The first-quarter net profit of 10 SET-listed residential developers has fallen to 3.56 billion baht, the lowest level in over a decade and less than half the five-year average, attributed to the economic slowdown and sluggish housing demand, Kasikorn Securities reported.
Sorapong Jakteerungkul, senior vice-president at Kasikorn Securities, said combined net profit fell short as expected, dropping 38% year-on-year and 51% quarter-on-quarter. The sharp decline was driven by falling top-line revenue and narrower operating margins.
"When the top-line drops, selling, general and administrative expenses rise relative to sales, eroding economies of scale," he noted.
"In some quarters over the past decade, combined profits hit 12-13 billion baht, while the five-year quarterly average was 8.3 billion baht."
The 10 developers covered in the report are AP Thailand, Britania, Land & Houses, L.P.N. Development, Origin Property, Pruksa Holding, Quality Houses, SC Asset Corporation, Sansiri and Supalai.
Mr Sorapong said the report identified one bright spot in the first quarter -- housing gross margins improved quarter-on-quarter, recovering from the fourth quarter of 2024's aggressive discounting when developers rushed to close deals ahead of the deadline of transfer and mortgage fee cuts.
"Some developers cut prices too deeply amid fears of broader markdowns," he said.
"In the first quarter of 2025, the market stabilised, helping margins recover slightly. Still, with weak demand and the pulled-forward fourth quarter transfers, profits remained under pressure."
He added that developers had tried to curb new supply amid a prolonged oversupply. Many launched projects earlier to drive growth, but when demand suddenly dropped, the market became unbalanced.
In the first quarter of 2025, the 10 developers recorded combined presales of 54 billion baht, while the value of new project launches tallied only 44 billion baht. They also exercised caution in land acquisition and construction activity.
These measures aimed to strike a balance between supply and demand and help mitigate financial risk and liquidity concerns. As a result, both interest-bearing debt and the net debt-to-equity ratio declined year-on-year and quarter-on-quarter.
Despite these adjustments, soft demand still outweighed supply controls, dragging down overall performance, he said.
Combined first-quarter profits accounted for only 15% of projected full-year earnings. While profits may gradually improve, Kasikorn Securities forecasts a 15% year-on-year decline in 2025, citing persistently soft market conditions.
"Several factors could support a mild recovery in the remaining quarters, though none are as impactful as strong economic growth," Mr Sorapong said.
"These include property incentives, easing of loan-to-value rules, new launches, pricing strategies, and potential interest rate cuts."
Additional support could come from a rise in condo backlog transfers this year. These factors may modestly boost performance in the second to fourth quarters, but annual profits are still expected to fall short of historical norms.
"Thailand's housing sector in 2025 will continue to face challenges, mainly from economic uncertainty," Mr Sorapong added.