Page 45 - Anual report STi 2022_eng

civil servant housing (2%). Large contractors often have an recovery in the real estate market, coupled with rising costs

advantage in government work, especially large-scale in line with energy prices, construction material prices, and
infrastructure, due to their experience, expertise, financial wages. These are causing some real estate developers to

capabilities, and continuous development of construction postpone the launch of new projects.
techniques and technologies. As for contractors, SMEs will The construction business in the future tends to
have the opportunity to receive government jobs in the form improve, with the main factor being the governments

of subcontractors. investment in mega-infrastructure, both ongoing investment
Private-sector construction: It is concentrated in projects and new investment projects, including the

residential construction, accounting for 52% of total private development of various projects in the EEC area to stimulate
construction. The rest is construction of industrial and the economy. Even though the COVID-19 situation is relaxed
commercial factories (20%) and others (28%), such as hotels until it can resume economic activities and open up to more

and hospitals (2020 data from the Office of the National foreign tourists, the economy still faces many challenges,
Economic and Social Development Council). The direction both from high inflation and the volatility of the global

of private construction depends on economic conditions, economy. As a result, the government sector still needs to

investment confidence, political stability, infrastructure accelerate investment further. The progress of mega projects
investment, and government investment stimulus policies. such as high-speed trains, dual-track trains, electric train

Source: https://www.krungsri.com/th/research/industry/indus- extensions, double-track trains, motorways and expressways,

try-outlook/construction-construction-materials/Construc- ports, and airport expansions that will continue to be built in
tion-Contractors/IO/Contruction-Contractor-2022 the future will help support the disbursement of state

According to Land and Houses Bank Research, the enterprises to have a better trend. There is also a supporting
business is still at risk from rising construction costs in line factor from private construction. It is expected that real estate
with commodity price fluctuations and delays in the bidding developers will gradually open new projects after slowing

and signing of government construction projects. In addition, down since 2019, especially in residential condominiums

rising central bank interest rates, high inflation, and high where accumulated supply has decreased significantly.
household debt, which will dampen the recovery in domestic The value of private investment will gradually recover from a

purchasing power, could hinder real estate growth. base that has contracted greatly in the past. However, the

business still faces a risk of construction costs due to
The overview of the construction business in the first
quarter of 2022 has a downward trend compared to the same construction material prices that tend to be at a high level
period last year. This was reflected in a 3.7%YoY drop in due to the protracted Russian-Ukrainian conflict, coupled with

construction investment following a decline in construction a declining construction workforce since the outbreak of
investment in both the public and private sectors. Public COVID-19, resulting in higher wages, which affect the cost

construction investment fell 2.1%YoY , partly due to the high of entrepreneurs, especially project contractors, in the
base due to the acceleration of infrastructure investment to government sector that does not enter into adjustable price
stimulate the economy during COVID-19, together with the contracts. There is also a risk that government construction

completion of some large construction projects. Private projects may delay the bidding and signing of contracts for
construction investment fell 6.1%YoY following a contraction new projects, which may cause the expansion of government
in residential construction investment, partly due to a slow construction to be lower than expected. In addition, the risk

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