Two quarters of weak earnings ahead
The property development market would remain subdued for two quarters, as floods would result in weak transfers and cancellations, according to DBS Vickers Securities (Thailand).
In a research note, the house said that property developers would also suffer from flood-related expenses, with Pruksa Real Estate Plc (PS) and Quality Houses Plc (QH) to be hit the most. LPN Development Plc should be the least affected, as fears of future flood risk could sway demand towards condominiums, particularly those located closer to the city.
"Most developers have delayed launches to next year, and customer visits have also dropped significantly at most sites. With no new presales and potential increase in cancellation rates, net presales could tumble in the fourth quarter. Transfers would drop as a lot of buyers would have flood-related priorities and some land registration offices are submerged. The big flood prevention expenses will kick in the fourth quarter, while the cleaning and repair bills will come in the fourth quarter of this year and first quarter of next year," DBS said.
PS and QH have more low-rise projects in flood-stricken areas such as Chaiyaphruek, Ratchaphruek, Bang Bua Thong, and Rangsit Pathum Thani. Least affected are LPN and Asian Property Development Plc (AP), which focus on city condominiums and low-rise developments that are relatively close to the city.
LPN has a strong balance sheet with net cash position while AP has a diversified portfolio of both low- and high-rise projects.
