Building more while carrying a high backlog

They also expect to achieve total revenue of Bt319.19 billion, a double-digit growth over last year’s sales. All of the firms are confident they will sustain their income from 2019 through 2022.
According to a recent survey by The Nation, listed property firms have announced a high backlog as of December 31, 2018 worth over Bt300 billion combined. Nearly 10 per cent or about Bt30 billion of that total backlog involves sales to foreign buyers.
Sansiri Plc shows high backlog totalling Bt63.5 billion, with up to Bt14 billion tied to overseas customers including in Mainland China, Hong Kong and Singapore (see graphic).

Meanwhile, all listed firms continue to expect this year’s presale target to record over Bt375 billion in transactions from both domestic and overseas customers.
“Our high backlog has secured our income for the long term,” Sansiri Plc’s president Srettha Thavisin said in a recent interview with The Nation.
The company has confidence that it would complete the presales with successful transfers of all units to customers, he added.
Foreign buyers must make a down payment of 25-30 per cent of total residential values. “Most of our foreign buyers are individuals and also made a high down payment. This secures our business in the long term,” Srettha said.
Sansiri has set presale targets for 2019 to 2021 that will reach Bt160 million combined, and generate income to the company from this year through 2024.
Also carrying a high backlog is AP (Thailand), with Bt41.8 billion on the books to provide revenues from 2019 through 2022.
The company also expects its presales to hit Bt60 billion in the year 2022, and is setting aside a Bt10 billion yearly investment budget from 2019 to 2022.
“We have boosted our presales to secure our revenue in the long term,” Anuphong Assavabhokhin, AP (Thailand)’s chief executive officer said recently.
The company’s success in speeding up its presale value has been helped by joint ventures with its Japanese partner Mitsubishi Real Estate Group. The joint venture has supported AP’s financial budget as well as improving its product designs, he said. Up to 60 per cent of its presale for condominium projects, which has been recorded at half of its total presales of Bt41.8 billion, has come from joint venture projects.
Prasert Taedullayasatit, honorary chairman of Thai Condominium Association, said the 2018 property market recorded total presale values for the combined 121,193 combined projects at Bt512.17 billion, up 18 per cent from the year 2017. That Bt512.17 billion included Bt293.72 billion from condominium projects, up 19 per cent from 2017 and spread over 70,066 units. Next was Bt122.58 billion from single detached houses, up 22 per cent from 2017, spread over 18,601 units. The remaining Bt87.57 billion from townhouses, up 13 per cent from 2017, was for a combined 30,914 units.
“Most of condominium projects sold last year included sales of up to 20 per cent to Chinese investors, which includes both the individual investors, and the brokers and agencies who bought more condominium units than they could sell to individual investors on the China mainland,” he said.
Following high recorded presales in 2018, some homebuyers have been rushing to transfer their residential purchase before a new measure by the Bank of Thailand kicks in on April 1, 2019. The BOT measure increases the required down-payments by reducing loan values from the current allowable 90 per cent to new limits of 80 per cent or 70 per cent for customers who buy second and third homes.
According to a survey by the Real Estate Information Centre of Government Housing Bank, in the fourth quarter of the year 2018, property transfers worth Bt339 billion were recorded for 92,500 units nationwide. This is the highest recorded in the past 12 quarters. The bump reflects the rush by homebuyers and property developers to finish transfers before the BOT measure begins.
The centre also forecasts that the property market will slow down after the Bank of Thailand measure begins, with 307,000 units transferred with a value of about Bt747 billion.
Meanwhile, Terdsak Taweethiratham, vice-president at Asia Plus Securities, is warning that both listed and non-listed property firms should be concerned about both their backlog and inventory as the country’s economy, and the property market, are due to slow down in this year compared with last year.
He added that a high backlog is normally better for property firms when they have product being sold on-hand and to be delivered to customers when the project is completed. 
However, at this time of slow economic growth and the impending BOT restriction on mortgage loans, some customers may be not be able to complete the transfer when the construction is completed. This would impact the financial results of property firms, said Terdsak.
Meanwhile, both listed and non-listed property firms have high inventory worth above Bt520 billion as of 2018 year-end.
The Asia Plus Securities’ research found 12 listed property firms with inventory worth a combined Bt520 billion, with 10 per cent of the Bt520 billion tied to construction already completed and the remainder for projects to be completed in this year and the next.
All of the inventory will take time to sell out – between 18 months and as long as two years, the research found, and this will impact directly on property firms as they shoulder the costs until the payments are made.
“We see more property firms also planning to launch new residential projects, while they also carry more inventory. That is both an opportunity for sales, also a burden if they cannot sell,” Terdsak warns.