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Discipline keeps Thai developers healthy Featured

The leading firms of property of Thailand succeed in maintaining their financial health by strictly adhering to debt-to-equity ratio well below 2:1. The firms learned the lesson from 1997 financial disaster. Experts are of the opinion that it makes impossible for the speculators to create property bubble.

Prasert Taedullayasatit, director and chief business officer of Pruksa Real Estate, is of the view that after financial disaster of 1997 most firms of property successfully kept the growth of their business in strict check with well disciplined cost management ensuring that debt-to-equity did not cross 2:1 limit.

Commercial lenders have also devised a policy that insists on holding property as collateral till the strong financial results have been indicated by the firms.

He explains that the business of the firms is now controlled by commercial banks. Such banks restrict the loans for the firms. They have clear rule of funding the project that the project of small and medium firms should show fifty percent presales and thirty percent in case of the project of top ten listed organizations.

Srettha Thavsin, Sansiri president, explained that most property firms suffered financial disasters during the 1997 due to policy of Stock Exchange of Thailand which insisted a business to have long term growth. Thus firms began to purchase lands for serving new projects of three years. When the financial crisis emerged, such land banks posed a burden for the firms. The experience of financial crisis 1997 has made the property firms to buy lands required for the current plans.

Last modified onMonday, 12 August 2013 12:25

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