Residential upswing boosts the sale of building materials

Construction on some of the government’s infrastructure projects will commence in the rest of this year, as will bidding on some infrastructure projects worth Bt193.2 billion. They will need building materials and related products.

According to research from Asia Plus Securities, 15 listed property firms reported a combined backlog worth Bt240 billion as of December 31. Half or Bt120 billion’s worth will be transferred to customers this year.

Up to 90 per cent of the backlog is condominium projects, which will be transferred to buyers in the second half of this year.

In 2013, 85,000 condo units worth about Bt170 billion were launched in Greater Bangkok for completion this year, according to a survey from the Real Estate Information Centre of the Government Housing Bank.

This has raised demand for construction materials since the second quarter of this year – a trend that should continue for the rest of the year.

"Demand for cement grew by 2 per cent, a reversal from the first quarter when demand declined, thanks to strong demand from the government to build infrastructure projects in the second quarter of this year rising 11 per cent," Kan Trakulhoon, president and chief executive officer of Siam Cement Group, said after releasing second-quarter financial results early this month.

Although demand for cement to build residences still fell 3 per cent in the second quarter from the same quarter of last year, this was better than the first quarter of this year, which showed a decline of 11 per cent.

"We believe that demand for cement from the residential market will increase in the second half of this year. This will boost demand for cement by up to 5 per cent in the second half of this year, and that will boost demand for cement 3 per cent this year," he said.

According to The Nation’s survey, the total backlog of 10 listed property firms was worth Bt107 billion, of which 85 per cent was in condo projects.

Normally, when a residential project is all transferred to customers, that boosts demand for furniture, home appliances and decoration items by nearly half of the project’s value, a property expert said.

The construction business also targets growth of 10-15 per cent this year.

"We have a backlog worth Bt100 billion, which will generate revenue of Bt34 billion to Bt35 billion this year, up 10 per cent from last year," said Plew Trivisvavet, president and CEO of Ch Karnchang.

Ch Karnchang also expects to win contracts from both state and private sectors worth Bt35 billion-Bt40 billion by year-end, which would ensure stable growth for the long term, he said.

Premchai Karnasuta, president of Italian-Thai Development, said its backlog would be swollen to Bt350 billion by year-end, assuming new contracts worth Bt170 billion could be signed for both private and public construction projects.

"We believe the government will launch more new infrastructure projects in the second half of the year, with most of them for motorways, the double-track rail system and mass-transit rail systems such as the Green, Orange, Pink and Yellow lines.

"This will boost the turnover of all contractors this year," he added.

Pakpoom Srichamni, president of Sino-Thai Engineering and Construction, another listed contractor, also said the government would open bidding for more infrastructure projects in the second half of the year.

This would boost the backlog of contractors and generate revenue to the end of 2017, he said.

Sino-Thai is sitting on a backlog worth Bt50 billion, of which up to Bt20 billion will be booked as revenue this year.

The company targets Bt30 billion of new contracts from the private and public sectors this year, he added.