Supalai predicts market restructure
Financially sound and responsible developers will survive and eat up a larger share of the residential market, which is forecast to take a few years to spring back, according to SET-listed developer Supalai.
Managing director Tritecha Tangmatitham said the impact from the pandemic on the property market this year was greater than the deleterious impact seen last year from weaker Chinese demand and macroprudential measures.
"The market last year was challenging, but this year is even more so," he said. "If the economy resumes and consumer confidence rebounds, homebuyers will come back, even though it will take time to return to normal levels."
After the government eased the lockdown earlier this month, the property market improved, with more customers visiting project sites, said Mr Tritecha.
The visits were mostly at low-rise housing projects, showing strong demand for the segment.
He said customers had strong purchasing power, particularly those in Greater Bangkok, as 70% of those living in Bangkok are salaried.
There is also a number of people benefiting from the lockdown, said Mr Tritecha.
New residential supply being launched this year will contract, with a drop of 20-30% in the number of single house and townhouse units newly launched, and a 50% decrease in condos, compared with 2019, he said.
"There will be a market correction in 2020-22 before swinging back to a boom," said Mr Tritecha.
"Developers with strong financial liquidity and a low debt-to-equity ratio will benefit from a market slowdown."
He said homebuyers will look for developers that display responsibility and respect to their customers, even during difficult times. These developers will grab a greater share in the market.
Supalai will keep its new launch target as planned, both in number and value, with 30 projects worth 30 billion baht, said Mr Tritecha.
Some 25 projects will be low-rise, comprising 13 in Greater Bangkok and 12 in provinces nationwide.
The company will reconsider the market later to see if demand has returned and how people's lifestyles have changed before launching five condo projects in Greater Bangkok, he said.
The 2020 presales and revenue targets of 26 billion baht and 24 billion remain unchanged. These are gains from 22.3 billion baht and 23.9 billion in 2019, respectively.
In the first quarter this year, Supalai recorded 5.72 billion baht in presales, down 8% from the same period last year.
Only presales from low-rise houses in provinces saw year-on-year growth, increasing 14%.
Revenue in the first quarter totalled 3.83 billion baht, down 40% from the same period last year, with a net profit of 750 million baht, a drop of 51%.
Gross and net profit margin also declined to 36.5% and 19.6% from 40.2% and 23.8%, respectively.