Bangkok--24 Nov--TRIS Rating
TRIS Rating sees slowdown in housing demand and uncertain changes in market behaviors in the aftermath of the flood crisis, heightening credit risks of developers with high leverage and large concentration in low-rise projects. The outlooks of four property developers: PRIN, PF, PS, and QH have been revised to “negative” from “stable”.
TRIS Rating Co., Ltd. said today that demand for residential properties is expected to drop sharply in the fourth quarter of 2011 and to remain under pressure during the first half of 2012. Demand for low-rise units in heavily flooded areas could slow down well into the second half of 2012. Meanwhile, performance in the condominium segment should recover relatively quickly in 2012.
TRIS Rating expects demand and supply of the low-rise segment in flooded areas to stay in disequilibrium for an extended period, pressured by sluggish demand and overhanging supply. A number of homebuyers are expected to delay their purchases or ownership transfers. Housing supply in flooded areas is expected to rise from higher number of houses on sales in the secondary market.
TRIS Rating assesses the flood impacts on 13 rated property developers based on their product portfolios, geographic coverage, and financial strengths. Credit profiles of developers who have high leverage levels and whose product portfolios are heavily concentrated in low-rise segment will be affected most. Excess housing supply, uncertain shifts in market behaviours, and flood-related costs pose challenges for impacted developers to adjust their business models and re-build consumer confidence.
As a result, TRIS Rating has revised outlooks of four developers: Prinsiri PLC (PRIN), Property Perfect PLC (PF), Pruksa Real Estate PLC (PS), and Quality Houses PLC (QH) to “negative” from “stable”. The outlooks could be revised back to “stable” should developers demonstrate an ability to adapt and generate growth while keeping leverage levels down. However, the ratings could be downgraded if developers require longer time to regain their product competitiveness and financial strengths. TRIS Rating views credit risks of the remaining nine developers to rise only temporarily and stay consistent with their respective rating categories.
The detail of credit ratings and outlooks of all the 13 rated property developers are shown below.
Residential Property Developers Rated by TRIS Rating as of 24 November 2011
Developer Company Rating Outlook Outlook
(Before) (After)
1.Asian Property Development PLC (AP) A- Stable Stable
2. Lalin Property PLC (LALIN) BBB Positive Positive
3. Land & Houses PLC (LH) A Stable Stable
4. M.K. Real Estate Development PLC (MK) BBB+ Stable Stable
5. Noble Development PLC (Noble) BBB+ Stable Stable
6. Prinsiri PLC (PRIN) BBB- Stable Negative
7. Property Perfect PLC (PF) BBB- Negative* Negative
8. Pruksa Real Estate PLC (PS) A Stable Negative
9. Quality Houses PLC (QH) A- Stable Negative
10. Sansiri PLC (SIRI) BBB+ Stable Stable
11. SC Asset Corporation PLC (SC) BBB+ Stable Stable
12. Supalai PLC (SPALI) A- Stable Stable
13. Univentures PLC (UV) BBB Stable Stable
* Outlook was revised from“stable” on 18 Nov 2011.
Source: TRIS Rating