Thailand’s property companies are restricting the launch of new residential projects and using financial management to drive their business this year, reports
, the country’s English news website. Their moves come in response to a drop in purchasing power due to Thailand’s slowing economic growth and ongoing political turmoil.
“We have to manage our cash flow at this time, having seen our customers delaying their decisions to buy and transfer homes in the current quarter,” Thongma Vijitpongpun, president and chief executive (CEO) of residential market leader Pruksa Real Estate, told
The company’s presales fell by about 15% in December, with the trend continuing into January with a 15% to 20% drop, said the company’s managing director for condominiums, Prasert Taedullayasatit. He added that while the demand to buy was still there, Thailand’s prolonged political uncertainty had damaged homebuyers’ confidence.
Thongma said Pruksa was managing its cash flow by reducing its inventory of homes ready for sale from an average of two months’ worth of stock to just one month, especially for detached housing and townhouses. The company has also reduced the number of project launches this year from 70 to 40-50 projects. This will reduce both construction costs and the budget for acquiring land.
“We have to manage our cash flow to support our business during a period of slower sales and transfers to customers,” Thongma said.
Adisorn Thananun-Narapool, managing director of real estate firm Land and Houses, said the company was halving its inventory of homes ready to transfer to customers, from 600 units to 300 a month. This will help the company to manage its cash flow during a period of lower sales value, which began in December.
“Our presales dropped by up to 50% in December, and continued to fall in the first month of this year,” president Naporn Sunthornchitcharoen added. Adisorn said the company was also managing its cash flow through the planned issue of an 8 billion Baht (THB) debenture, to be raised in two stages during 2014.
Part of the funds raised will be used to roll over some of a debenture due to expire this year, and the remainder for cash-flow purposes.
reports that small and medium-sized property firms are delaying the launch of residential projects and conserving cash to support the business for the long term, at a time when more customers are deferring the transfer of homes and banks are restricting the provision of mortgages.
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