SET-listed developer Pruksa Holding has reduced its goals for new project launches, presales and revenue for its residential development business to cope with a significant market contraction in the third quarter.
Pumipat Chatnoraset, executive vice-president of treasury and investor relations, said the housing business in the third quarter continued to slow because of the ongoing economic downturn, despite government measures to stimulate the property sector.
"Rising household debt prompted banks to become stricter on mortgage approvals," he said.
"Even though interest rates were cut 0.25 percentage points in September, the rate remains high, resulting in weakened purchasing power."
In the first nine months of 2024, Pruksa recorded total revenue of 15.6 billion baht, reflecting a 22% decline year-on-year.
This decrease was primarily based on a drop in the residential business, which fell 24% to 12.9 billion baht, while revenue from the healthcare sector increased 21% to 1.6 billion baht, said Mr Pumipat.
The decline in residential business revenue was driven by economic pressure affecting middle- to low-income earners, particularly for units priced 3 million baht or less, combined with higher mortgage rejection rates among these buyers, he said.
In addition, Pruksa decided to slow condo project launches the last few years after the pandemic, contributing to lower revenue.
Fewer launches resulted in reduced revenue recognition from the condo business, said Mr Pumipat.
During the first nine months of 2024, the market for new project launches decreased 21% year-on-year.
This was evident in the third quarter, which had the fewest project launches in three years as developers postponed plans, monitoring market conditions and adjusting their product portfolios to align with demand, he said.
Launches of townhouses and condos priced less than 5 million baht continued to decline as developers shifted focus to higher-value properties.
This included single detached houses priced between 15-50 million baht per unit and condos priced more than 10 million baht per unit, primarily in prime locations.
As a result, Pruksa adjusted its 2024 target for new residential project launches, falling to 20 billion baht from the initial target of 27 billion.
The positive impact on the townhouse market expected from recent interest rate cuts did not materialise, said Mr Pumipat.
The company lowered its presales target to 15.8 billion baht from 22.4 billion and its transfer target to 18 billion from 25.5 billion.