The Real Estate Information Center of the Government Housing Bank reports the confidence index of residential development businesses in Bangkok and its vicinity for the current situation (Current Situation Index) in the second quarter of 2023, which stands at 47.5, showing a slight increase compared to the first quarter of 2023, which was at 46.7. However, compared to the same period last year, which had an index of 49.8, this quarter shows a decrease in confidence and remains below the neutral level of 50.0, indicating that while operators have slightly improved confidence, they still hold a negative view of the current business situation. In contrast, in the next 6 months, confidence is expected to soar to 62.1, particularly regarding the confidence to launch new projects.

 

Dr. Vichai Viratakphand, Inspector of the Bank of Thailand and Acting Director of the Real Estate Information Center revealed the results of the survey on the "Confidence Index of Residential Development Businesses in Bangkok and its Vicinity" for the second quarter of 2023. The current situation index stands at 47.5, showing a slight increase compared to the first quarter of 2023 (QoQ) at 46.7. However, compared to the same period last year (YoY), which had an index of 49.8, confidence has decreased and remains below the neutral level of 50.0.

When examining each aspect, it was found that two areas have confidence indices above the neutral level of 50 points: investment at 55.8 points, which is an increase of 3.3 points from the previous quarter, and employment at 53.3 points, which is a slight decrease of 3.2 points from the previous quarter. This indicates that operators have consistently maintained confidence in these two areas since last year.

Meanwhile, the confidence levels below 50 points, indicating a lack of confidence, include performance at 44.8 points, continuing for two quarters, sales at 46.0 points, and the launch of new projects and/or new phases at 47.7 points, both slightly below 50 points but showing increases of 3.2 and 0.6 points from the previous quarter, respectively. Additionally, the operational cost index (inversely related) stands at 37.4 points, which, while significantly below the neutral level, has shown an upward trend from the previous quarter and has been increasing since the second quarter of 2022, indicating improved adjustments by operators in this area.

“The results of the confidence survey indicate that although in the second quarter of 2023, operators still have low confidence regarding sales, performance, and the launch of new projects and/or new phases, this is due to various negative factors, particularly the increase in the policy interest rate by the Monetary Policy Committee, which was announced on May 31, 2023, raising it by 0.25% per annum from 1.75% to 2.00% per annum. This marks the third interest rate hike within the first five months of 2023. However, it was found that confidence in all three areas has slightly improved, which may support the confidence level of operators in terms of investment and employment. Additionally, the interest rate hike is considered a significant negative factor affecting the confidence of operators regarding operational costs, which remains at the lowest index compared to other areas.”

 

When classifying confidence by operator group, it was found that the current confidence index of Listed Companies in the second quarter of 2023 stands at 52.1, higher than the previous quarter's index of 50.0, which is the neutral level. This indicates that operators in the Listed Companies group still have confidence in the current business situation. The confidence of Listed Companies in areas above 50 points includes performance, sales, investment, employment, and the launch of new projects and/or new phases, while only the operational cost confidence index (inversely related) remains significantly below 50 points.

In contrast, the confidence index of Non-listed Companies in the second quarter of 2023 is 40.6, down from the previous quarter's level of 41.9, and continues to remain below the neutral level of 50.0 since 2022, indicating that small operators in the Non-listed Companies group are more concerned about negative factors than those in the Listed Companies group. Notably, the confidence of Non-listed Companies shows no aspect exceeding the 50-point level (see Table 1 and Chart 1).

The confidence index of residential development businesses in Bangkok and its vicinity for the next 6 months (Expectations Index) stands at 62.1, showing a slight increase from the previous quarter's level of 61.4, and the index is above the neutral level of 50.0, reflecting that operators have a more positive outlook on the real estate business situation in the next 6 months, with increases across almost all areas, except for investment, which has decreased slightly but remains above the neutral level. Meanwhile, operational costs (inversely related) have slightly decreased, indicating that costs are still rising slightly.

The overall increase in confidence for the next 6 months is likely due to the positive outlook following the establishment of a new government, which is expected to introduce policies and measures to stimulate overall economic recovery, including various measures to support the real estate business.

When classifying operator groups by company type, it was found that Listed Companies have a confidence index for the next 6 months of 69.1, up from the previous quarter's level of 67.1, indicating that operators in the Listed Companies group have increased confidence in the real estate business, with improvements across almost all areas, particularly in the launch of new projects and/or new phases, which increased by 8.8 points from the previous quarter, except for the operational cost confidence index (inversely related), which remains significantly below the neutral level of 50 points.

Meanwhile, the confidence index of Non-listed Companies stands at 51.6, down from the previous quarter's level of 52.9, indicating that operators in the Non-listed Companies group have decreased confidence, particularly regarding sales, investment, and employment. However, confidence in operational costs (inversely related) and the launch of new projects and/or new phases has increased. Nevertheless, only confidence in employment and operational costs (inversely related) remains below the 50-point level (see Table 2 and Chart 2).