Thai developers optimistic despite flagging bottom lines

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Rosy presales have emboldened companies to set ambitious targets this year

Ratchaprarop Road, Bangkok. stockphoto mania/Shutterstock

A delay in turnovers to customers, coupled with ever-tightening mortgage policies, has weighed down the revenues and net profits of most top Thai property developers in the first quarter of 2017, The Nation reported, citing recent quarterly financial results from top 10 SET-listed property firms.

Pruksa Holding, one of the country’s biggest developers, reported a Q1 2017 revenue of THB8.07 billion (USD234 million), down 21.5 percent from Q1 2016. Net profit for the Bangkok-based firm meanwhile sank 45.1 percent to THB681 million.

“[It’s] because we have a backlog worth THB13 billion that will transfer this year,” Pruksa Holding CEO Thongma Vijitpongpun explained in a conference Monday.

The political crisis of 2014 forced developers to reduce launches that year, in turn delaying transfers to customers this year, said Prasert Taedullayasatit, president of the Thai Condominium Association.

However, most developers showed healthy presales in metropolitan Bangkok, rising 13.6 percent year-on-year to THB97.47 billion in the first quarter, Thongma revealed. Pruksa itself posted presales worth THB13.3 billion in the first quarter, a staggering increase of 35.6 percent from the same period last year.

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“We are confident the overall property market will grow strongly, by up to 10 percent this year, in terms of presale value,” Thongma said, adding that the company targets revenues of THB57.9 billion this year.

Presales for projects by Ananda Development reached THB4.43 billion in the first quarter, an increase of 11 percent from the same quarter last year. The company has been emboldened to target presales of THB22.67 billion this quarter, although its Q1 2017 revenue and net profit plunged 10.8 percent and 5.6 percent, respectively.

Developers attributed the profit gloom in part to a dearth of government stimulus measures this year. The measures, designed to lower transfer and mortgage fees, had expired in April 2016.

LPN Development managing director Opas Sripayak blamed the sector’s lacklustre quarterly performance on tighter mortgage approvals by commercial institutions.

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