Amid the residential market slumps, SET-listed developers are diversifying to other businesses. Somchai Poomlard

SET-listed developers are exploring ways to diversify risks and increase revenue as the residential slowdown lingers, with projections indicating it will persist for a few more years.

Sorapong Jakteerungkul, senior vice-president at Kasikorn Securities Plc, said many developers are adjusting their strategies to navigate the market downturn, which has been exacerbated by oversupply and sluggish demand since 2023.

"In a typical year, new residential launches would surpass sales as developers aim for growth once sales pick up. However, in 2024 new launches were minimal due to reduced demand, resulting in sales figures comparable to the pandemic period," he said.

FEWER LAUNCHES

A key strategy adopted by several developers this year involves minimising new project launches and focusing on reducing unsold units to improve cash flow and liquidity.

Land and Houses Plc (LH), for instance, scaled back its plans significantly, with only four new projects worth 11.1 billion baht, the lowest number of launches in more than 20 years.

Despite this conservative approach, LH is targeting 23 billion baht in presales and 20 billion baht in transfers by focusing on clearing inventory from 75 existing projects with a combined development value exceeding 93 billion.

SC Asset Corporation Plc is adopting a similar approach, cutting new launches to 15 projects valued at 28 billion baht in 2025, compared with 17 projects worth 31.8 billion baht last year.

Supalai Plc plans to launch 36 new projects worth 46 billion baht in Greater Bangkok and the provinces, though this represents a reduction from 41 projects valued at 52.4 billion last year.

AssetWise Plc also downsized to 10 new projects worth 22 billion baht in Bangkok and Phuket, from 13 projects valued at 36.8 billion last year.

Major Development Plc has shifted its focus entirely, emphasising existing projects instead of launching new ones.

This strategic pivot aims to manage risks, protect profitability, and maximise revenue from completed, unsold units.

KEY FOREIGN DEMAND

Given weakened purchasing power among local buyers, foreign demand has become a crucial lifeline for the property market.

The share of condo transfers to foreign buyers has risen, with their proportion of total transaction value increasing from one-fifth in 2023 to nearly one-fourth in 2024.

Developers are increasingly targeting international buyers, especially in tourist hotspots like Phuket, where luxury properties remain resilient thanks to demand from affluent foreigners.

For instance, Sansiri Plc is capitalising on international interest by focusing on wealthy buyers from China, Russia and Europe to drive sales of high-end properties in Phuket.

The company also expanded into Pattaya, launching a new luxury condo project to capture foreign demand.

Charn Issara Development Plc is similarly eyeing luxury projects for foreign buyers, particularly in resort destinations such as Phuket, where sustained interest from overseas investors is helping to stabilise the market.

Origin Property Plc aggressively ramped up efforts in the foreign market, achieving record sales of more than 5.7 billion baht last year, up 225% year-on-year, out of total presales of 35.4 billion baht. Key foreign markets include Taiwan, China, Russia, Myanmar and Europe.

ADDING RECURRING INCOME

Another survival strategy involves expanding recurring income, particularly through rental properties and non-residential investments.

Mr Sorapong said developers are increasingly emulating LH's diversified revenue model, which reduces reliance on housing sales.

LH has successfully invested in retail (Terminal 21 malls), hospitality (Grande Centre Point hotels), and rental apartments in the US.

These ventures generated service and non-operating income of 9.1 billion baht and 1.7 billion baht, respectively, in 2024.

"Origin and SC Asset see LH as a role model," he said. "Both have diversified into hotels, serviced apartments, and logistics to create steady income streams amid weak residential sales."

Financial statements for 2024 showed only 3 out of 24 listed residential developers reported year-on-year net profit margin growth. A total of 14 reported declines, and seven recorded losses.

Among the top performers, Quality Houses Plc (QH) posted the highest net profit margin at 25.5%, followed by LH at 21.8%.

QH's residential business contributed only 20% of its net profit, with the majority coming from investments.

Some developers are branching out to non-property businesses, as Pruksa Holding Plc (PSH) entered the healthcare sector, developing hospitals from scratch.

Last year, PSH also expanded into logistics by partnering with Singapore-based CapitaLand to invest in the Omega Logistics Campus in Bang Bo, Samut Prakan.

EXPLORING NEW FRONTIERS

In addition to diversifying income streams, developers are exploring new markets, including the homebuilding sector, to reduce reliance on traditional residential sales.

Sutee Ketsiri, managing director of homebuilder Built To Build Group, said demand for self-built homes remains robust, even during economic downturns.

"Self-built homebuyers typically have stronger purchasing power because they already own land, which makes securing mortgages easier," he said.

The self-built home market is valued at 211 billion baht, presenting a lucrative opportunity for residential developers, said Mr Sutee.

PSH recently entered the homebuilding market through its subsidiary, Inno Home Construction, aiming to generate 1.6 billion baht in revenue by leveraging its expertise in precast production.

Origin Property also expanded into homebuilding through Britania Plc, its low-rise housing subsidiary, as part of its 2025 growth strategy. The move aims to capture demand for custom-built homes and carve out a share of this growing niche, said Mr Sorapong.

Property Perfect Plc launched a homebuilding division to cater to clients seeking bespoke residences. The company aims to diversify its business by leveraging its core strengths in construction, design and project management.

By diversifying geographically, expanding income streams and exploring new markets, developers hope to weather the prolonged residential market slowdown and position themselves for long-term stability and growth.