The deadly Erawan Shrine bombing is expected to weaken already soft demand in the property market.
The bleak prospects have prompted many residential developers to rethink and even scale down their plans for the next four months, normally considered the sector's high season.
In the wake of the bombing on Aug 17, SET-listed developers including Supalai Plc, Property Perfect Plc, Major Development Plc and Noble Development Plc have decided to postpone some or all of the projects they had planned to launch this year.
Thailand's largest developer, Pruksa Real Estate Plc, is considering a cut in new launches, while AP (Thailand) Plc has shifted its focus to single-house and townhouse projects because the low-rise segment is less risky than the condominium market.
"Developers should be more cautious of new investment, particularly in large projects that take a few years to develop," says Atip Bijanonda, president of the Housing Business Association.
They should instead focus on smaller projects that can have sales closed and construction completed in a shorter period, he adds.
"Maintaining financial liquidity with cash on hand enough for one year amid an uncertain situation is a must, as this year's fourth quarter may not be a hot time for the sector to boost new residential sales," Mr Atip says.
"In marketing events or housing fairs in recent weeks, we have seen more existing projects than new launches introduced with campaigns. This shows that developers have tried to sell their housing stocks to boost revenue."
Suriya Poolvoralaks, managing director of Major, says the company has scaled down a large condo project into a smaller one with eight storeys and only 200 units, which can generate sales and revenue more quickly.
"We have been scaling down since mid-year because the economy is not good," he says. "After the bomb blast, we may consider postponing the launch of a condo project worth 1 billion baht to next year from the fourth quarter."
Pruksa is considering how many projects it will postpone to next year due to many negative factors. "It is hard to have new sales," says managing director Prasert Taedullayasatit. "We will try to transfer our condo sales backlog to have revenue as targeted."
Mr Prasert, also president of the Thai Condominium Association, suggests developers deal with financial institutions to help their customers get mortgage loans.
"In the remaining months, developers need to accelerate condo transfers," he says. "The impact from the Bangkok bombing on the property sector may be minimal in the short term but it will be bigger if the effect on tourism prolongs."
Theeraphon Voranithiphong, executive vice-president of Noble, says the company has decided to postpone to next year all four projects due to launch in the next four months.
The projects worth a combined 13 billion baht comprise a single-house scheme in the Watcharapol Road area and three condo projects in Thong Lor, Ari and at an undisclosed site.
"Presales and revenue will not achieve their targets as the market situation becomes weaker due to many negative factors including the bombing," says Mr Theeraphon. The presales target was 10.2 billion baht.
Like Property Perfect, Noble will focus on 10 existing projects in Bangkok locations including Sukhumvit Soi 33, Thong Lor, Phattanakan Road, Ari, Phaya Thai, Rama V Road, Watcharapol Road and Ratchadaphisek Road.
Assistant chief executive of Property Perfect Theerathat Singnarongthon says the company has cut the number of new projects launched this year to 15 worth 20 billion baht from the planned 22 projects worth 26 billion baht.
The postponed projects are two condo sites near Abac's Bang Na campus and in Ramkhamhaeng and five low-rise projects in locations where demand may be weak.
"If we launch new projects and sales are slow, expenses will rise. We will be more selective when launching a project. At least we need to make sure of demand in that location," says Mr Theerathat.
Locations where demand is healthy include Bang Yai and Bang Bua Thong where the Purple Line will start running by the end of the year.
PF has also revised down revenue and presales targets by 10% from 16.8 billion baht and 14.4 billion to around 15 billion and 13 billion, respectively. This is the second adjustment since early in the year when it targeted 18 billion baht in both revenue and presales.
"We will focus on existing projects because sentiment is unfavourable and unpredictable for the remaining four months of the year," Mr Theerathat says.
As of June, PF had 50 residential projects on hand with units worth 35.8 billion baht remaining for sale, which accounted for 66.4% of total project value. Its debt-to-equity ratio was 1.4 times.
Tritecha Tangmatitham, deputy managing director of Supalai Plc, says the company will only launch condo projects when it is confident demand is strong.
"We will not launch condo projects when we are not sure of their locations because launches come with expenses," he says.
Vittakarn Chandavimol, chief marketing officer of AP, says the company will focus on the low-rise housing segment because it has lower risks and can generate revenue more quickly than condo projects.
"Low-rise housing demand remains strong and development is more flexible. If the economy is poor and purchasing power slows down, we can develop low-rise projects on a phase-by-phase basis," he says.
AP will launch 10 low-rise projects worth a combined 8.15 billion baht and will maintain presales of 28 billion baht and revenue of 25.3 billion as targets.
James Duan, chief executive of Fragrant Property Co, says the company has postponed two new condo projects worth a combined 18 billion baht from the fourth quarter to next year.
They include a site on Soi Sukhumvit 36 worth 1 billion baht and new phases of a project in Na Jomtien worth 8 billion.
"We need to hope for an economic recovery next year," he says. "If the government has no clear investment plan in the next four months to boost the overall economy, the situation next year may be worse."
Surachet Kongcheep, associate director of property consultant Colliers International Thailand, suggests developers cut marketing events and campaigns to reduce expenses and try to close sales from prospective buyers.
For smaller developers, postponing new projects planned for launch this year is the best way if they are not sure of market demand in the location. For launched projects, they can close sales offices to reduce costs and instead make appointments with new customers.
"Potential projects where sales rates will be good will be those with a mass transit station within walking distance. Unit prices should be affordable and no higher than 150,000 baht per square metre," Mr Surachet says.
Concerned about soft demand in the property market, developers are urging the government and its new economic ministers to use tax incentives to help restore housing demand in the remaining months of this year.
Thongma Vijitpongpun, president and chief executive of Pruksa, recently proposed cutting property tax and transaction fees to stimulate the property market and the economy in general.
He proposes the property transfer fee be reduced to 0.02% from 2%, mortgage fee to 0.01% from 1% and special business tax to 0.01% from 3.3%.
The cuts should be applied to housing units priced 2 million baht or lower, which would help low earners to afford their own homes, Mr Thongma says.