Residential Property – 2027: a stock-picker’s year

Property stocks have underperformed the SET by avg 18-47% over the past 12 months on weak presales and earnings. We see more limited downside at current levels, with earnings recovery in 2H26–2027 providing support to share prices. Sector net profit is expected to rise 22% YoY in 2H26 on stronger transfers and a favorable base, followed by 9% growth in 2027 on revenue growth and margin recovery from reduced promotions and selective price increases. The new city plan offers upside, while higher costs and limited pricing power remain key risks. Our Top Picks are AP, SIRI and SPALI.

The market grows; listed developers don’t. We expect 2026 transfers worth Bt881bn (+1.8%), rising to ~Bt900bn (+2%) in 2027. But two-thirds are secondhand homes (2Q26: +24% YoY), mostly Bt1.5–5mn units that compete head-on with new supply, and bank-owned listings have doubled. Developers cut supply: 2026 launches should hit a five-year low of Bt155bn (-9% YoY) to manage inventory levels.

Presales flat in 2026, +5% in 2027. We forecast 2026 group presales of Bt153bn, flat YoY and 8% below target, with 3Q26 at Bt38–39bn and 4Q26 at ~Bt40bn, led by AP and SIRI (>60% of 3Q26). For 2027 we expect Bt160bn, with demand pulled into 1H27 before the policy expiry.

2H26 recovers YoY; 2027 net profit +9%. We estimate 2H26 net profit of Bt11.3bn (+22% YoY, +38% HoH), led by LH and AP. Revenue should rise 6% YoY on condo backlog and ready-built low-rise transfers, plus extra gains at LH and SIRI, while gross margin (29.1%) stays below 2H25’s 29.9% on continued discounting. For 2027 we forecast revenue to grow 9.9% and net profit of Bt21.3bn (+9%). Backlog secures 18% of 2027 revenue, but AP, LH and SIRI hold 93% of it; QH, LPN and PSH must sell and transfer within the year (Underperform) while gross margin should recover to 29.2% in 2027 from a 28.0% low in 2026 on lighter discounting.

Policy cliff in mid-2027; upside from city plan A 1.00% policy rate and 2% GDP growth in 2027 give little lift. LTV and 0.01% transfer and mortgage fee relief (≤Bt7mn) run to 30 June 2027 but also cover secondhand homes, supporting volume more than developers’ share; their joint expiry should pull sales into 1H27, leaving 2H27 softer. While higher construction material costs could push 3–5% price rises in 2027. The new city plan (expected 2027), which raises FAR along transit lines, is an upside to our forecasts but may delay 1H27 launches in some area.

Key risks: presales miss; no relief after Jun-27; loan rejections; cost inflation; secondhand supply; launch delays; weaker foreign demand. Key ESG risks are GHG emissions, waste & water management, EIA assessment (E), product quality management, and health & safety policies (S).