The Real Estate Information Center of the Government Housing Bank reports that the Current Situation Index for business operators in residential development in Bangkok and its vicinity for Q1 2022 is at 47.1, a decrease compared to the previous quarter (QoQ). This marks a return to a value below the neutral level of 50.0, indicating a further decline in confidence among operators in this quarter. In the previous quarter (Q4 2021), the confidence index was slightly above 50.

Dr. Vichai Viratakphan, the acting director of the Real Estate Information Center at the Government Housing Bank, stated that the decline in the confidence index this quarter is primarily due to the ongoing conflict between Russia and Ukraine, which has led to rising oil prices and construction material costs. Notably, the price of steel has increased by as much as 35% compared to the same period last year. Additionally, issues such as labor shortages in the construction sector, inflation, and interest rate adjustments have contributed to operators' concerns about conducting business in the current quarter.

When categorizing the operators, it was found that the confidence index for Listed Companies in Q1 2022 is at 51.1, above the neutral level of 50 but lower than the previous quarter's index of 56.3. This indicates that Listed Companies still have confidence in the current business environment, although it has decreased from the last quarter.

In contrast, the confidence index for Non-listed Companies in Q1 2022 is at 41.1, a continuous decline from the previous quarter's level of 45.5, showing that small operators in the Non-listed Companies group still lack confidence in the current business environment and have seen a decrease in confidence from the previous quarter (see Table 1 and Chart 1).

Table 1 Current Situation Index

Chart 1 Current Situation Index

The Expectations Index for the next 6 months for residential development operators in Bangkok and surrounding areas is at 56.5, down from the previous quarter's level of 62.0. Operators have reduced confidence across all areas, particularly regarding operational costs, which they are most concerned about increasing in the next 6 months, with the operational cost index dropping to 24.3, down from 26.5 in the previous quarter.

When categorizing operators by company type, Listed Companies have an expectations index for the next 6 months of 60.5, down from 67.4 in the previous quarter, but still above the neutral level of 50.0, indicating a decrease in confidence across all areas.

Meanwhile, Non-listed Companies have an index of 50.5, down from 54.0 in the previous quarter, with a decrease in confidence in almost all areas, except for sales, where this group believes there will be an increase in the next 6 months compared to the previous quarter (see Table 2 and Chart 2).

Table 2 Expectations Index for the next 6 months

Chart 2 Expectations Index for the next 6 months

Data Collection Method

The Real Estate Information Center of the Government Housing Bank has designed a questionnaire to create the “Business 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, each consisting of 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 (Listed Companies) compared to non-listed companies (Non-listed Companies) in a ratio of 60:40, as more than 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 surrounding areas, including 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 is above the neutral value, it indicates that operators have confidence and a positive outlook on the business situation. Conversely, if the index is below the neutral value, it indicates that operators have decreased confidence and a negative outlook on the business situation.