Miniature house models on display at a recent property fair. (Photo: Varuth Hirunyatheb)

Listed residential developers have sought to retain and raise cash by avoiding new costs, borrowing short-term loans from major shareholders, and selling assets to mitigate risks amid difficulties in the financial market and limited mortgage loan approvals.

Kessara Thanyalakpark, managing director of SET-listed developer Sena Development, said the residential market situation is very poor.

Although units were sold, transfers could not be completed as homebuyers were facing mortgage loan rejections.

"We need to closely monitor the situation in the second half as challenges would arise on both the demand and supply sides," she said.

"The financial market for developers is more fragile, so we may delay launching new projects that were originally planned for this year to retain cash."

Launching new projects could incur additional costs, said Wongsakorn Prasitvipat, managing director of SET-listed developer Property Perfect (PF).

"It's not a downward trend in the residential market; there is demand but homebuyers' purchasing power is very weak due to difficulties in securing mortgages," he added.

PF has launched only one project worth 2 billion baht, down from the original plan of seven projects worth 7.7 billion baht. It will focus on existing ongoing projects, which include over 50 sites in Greater Bangkok.

"Other developers are also exercising extra caution and are slowing down investments," said Mr Wongsakorn. "To help improve the market, the loan-to-value limits should be revoked."

Following a signal of poor market sentiment in the second quarter, some listed developers have been raising funds by borrowing short-term loans from major shareholders during the past two months.

Areeya Property Plc reported that it would borrow 50 million baht from Viwat Lauhapoonrungsi, an executive director and major shareholder, at an annual interest rate of 9% for one year.

Nirvana Development Plc early last month resolved to approve financial assistance from members of the Piyasombatkul family, who are major shareholders and directors of the company.

The assistance will be provided in the form of a short-term, unsecured promissory note with a credit line of up to 60 million baht for six months from the date of withdrawal, at an interest rate of 6% per annum.

Siamese Asset Plc will also receive financial assistance from four major shareholders by issuing short-term bills totalling up to 500 million baht, with the debt instruments maturing within 270 days from the date of issuance.