Earthquake to Impact Profits of Listed Real Estate Developers Amid Existing Market Glut
High-rise condominium transactions in Greater Bangkok are projected to plummet by 50%, with overall condo transfers in the region forecasted to decrease by 0.8% in 2024 following last week’s significant earthquake, according to recent analyses by market research firms.
Research indicates that the value of ownership transfers for high-rise condo projects could fall by half in 2025 compared to 2024, reflecting the challenges posed by the earthquake that struck on March 28.
Financial forecasters predict a decline in net profit for residential developers by 15% this year. Notable companies including L.P.N. Development, Origin Property, and Pruksa Holding are expected to experience substantial effects from this market downturn.
In a pessimistic scenario, net profits for residential developers could plummet by as much as 31% if condo ownership transfers come to a halt for high-rise projects.
The unprecedented earthquake has prompted concerns over ongoing instability within the residential sector, leading to a cautious approach among condo residents that is likely to hinder sales and impact upcoming inventory.
Developers specializing in condominiums will face challenges, especially Ananda Development and Origin, known for their significant ready-to-move-in inventory. Origin is projected to encounter the most pronounced immediate impact.
Looking ahead, while no further seismic activity is expected in the medium term, condo demand could rebound once industry experts restore confidence among owners.
Property developers focused on delivering high-quality construction standards may see improved returns and profitability as the market stabilizes.
However, the looming threat of additional earthquakes could exacerbate the situation, leading to lower revenue expectations and waning market confidence in financial support. Tighter debt repayment schedules could also stress liquidity and cash flow.
Economic Impact Estimated at B30 Billion
Initial evaluations indicate a potential economic impact of approximately 30 billion baht, significantly affecting the tourism, real estate, and construction sectors.
While no buildings collapsed during the earthquake, the recovery of the condo market will heavily rely on restoring consumer confidence.
Condo transfers in Greater Bangkok are now anticipated to reach 85,000 units in 2025, a 0.8% reduction from previous projections of 2.6% growth.
Prospective buyers and owners contemplating condo ownership transfers are likely to postpone decisions as they seek assurance regarding safety and necessary repairs, including any architectural damage.
In light of these uncertainties, condo investors may also delay their investment plans, particularly regarding resale prices.
Concerns regarding living conditions may prompt tenants to seek low-rise housing alternatives, even if it means incurring higher rents, or to pursue more affordable low-rise rentals in suburban areas.
This slowdown in condo transfers and purchasing decisions is expected to leave unsold inventory in Greater Bangkok at approximately 74,000 units by 2025.
Additionally, challenges such as lower purchasing power among middle to lower-income buyers and restricted access to home loans are likely to hinder new condo launches throughout the year.
Developers may postpone new projects and boost marketing efforts by emphasizing safety features, contractor reliability, disaster preparedness, and resident support services.
The low-rise housing market is predicted to gain traction as individuals concerned about condo living safety consider relocating or acquiring more affordable low-rise options.
