Real Estate Information Center, Government Housing Bank reports that the overall confidence index of residential development operators in Bangkok and its vicinity in Q2 2021 stands at 46.4, showing a slight increase compared to the previous quarter but still below the neutral level of 50.0 for nine consecutive quarters. Meanwhile, the confidence index for the second half of 2021 has also decreased, with both listed and non-listed companies showing a decline in confidence, particularly among non-listed companies, which have significantly reduced confidence regarding sales, performance, investment, and new project launches.

Dr. Vichai Viratakpan, Acting Director of the Real Estate Information Center, Government Housing Bank, stated that the economic slowdown has resulted in the confidence index of residential development operators in Bangkok and its vicinity in Q2 2021 remaining below 50.0. The index has been declining continuously since Q2 2019, starting from the enforcement of the Bank of Thailand's LTV control measures in Q2 2019. Subsequently, in 2020, Thailand faced the COVID-19 pandemic, which was another significant factor contributing to the slowdown in the real estate market in terms of both demand and supply.

The current pandemic situation, which remains uncontrolled as of Q2 2021, has impacted the Thai economy, causing a slower recovery than previously anticipated and leading residential development operators to be concerned about the effects of this situation both now and in the future.

However, when categorizing operators by company type, it was found that the current confidence of listed companies in Q2 2021 has an index value of 51.1, which is above the neutral level of 50 and higher than the previous quarter's index of 49.4. This indicates that public companies have confidence in their business in the current situation, attributed to increased sales, new investments, and the launch of new projects or phases, particularly in housing projects to replace sold units and compensate for the reduced launches of condominium projects.

In contrast, non-listed companies have a confidence index of 39.3, down from the previous quarter's index of 41.7, and still below the neutral level of 50, indicating that this group of operators lacks confidence in their business in the current situation across all factors (see Table 1 and Chart 1).

Table 1 Current Situation Index

Chart 1 Current Situation Index

Regarding the confidence index of residential development operators in Bangkok and its vicinity over the next 6 months, the overall confidence index is at 50.5, which has significantly decreased from the previous quarter's level of 58.8. Although the index is still above the neutral level of 50.0, there has been a substantial decline across all factors, reflecting that operators still maintain a slightly positive outlook on the development of the real estate business in the next 6 months. This may be due to the government's announcement of plans to reopen the country within 120 days, around October 2021, which, if achieved, could help revive the country's economy. However, concerns remain regarding the control of the ongoing COVID-19 outbreak.

When categorizing operators by company type, it was found that listed companies have a confidence index of 55.7 for the next 6 months, down from the previous quarter's level of 63.6. Although it remains above the neutral level of 50.0, there is a noticeable decline across all factors.

Meanwhile, non-listed companies have an index of 42.7, down from the previous quarter's level of 51.5, showing a significant decline across all factors. It is evident that this group of operators lacks confidence in their business for the next 6 months more than public companies, which may be due to disadvantages in investment for new project development or expansion and the confidence of buyers in the reputation of public companies, affecting opportunities and competition in the market, especially during the COVID-19 pandemic (see Table 2 and Chart 2).

Table 2 Expectations Index for the Next 6 Months

Chart 2 Expectations Index for the Next 6 Months

Methodology

The Real Estate Information Center, Government Housing Bank, has designed a questionnaire to create the "Confidence Index of Residential Development Operators in Bangkok and Surrounding Areas" on a quarterly basis, starting from Q4 2007.

The confidence index is divided into the Current Situation Index and the Expectations Index for the next 6 months, with both indices comprising 6 questions regarding company performance, sales, investment situation, employment, operational costs, and new project launches.

In processing the data, the center gives more weight to listed companies (60%) compared to non-listed companies (40%) due to the fact that over 60% of residential projects currently for sale in Bangkok and surrounding areas are from listed companies. The sample surveyed consists of operators developing residential projects in Bangkok and its vicinity, covering 5 provinces: Bangkok, Nonthaburi, Pathum Thani, Samut Prakan, Samut Sakhon, and Nakhon Pathom.

Interpretation: The neutral value of the index is 50.0 points. Therefore, if the index value is above the neutral level, it indicates that operators have confidence and a positive outlook on the business situation. Conversely, if the index value is below the neutral level, it indicates that operators have reduced confidence and a negative outlook on the business situation.