Thailand

Housing developers tighten noose amid uncertainty

As the pandemic has unsettled the market, housing developers in greater Bangkok have implemented more stringent cost-saving measures while continuing plans for new project launches, according to the Real Estate Information Center (REIC).

The centre's acting director-general, Vichai Viratkapan, said the sentiment index of developers in Bangkok in the first quarter of 2021 was lower than the median for eight consecutive quarters as the Covid-19 crisis continues.

"Even though the overall situation in the first quarter improved this year, developers are still laying off staff to save development costs as the outbreak remains a big concern," he said.

According to REIC, the current index amongst developers in Bangkok in the first quarter of 2021 was 46.3. The figure remained unchanged from the fourth quarter last year but it was below the median at 50.0.

"The index went below the median in the second quarter of 2019 after the loan-to-value limits came into effect in April of that year, which was a concern for residential developers," said Mr Vichai.

He said developers were not confident in the first quarter as the outbreak continued to rock the country, leading to tepid economic recovery.

While the position for listed developers on the developer's index rose slightly to 49.4 from 49.2, the index of non-listed firms fell slightly to 41.7 from 42.1. However, both still lingered below the median.

"To be more specific, listed developers were confident, particularly in performance, sales and investment as those indexes were above 50 but non-listed firms were not confident with the index being below the median," he said.

In the first quarter of 2021, overall performance and sales picked up but developers are still cutting jobs to control development costs.

However, developers are still planning to launch new projects as they expect a recovery in the next six months.

Housing developers' expectations index or confidence over the next six months increased to 58.8 in the first quarter from 54.4 in the fourth quarter last year. This represented the most confidence yet as it soared above the median.

The index of both listed and non-listed developers rose to 63.6 and 51.5 from 59.7 and 46.5, respectively, as they are confident of investments, performance and sales in the future.

REIC conducted the survey on housing developers' sentiment between mid-February to March 2021 when the vaccination drive began and property tax incentives, including a cut of transfer and mortgage fees, was extended until the end of 2021.

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