[Click eStock] "2024 Maturing Main PF, Estimated Potential Default Rate 45%"

Daol Investment & Securities announced on the 3rd that the potential default rate of project financing (PF) maturing in 2024 related to the construction and real estate sectors reaches 45%.

As of the end of November, unsold units stood at 57,925, marking a decrease for nine consecutive months. Unsold units after completion increased for four consecutive months to 10,465 units. General sales in November were 17,334 units, down 4,829 units compared to the previous month. As of the end of November, units waiting for construction start were 832,229, and waiting units totaled 1,122,000. The volume of units sold before construction start is evaluated to be at its lowest level since 2007.

Researcher Park Young-do stated, "The continued decrease in sales remains the main cause of the decline in unsold units," adding, "Sales in the first quarter of 2023 were at an all-time low, and given the funding schedule, sites with delayed sales are approaching a point where they have no choice but to start selling, so the 12-month cumulative sales figure is expected to rebound after the first half."

He noted, "As time passes, the likelihood of an increase in PF delinquency rates due to the maturity of distressed projects is high," and explained, "Although more than half of the PFs maturing in securities companies in the first half of last year were extended due to construction delays, a significant portion of PFs maturing by 2023 have a low potential default rate, so the full-scale delinquency cycle has not yet begun."

He continued, "The potential default rate of maturing PFs rises rapidly as the years progress," pointing out, "It is 24% in 2023, 45% in 2024, 62% in 2025, and reaches 71% after 2026."

He added, "If the market price does not surpass the previous peak and the accumulated unsold units are not resolved before 2025, there is a high possibility that a full-scale delinquency cycle will begin."

This content was produced with the assistance of AI translation services.