Easing mortgage rules, new launches to boost Thai property sector: Maybank KE

THAILAND'S property space is set for take-off in the new year ahead thanks to favourable fiscal measures and new supply coming in, according to Maybank Kim Eng (Maybank KE) in a recent sector note.

Stocks under Maybank KE's coverage are projected to book a combined year-on-year revenue growth of 11 per cent as well as 13 per cent earnings growth in 2022, notwithstanding potential Covid-19 related disruptions.

The brokerage remains "positive" on the sector with expectations for the upcoming Q4 results season to be the best quarter of the year for Thai property developers under its coverage, led by real estate giants Land & Houses, Quality Houses and Pruksa Holding.

In a Dec 17 report, analyst Vanida Geisler said she foresees strong recovery momentum for Thailand's listed developers throughout 2022 with double-digit presales and earnings growth.

This comes as the Bank of Thailand's recent easing of its loan-to-value ratio (LTV) to permit 100 per cent LTV borrowing until December 2022, which is expected to buoy both consumer and developer confidence during this period.

Land & Houses is Maybank KE's top "buy" pick, as it believes the specialist in mid to high-end landed property development will continue to reap the benefits of healthy landed property sales and the 100 per cent LTV allowance.

Overall industry sentiment is to be further boosted by a slew of new property projects planned for next year, said Geisler, who believes the anticipated new launches will not lead to an oversupply considering that declining new launches from 2019 to 2021 had led inventory to drop to its lowest levels since 2016.

The analyst thinks developers are likely to focus on the landed property business going forward, as the sub-sector grew 12 to 13 per cent since 2020 amid the recent inventory dearth.

"We expect rising residential prices to offset inflationary pressure from higher building material prices. We also foresee additional property incentives (such as a higher price ceiling for transfer and mortgage fee incentives) from the government," she said.

Other potential upside catalysts include an anticipated government policy regarding a 10-year long-term visa for certain foreigners who buy properties in Thailand.

"When foreign tourists, particularly from China return, the government may seriously consider this issue again," said Geisler.

"Note that condominium units sold to foreigners peaked in 2018 at 57,251 units before gradually declining to around 20,449 units in H1 2021."

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