In a recent analysis, CGSI (CGS International Securities) has reported promising growth forecasts for Thailand's real estate sector, specifically for the top ten listed property companies. According to CGSI's estimates, these companies are expected to see a presales increase of 7.2% quarter-over-quarter and 1.3% year-over-year, amounting to a total of 58.8 billion baht in the first quarter of 2025. This figure represents 26.3% of CGSI's annual presales target and 22.3% of the overall goal set by property firms for the year.
In the first quarter of 2025, presales in the Asia Nawa Racha area are projected to reach 30.8 billion baht, marking a 1.7% quarter-over-quarter increase but a 7.5% decrease year-over-year. This decline is attributed to weakened demand, intensified competition, and a rise in loan rejection rates along with increased cancellations. Conversely, presales for condominiums are expected to rise by 14% quarter-over-quarter and 13.1% year-over-year, totaling 28 billion baht. This growth is largely driven by new condominium projects launched by SIRI.
CGSI's analysis highlights a mixed performance among key players in the market. Companies such as AP, PSH, SIRI, and ANAN are projected to experience an uptick in presales, while LH, QH, ORI, and SC are expected to see declines. SPALI and LPN are anticipated to maintain stable presales.
In a significant policy development, the Cabinet has approved a reduction in transfer fees from 2% to 0.01% and mortgage fees from 1% to 0.01% for residential properties (both horizontal and condominium) priced below 7 million baht per unit. This measure will be effective from the date of publication in the Royal Gazette until June 30, 2026. Analysts believe this initiative will expedite property transfers and help reduce the inventory of ready-to-move-in homes priced below 7 million baht.
Furthermore, the easing of loan-to-value (LTV) regulations and the reduction of transfer and mortgage fees are expected to stimulate demand, potentially increasing property transfers by 7-8% in the second quarter of 2025. Analysts suggest that horizontal residential properties will benefit more from these measures compared to condominiums. The recent earthquake on March 28, 2025, may have caused some buyers to reconsider purchasing high-rise properties.
CGSI believes that mid to high-end residential projects, particularly those priced above 3 million baht, will gain the most from these new measures. Companies such as SIRI, AP, SPALI, LH, and QH are expected to benefit significantly from the government's stimulus initiatives.
However, CGSI projects that overall presales for listed property companies in 2025 will decrease by 6.6% year-over-year, totaling 223.4 billion baht. This anticipated decline is primarily due to a projected 28.8% drop in condominium presales following the earthquake.
On a more optimistic note, CGSI forecasts that the Bank of Thailand may lower policy rates 2-3 times this year, which could improve market sentiment and enhance buyers' purchasing power. A reduction in interest rates by 25 basis points is expected to increase home affordability by 2.33%. Additionally, buyers will benefit from lower mortgage payments, which could decrease by 2.28% due to the same interest rate cut.
Despite the challenges, CGSI maintains a "hold" recommendation on real estate stocks, noting that while presales and profit growth may slow in 2025, valuations remain attractive. The real estate sector is trading at a price-to-earnings (P/E) ratio of just 6.4, which is below the historical average. The sector also offers a compelling dividend yield of 8.2% for the year.
CGSI has identified AP and SIRI as top picks in the sector due to SIRI's potential to outperform competitors and its attractive dividend yield. AP, with a higher proportion of mid to high-end properties, is also noted for its appealing valuation.
However, the real estate sector faces downside risks if macroeconomic conditions remain uncertain and if interest rates are adjusted less than anticipated. Conversely, upside potential could arise from further interest rate cuts and the extension of land lease periods to 99 years.
Meanwhile, TISCO Financial Group reported its first-quarter results for 2025, revealing a net profit of 1.643 billion baht, a decline of 5.2% compared to the same period last year. Mr. Sakda Chai Pichapat, CEO of TISCO, attributed the drop to reduced net interest income and increased provisions for expected credit losses.
The decrease in net interest income by 2.0% was influenced by the Bank of Thailand's adjustment of interest rates in February 2025 and the implementation of the "Khun Suey Ruay Chuay" project, which aims to alleviate interest burdens for vulnerable borrowers. Additionally, provisions for expected credit losses rose to 0.7% of average loans due to anticipated growth in high-yield loan segments.
On a positive note, non-interest income increased by 3.4%, driven by a 10.3% rise in income from asset management and a 3.3% increase in securities brokerage fees, reflecting TISCO's growing market share. However, the commercial banking sector continues to feel the effects of a sluggish automotive market, which has hindered recovery in insurance brokerage fees.
Compared to the previous quarter, TISCO's net profit decreased by 3.4%, primarily due to a 2.5% drop in total income and an increase in credit loss provisions. The bank's total assets as of March 31, 2025, stood at 282.1 billion baht, a slight increase of 0.1% from the end of 2024, bolstered by a 2.9% rise in fair value assets.
As TISCO navigates these challenges, it remains committed to a cautious lending policy and robust risk management practices. The bank's non-performing loans (NPLs) increased by 2.3% from the previous year, resulting in an NPL ratio of 2.42%, up from 2.35% in 2024.
In summary, both the real estate and financial sectors are facing a mix of challenges and opportunities as they adapt to changing economic conditions and government policies aimed at stimulating growth.
