The real estate business is projected to experience a 50% decline in Q2 compared to Q1. Therefore, this quarter is crucial for a complete re-engineering of the entire system, including cost structures, quality, service, and home delivery, to enhance financial liquidity and ensure the organization survives the Covid-19 crisis in 2020.

 

 

Overview of New Project Launches in Q1 2020 saw a total of 19,000 units, while Q2 is expected to see only 9,500 new launches, a further 50% decrease.

            Bangkok and Surrounding Area Condominiums had a total of 15,000 units launched in the first quarter, with an average price of 78,000 THB per square meter. Selling prices dropped by 12% from 2019, with the highest launches in the Sukhumvit-Ekkamai area at 22%, followed by Chatuchak-Prachachuen-Rattanathibet at 15%. In Q2, launches are expected to decrease by another 50% (7,500 units).

            Single-family Homes, Townhomes, Duplexes, and Commercial Buildings in Bangkok and Surrounding Areas saw 4,000 units launched in Q1, with an average price of 3 million THB per unit. Selling prices decreased by 20% from 2019, with the highest launches in the Saphan Sung-Min Buri-Ladkrabang area at 25%, followed by Nonthaburi at 18%. In Q2, launches are expected to drop by 50% (2,000 units).

Data from TERRABYTE

New Project Launches by Listed Companies in Q1

The top condominium launch champion is Supalai Public Company Limited with 1,036 units, followed by Pruksa Real Estate Public Company Limited with 834 units, and LPN Development Public Company Limited with 710 units.

The top single-family home launch champion is Land and Houses Public Company Limited with 806 units, followed by AP Thailand Public Company Limited with 684 units, and Quality Houses Public Company Limited with 320 units.

Data from TERRABYTE

            Given the ongoing Covid situation, we must anticipate a 20% increase in patient numbers, a rate that Thailand's medical public health system can still manage. If we assume this manageable scenario, the overall forecast for 2020 indicates a 30% decline in completed residential registrations in Bangkok and surrounding areas, totaling 78,000 units for both condominiums and single-family homes.

            In this situation, operators must adapt to survive because projections indicate that a 30% decline in performance for the real estate business poses the highest risk. The average gross profit margin for this sector is 30-35%, with net profit at 10-15%. This means that without internal organizational adjustments in management and sales costs, the performance for this year could result in a net loss of approximately 15%. For listed companies, there is still the option to issue bonds to generate additional cash flow. However, for medium and small enterprises without sufficient retained earnings to sustain operations for up to two years, they may need to consider mergers or asset sales, whether land or entire projects, to increase cash flow and keep the organization afloat.