Residential inventory rising

Sansiri, Pruksa Real Estate and Land & Houses top the table, accounting for 48 per cent of the inventory of the top 10 residential developers.

According to a survey by The Nation, up to 30 per cent or Bt96.84 billion of the inventory is for already-completed condominiums, townhouses and detached housing.

"Normally, we have ready-to-occupy homes for sale to meet our sales average for each month and a half, or between Bt1.5 billion and Bt2 billion. This will secure our sales and revenue bookings," said SC Asset Corp’s chief financial officer, Attapol Siriddipuntawat.

The remainder of its inventory is undeveloped land and projects at the construction stage, he said.

Ananda Development chief executive officer Chanond Ruangkritya said his company currently had around Bt3 billion worth of homes ready for occupation.

"We have to have the inventory in order to meet demand in the market. If we don’t have the stock, we may lose potential customers," he said.

"We cannot say all of the inventory is stock, because some of it is backlog that has already been sold but is awaiting construction to be complete before transferring to customers. Under our accounting standards, those homes will be booked as revenue once they are delivered to customers," said Pruksa’s managing director for condominiums, Prasert Taedullayasatit, who is also president of the Thai Condominium Association.

Of Pruksa’s inventory worth Bt54.03 billion, between Bt1.5 billion and Bt2 billion is accounted for by completed homes ready for sale, with the rest consisting of undeveloped land and a backlog that will be transferred to buyers when construction is complete, he said.

"Having a high inventory does not mean our residential projects cannot be sold, because it combines our undeveloped land, under-construction residential projects, many of which have been sold and will be transferred when the projects complete, and ready-to-occupy homes, which are waiting to be sold," he added.

However, the managing director accepted that some of a developer’s inventory, especially homes ready for occupation, could be a burden if sales proceeded more slowly than stock built up.

This is especially true for condominiums, because once a condo project commences construction, it is not normally possible to suspend the development process.

If sales fail to meet the target, construction will continue and the developer has to shoulder the construction cost until the project is completed, while having to wait for income to be generated from the project, he explained.

Meanwhile, detached housing and townhouse projects do not face the same problem, because the developer can suspend construction if sales fall below the estimated level, he added.

Nonetheless, most residential developers have tried to reduce their inventory, especially for condominium projects, after witnessing slower growth or a drop in demand.

For example, Sansiri has suspended new condominium launches in the latter part of this year after seeing a fall in demand, and is solely focusing on the development of condominiums under a joint venture with BTS Holdings Group.

Early this year, the company also suspended development of the Base Central Udon Thani, which was launched in 2013, after demand fell below the estimated level.

AP (Thailand) also suspended development of a condominium in Pattaya early this year when its sales came in lower than had been forecast.

Most property companies have also revised their business plans for launching further condominium projects over the rest of this year after seeing more supply in the market, but lower demand.

NC Housing now plans to launch only detached housing and townhouses worth Bt2 billion during the remainder of the year, and has suspended its plan to launch a condominium.

Sammakorn is also focusing on townhouses and detached housing, with no plan to launch condominium projects over the rest of the year.

Fragrant Group, meanwhile, has deferred plans to launch two more condominium projects by year’s end, after introducing its latest condominium, the Bt4-billion Circle Prototype Condo.

The company cited a drop-off in demand for the decision.

Property Perfect is delaying plans to launch a condominium project in Khao Yai, in Nakhon Ratchasima province, and a condo located close to the Purple Line mass-transit route after seeing more supply in the area.

"We have had to revise our business plan following the market trend, and that will stabilise our financial results to stay strong during a period of only slight economic growth," said chief executive officer Chainid Adhyanasakul.