Ratings agency Fitch has warned its outlook on the corporate ratings of some Thai property developers could come under pressure during the second half of 2014 if protracted political instability intensifies the country’s economic downturn.
In a statement today (Thursday) it said it believes most other corporate sectors – including large industrial, energy-related, and telecoms companies – are in a stronger position to weather the political impasse.
The most affected sectors are those exposed to declining consumer confidence, according to Fitch Ratings. Property developers and retail operators have been reporting weaker operating performance since the onset of political instability in 4Q13, and rating headroom has therefore narrowed across both sectors, is said.
Fitch noted that presales of leading residential developers fell sharply in Q1 2014, including those for Prueksa Real Estate, Sansiri, Land and Houses, and AP Thailand. This was especially the case for their condominium projects, it said, where construction delays compounded the sales drop.
Nevertheless, the company expects revenues to be maintained or to grow slightly in 2014, supported by the recognition of their strong backlog of pre-sales and a high level of completed projects ready to transfer.
Commercial property developers are less affected. The average commercial occupancy rate in Q1 2014 for Bangkok and its suburban areas remained above 95 percent, according to Colliers International. Most of the commercial property developers’ income comes from rental income which is buffered by long-term lease agreements, even though some discounts on rental were given to tenants in areas affected by the political rallies during Q4 2013 and Q1 2014, it noted.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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