Thai property developers dump stock to increase cash flow
Weak economic recovery and high household debt continue to hit purchasing power
Property developers are dumping their stock to boost cash flow as sluggish economic recovery and rising household debt weaken consumer purchasing power.
The World Bank slashed its 2024 GDP growth forecast for Thailand to 2.4% from 2.8% on Friday while household debt remains among the highest in Asia at around 91% of GDP.
LPN Development said this week that it was planning to sell its riverside condominium units in bulk to corporate clients to use as accommodation for their executives.
“This condo was finished four years ago and still has some unsold units. If we can close the sale, the company will increase its cash flow in the second quarter, which is low season in the property market,” chief executive officer Apichart Kasemkulsiri said.
“We may even surpass first-quarter sales,” he added.
Apichart said the property market has suffered a severe contraction in the first half of the year, with both units sold and new project launches at their lowest in six years.
“We expect the situation to improve in the second half as government stimulus campaigns increase people’s purchasing power,” he said. “Although interest rates are still high, people are now used to the situation and have learned to adapt.”
Chanond Ruangkritya, CEO of Ananda Development Pcl, said the company had sold its 2.54-billion-baht stake in five serviced apartments to Mitsui Fudosan Asia Development (Thailand). The apartments are located in Bangkok’s Ratchada, Sukhumvit Soi 8 and 59, and Sathorn areas and in Pattaya, he said.
“Selling the stakes in these serviced apartments will benefit the company and shareholders as the money will be added to our rotating fund, which will be used to expand the business and follow our investment plan,” he said.
Chanond insisted Ananda would continue investing in serviced apartments despite the sell-off, adding that the investment plan may be adjusted for economic and market conditions.
Ananda currently has properties worth 28.28 billion baht ready for transfer in 2024, and 11.92 billion baht for transfer next year.
Thailand’s residential property market index fell for the sixth consecutive quarter in Q1 this year, as the value of transfers dropped by 13.4%.
