Is Non-titled Land To Be Avoided?

[brahmburgers]

Crown Property Bureau (CPB) is the corporation that manages the royal

family’s vast property holdings. In June 2007 CPB ran an ad in major Thai

newspapers which announced the tendering of bids for one of their

properties. The parcel is located in downtown Bangkok at the intersections

of Surawan and Suriiyasai roads, near the Plaza hotel and the Russian

embassy. At 2180 square meters, it’s roughly 1.3 rai or a bit less than

half an acre. The minimum opening bid is 166 million baht (US$4,742,857)

and yet it’s not a real purchase. Rather, the winning bid gets a 30-year

lease. Also, the purchaser must promise to complete construction of a

substantial building within the first three years of the lease – or the land

reverts back to the property managers; CPB.

Just for fun, let’s see how the CPB property and my ‘Rock Land’ stack up

against each other – in terms of attributes, drawbacks and comparative

values. First the similarities: Both properties are in Thailand, both are

undeveloped. So too, both are offered as 30-year leases, rather than

outright ownerships. The Rock Land is located on Forestry Land, so it is

doubtful it will ever get full title. Similarly, it’s unlikely the CPB

property will ever enable the occupier to claim title in his name. Whereas

the Rock Land contract makes a provision for the lease to be renewed after

30 years with no additional monies changing hands, I doubt the lease terms

are as casual for the CPB property, but that’s a minor point. Another

similarity is; both parcels are minutes from world class hotels.

The comparative attributes of the CPB parcel in Bangkok are: A. It’s near

shopping complexes and hotels. B. It’s within one of the busiest

commercial sectors of Thailand. C. It is relatively flat and therefore

easier to develop.

The comparative drawbacks of the CPB parcel compared with the ‘Rock Land’

near Chiang Rai: A. it has no natural views except of grayish-white skies

on the clearest days. B. It is in a part of the country that is warm and

humid twenty four hours a day – no cool nights. C. Some climactic

forecasts predict Bangkok will be under water or at least suffer dramatic

flooding in near future. D. traffic and other city noise nearly around the

clock. E. Street parking is near impossible during the day.

The comparative attributes of my ‘Rock Land’ parcel Chiang Rai; A. It’s

quiet. The loudest noises are birds chirping. B. Air is breezy and clean.

C. Views of rolling hills go on for dozens of miles, nearly to the Burmese

border. D. Never a lack of parking. E. Many fruit and nut trees. F. Rock

climbing at various skill levels. G. The sky is actually blue about half

the year (unusual in most parts of Thailand, where skies are most often

white). I. The Rock Land is a casual fifteen minute drive to an

international airport. From the CPB property it’s between a one and two

hour drive depending on the degree of gridlock.

The comparative drawbacks of my 'Rock Land' parcel with the CPB parcel:

A. no taxis nearby. B. Shopping malls and discos are a few minutes drive

further away.

If a consortium were to win the 30-year lease for the Crown Property Bureau

parcel at its minimum bid of 166 million baht, they would be paying 122

million baht per rai for land they won’t own. Added to that (as mentioned

earlier), they’d be bound by contract to finish a substantial building upon

the land within three years – and those are improvements which they may or

may not own upon leaving the premises when their lease is up.

Comparatively, the price for the 12 rai Rock Land was 14,583 baht/rai which

is one eight thousandth the minimum asking price for the CPB land. But

that’s not a fair comparison, because that value was predicated on its

purchase price in the year 2000, so we can’t fairly compare it with a 2007

asking price for the CPB land.

Due to the improvements (planting trees, cutting grass, but no building) to

the Rock Land, and the passage of over seven years, it would be more fair to

compare prices with a fair market value of the current Rock Land, which is

2.5 million baht. Even at that comparison, the CPB land in Bangkok is 537

times the value of the Rock Land. Another way to compare values is: the

cost of the minimum bid on that 1.3 rai CPB parcel in Bangkok would get you

6444 rai (or nearly 2,600 acres) in the rolling hills near Chiang Rai.

- Excerpt from soon-to-be-released book ‘Toad in My Shoe’ by Ken Albertsen

[brahmburgers]

oops, unwittingly posted it twice. I thought the post didn't register the first time. katot krap.

[steveromagnino]

ken is one of the serial letter writers in BKK post or the nation is that right?

[expatwannabe]

I bet some Thai businessman bids on it. It's a reputational thing to be so closely involved with HRM.