Update – Thailand’s property sector set to brace for impact from liquidity issues with one of leading developers – MQDC

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Update with statement from MQDC

The malaise in Thailand’s real-estate sector is set to face yet another blow after one of the country’s leading non-listed developers – Magnolia Quality Development Corp (MQDC), is reportedly facing liquidity problems, sources in the industry and financial sector say.

“This has been a persistent talk of the town among the financial sector that the firm is facing some kind of liquidity issue but why such a renown developer is having a problem is yet to known,” sources in the banking industry say.

As many as 3 bankers from 3 different institutions have confirmed that they have heard of talks of liquidity crunch in MQDC.

“I don’t know what is happening with this firm, the family has money but there is something that is not adding up for this firm,” another banker said.

MQDC, a non-listed developer that has been behind the building of Icon Siam (partially owned by MQDC), Magnolia (Ratchadamri) and Wizdom brand condominium projects, not to mention the massive development of a project called ‘Forestias’ on Bangna Trat road.

Forestias is one of the biggest projects the firm is undertaking and as per news reports the group has investment plans of more than 125 billion Baht in this nearly 400 rais of land project that continues to remain under construction.

MQDC’s advisor for corporate affairs Charlotte Donavanik has come out to deny that the company has any liquidity issues, but bankers and industry experts beg to differ.

The issue about ‘no liquidity issue’ has been a sharp contrast to the reports that some of the suppliers have seen their cheques not honored or have been asked to put off enchasing the cheques that have been handed to them.

“If the company had enough funds, then why would they not honor or request a delay in the payments?” one of the suppliers told Thai Enquirer.

Once again Charlotte of MQDC came out to defend saying that “there was no incident cheque bouncing and there is no cash flow problem, as far as I have checked.”

Sentimental Impact on Industry

Sources in the industry say that with such a big player showing signs of pain, the industry outlook looks murkier and could spell more problems than that is visible on the surface.

“This could be bad news for the market, there have been talks of possible problems, but nobody knows how deep the problem is,” a leading real-estate developer told Thai Enquirer.

The developer, which is focused on similar segment as that of MQDC, said that such news would have more impact on the smaller players in the industry than MQDC itself.

“Think about it, dad will come to the rescue of MQDC, but who will rescue the smaller players,” the CEO of this real-estate developer questioned.

The statement of ‘dad rescuing’ is a pun to the father of the owner of MQDC – Dhanin Chearavanont, Thailand’s richest person who is the senior chairman of CP Group, whose daughter Tippaporn runs MQDC.

Bankers in some of the leading banks in Thailand say that the problem in the sector is with many other developers and there are reports that some of the smaller developers are already falling short of cash and projects are being delayed or shelved altogether.

Thailand’s real-estate sector has been reeling from a slowdown in demand amid the slowdown in the domestic and global economy. This has prompted many developers such as Ananda Development Plc (ANAN) to announce that it would slash prices of projects by as much as 30% in 27 of its projects as a way to generate sales that would help it to repay the debt obligations it has into 2024.

Heavy Debt Obligations

Most of the developers have been too comfortable with the low interest rates coupled with flush liquidity in the system that allowed for easy borrowing by corporates.

Ananda has come out to say that it has repaid 3 billion Baht in bonds in Q1 2023 and another 1.7 billion Baht last month and has remaining obligation to repay bonds of about 700 million Baht in Q4 2023. In 2024 ANAN has a to repay up to 7 billion Baht out of which 3.8 billion is due in Q1 2024 and the remaining in Q4 2024.

According to data on Thai Bond Market Association (ThaiBMA), MQDC has bond obligations to repay of about 1.5 billion Baht in November 2023. Then 9.7 billion Baht in January 2024 and 11.67 billion Baht for the remainder of 2024.

MQDC’s total outstanding bond obligations are in excess of 53.8 billion Baht due until July 2026.

“The bonds that are due this year is around 1.5 billion Baht,” Charlotte said when asked about the issue of the bonds.

She added that details of the issues would be revealed later this month when MQDC holds its so called ‘MQDC Expo’ from October 12-15.

“The company is in the progress of drafting a press release on the updates of the Forestias project and the company is arranging an MQDC Expo on between October 12 and 15,” she said.

MQDC finally issued a statement but via different media outlet and being fair to the organization, Thai Enquirer would like to post a link to the statement MQDC made on this issue.



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