstrips market demand, analysts at Bangkok-based investment firm Asia Plus Securities said. Development projects represent the highest level in more than a decade, and unsold inventory could exceed 1 trillion baht ($29.8 billion), putting the market under price pressure, said Therdsak Thaveetheerathum, deputy director of research at Asia Plus Securities. Currently, 342 projects with a total value of nearly 448…
Residential property developers in Thailand are facing huge headwinds in the market as the number of new projects far outstrips market demand, analysts at Bangkok-based investment firm Asia Plus Securities said.
Development projects represent the highest level in more than a decade, and unsold inventory could exceed 1 trillion baht ($29.8 billion), putting the market under price pressure, said Therdsak Thaveetheerathum, deputy director of research at Asia Plus Securities.
Currently, there are 342 projects planned for launch in 2022, with a total value of nearly 448 billion baht of new residential supply from 18 listed developers. Combined with ongoing projects under development, the 14 developers have a total of 557 billion baht of unsold inventory at the end of 2021, and the available supply “will exceed 1 trillion baht for the first time in history,” he noted.
“Even if there is still buying power in the market, there will be excess supply. Developers should be vigilant as demand will not be as high as it was in 2018,” Therdsak warned.
Pre-sales plummet during Covid-19
In 2018, pre-sales by 18 listed developers totaled 354 billion baht, the highest level on record. Three years later, presales fell to about 260 billion baht per year. Pre-sales in 2022 are expected to rebound to 319 billion this year as the recovery from the Covid-19 pandemic gradually progresses.
However, “there is still a lot of uncertainty today that will disrupt demand,” Therdsak said, alluding to the Russia-Ukraine conflict that is shaking the world economy.
Another problem for the 18 listed developers is their debt levels, which averaged 0.9 times net gearing at the end of last year, which is already close to risk territory.
