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Bangkok Condo – Asia Plus Warns of Condo Backlog

By on Nov 26, 2013 in Property News

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Not all sold units translate into revenue

SET-listed developers should be more concerned with quality in their condo backlog, as sold units may fail to realise revenue for a year to come, warned securities firm Asia Plus Securities Plc.

Therdsak Thaveeteeratham, senior vice-president of research, said not all sold condo units can be transferred and characterised as revenue even though developers have enjoyed good sales rates for condo projects this year.

“Risky projects are those with low down-payment collections, sales closing in a single day or having no rise in unit prices. These projects are vulnerable to speculators or buyers refusing unit transfer when project construction is complete.”

He said developers should monitor the quality of condo buyers as the sold undelivered units will become their debt eventually. Some buyers may be affected by the government’s policy to lower the loan-to-value ratio.

The sales backlog of the top 15 SETlisted developers continued to rise as they increased their portfolio, particularly for condos. At the end of the third quarter,their residential sales backlog totalled 279 billion baht, with 87% or 240 billion from condos.

Mr Therdsak estimated 20% of the condo sales backlog was speculators. If this 48 billion baht cannot be turned into revenue, the average net interest-bearing debt of the 15 SET-listed developers will rise from 1.2 times at the end of September 2013, he said.

The net interest-bearing debt of the 15 listed firms in the third quarter rose to 200 billion baht, up 45.5 billion.

“SET-listed developers will adjust,launching more single houses or townhouses that can return revenue in a short period to compensate for lost revenue from undelivered condo units,” he said.

Among the 15 SET-listed developers,Sansiri had the largest sales backlog totalling around 60 billion baht, of which 50 billion was from condos. It was followed by Pruksa Real Estate with a 40-billionbaht backlog, with 29 billion from condos.

Though nine-month pre-sales of these listed developers was healthy at 192 billion baht, up 20% year-on-year, pre-sales by quarter were decreasing this year. Presales in the first quarter totalled 75 billion baht, dropping to 60 and 55 billion in the second and third quarters, respectively,as purchasing power dipped.

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Source | Bangkok Post 20 November 2013

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