The initial losses of property developers from the floods are estimated at 18 billion baht, but the industry's stability and that of the financial institutions that support it should remain intact barring a catastrophic flood in Bangkok, says a consultant.
Sopon Pornchokchai, president of Agency for Real Estate Affairs (AREA), said inundated land contained 311 projects, either partially completed or planned, represented 34,203 unsold units with a value of 98 billion baht.
These areas are Kantana (west side), Taling Chan-Suphan Buri, Tiwanon-Song Prapa, Nakorn In, Nava Nakorn-Rapeepat, Bang Bua Thong, Pathum Thani-Highway 345, Rangsit-Nakhon Nayok Klong 1 to 7, Rangsit-Bang Poon, Ratchapruek-Tha It, Lam Luk Ka and Ayutthaya (Bang Pa-in-Wang Noi).
There are also risky locations, covering 226 projects with 23,908 unsold units valued at 76.51 billion baht. They were in Klong Sam Wa-Nong Chok, Pin Klao, Thon Buri, Rangsit Klong 7 to 15, Ramkhamhaeng, Min Buri, Suwintawong, Lat Krabang and Sai Mai.
Assuming 20% of sold units are returned due to flooding, those losses are estimated to total 53.1 billion baht. Combined with the 174.5 billion in value of unsold units, the possible opportunity loss equals as much as 227.6 billion.
"If floods delay income for six months, at an interest rate of 0.5% a month that is 6.71 billion baht," he said. "If development costs in the flooded areas rise by 5%, this is another 11.26 billon baht in losses."
Developers could face 17.97 billion baht in losses, although this is only an estimate and it could worsen.
However, the industry should be able to withstand these losses as long as utilities in the inner city are not affected by floods.
If inner Bangkok is flooded, all businesses will be temporarily closed and the economy will be crippled. "Property businesses will nosedive due to lack of purchasing power," said Mr Sopon.
Bangkok Post 26/10/2011
Sopon Pornchokchai, president of Agency for Real Estate Affairs (AREA), said inundated land contained 311 projects, either partially completed or planned, represented 34,203 unsold units with a value of 98 billion baht.
These areas are Kantana (west side), Taling Chan-Suphan Buri, Tiwanon-Song Prapa, Nakorn In, Nava Nakorn-Rapeepat, Bang Bua Thong, Pathum Thani-Highway 345, Rangsit-Nakhon Nayok Klong 1 to 7, Rangsit-Bang Poon, Ratchapruek-Tha It, Lam Luk Ka and Ayutthaya (Bang Pa-in-Wang Noi).
There are also risky locations, covering 226 projects with 23,908 unsold units valued at 76.51 billion baht. They were in Klong Sam Wa-Nong Chok, Pin Klao, Thon Buri, Rangsit Klong 7 to 15, Ramkhamhaeng, Min Buri, Suwintawong, Lat Krabang and Sai Mai.
Assuming 20% of sold units are returned due to flooding, those losses are estimated to total 53.1 billion baht. Combined with the 174.5 billion in value of unsold units, the possible opportunity loss equals as much as 227.6 billion.
"If floods delay income for six months, at an interest rate of 0.5% a month that is 6.71 billion baht," he said. "If development costs in the flooded areas rise by 5%, this is another 11.26 billon baht in losses."
Developers could face 17.97 billion baht in losses, although this is only an estimate and it could worsen.
However, the industry should be able to withstand these losses as long as utilities in the inner city are not affected by floods.
If inner Bangkok is flooded, all businesses will be temporarily closed and the economy will be crippled. "Property businesses will nosedive due to lack of purchasing power," said Mr Sopon.
Bangkok Post 26/10/2011
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