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Developers show rise in inventory

By on May 25, 2012 in Property News

Impact of flood on demand reflected in first quarter

The top-ten listed property firms have inventory and undeveloped land worth Bt200.29 billion in the first quarter of this year, higher than last year’s average of 5 per cent.

This is due to the slowdown in the demand for residences in the first quarter of this year following last year’s floods.

According to the filing to the Stock Exchange of Thailand for the period ended March 31, most property firms showed their inventory and land banks of underdeveloped residential projects higher than at the end of 2011 due to delays in construction.

Most of them are also faced with labour shortage which has led to delay in construction.

Pruksa Real Estate has shown inventory, land bank and development of residential projects worth Bt36.87 billion as of March 31, 2012, up 1.99 per cent from the end of last year. Sansiri recorded inventory, land bank and development of residential projects worth Bt27.39 billion as of March 31, up 6.95 per cent from the end of last year. Asian Property Development shows inventory, undeveloped land, and developing residential projects worth Bt27.23 billion, up 2.32 per cent from the end of year 2011.

Pruksa Real Estate director and chief business officer Prasert Taedullayasatit said that the company’s inventory is worth less than Bt2 billion, while the rest of the total Bt36.87 billion is undeveloped land.

He acknowledged that the company’s inventory had risen due to buyers delaying their decision to buy residences after last year’s floods. The market started to recover in March but that was not enough to match the company’s inventory, especially residences at locations that faced floods last year such as Rangsit, Bang Bua Thong, and other places.

SC Asset Corporation’s chief operating officer Kree Dejchai said the company’s inventory rose as the company had accumulated undeveloped land to develop residential projects this year and next year. That supports its target growth average of 10 per cent for the year.

“Our sales in the first quarter of this year met our target as none of our residential projects were hit by the floods last year,” he said.

Labour shortage
Meanwhile, property firms now face labour shortage and the delay in construction may impact their delivery and sales target.

Pruksa Real Estate chief business officer Prasert said that although the company’s construction process used prefabrication system and less labour than in the conventional process, the company still faced labour shortage for building its residential projects. However, the company has solved this problem by shifting its labour to build residences for delivery to buyers rather than build up inventory, he said.

Business Housing Association’s president Issara Boonyoung said that supply of labour in the market is now lower than the demand by between 30 per cent and 40 per cent, which is impacting the ability of property firms to develop residences and deliver them to buyers on time.

Meanwhile, the demand for labour to construct infrastructure is also rising following the government policy to expand investment in infrastructure projects.

“We have sent a letter to the Labour Ministry urging it to relax the rule on hiring foreign labour to meet the demand in the construction and property business. However, the ministry has not yet responded to our proposal,” he said.

He urged the ministry to seriously consider the proposal as the industry is facing a serious shortage of labour.

Source : The Nation 25 May 2012

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