Why Is Property In Suk 24 Area So Expensive?

[TheGameJustIs]

Prices on this soi and the other close by sois run 150k/m2 which is more than wireless road, sathorn, silom, asoke locations. its the most expenisve area in bangkok and besides emporium being close by i dont see why that is. there are just as many nice restaurants and bars in thong lo or the other areas of central bangkok.. so what is so special about this area all i can come up with is that its the japanese area thus its severly over priced.

[Irene]

Let me share with you the mind of an investor who has been buying the space in that price range:

The reasons are being near to Emporium, BTS station, and a park. On a higher floor, the view of the park and some with the lake is impressive. With that pluses, you can command Baht700 to 800/m2 monthly rental against an investment of 130k/m2 to 150/m2. The gross rental yield per annum is 6.5% or a net yield of 5% after taxes and other incidental expenses. Under a broad brush basis, a yield of not less than 5% has always been considered as an acceptable benchmark. Currently, bond yield or bank interest is in the range of 2% to 3%. In addition, the likelihood of capital growth, if very near to the three gems, is greater than others. The vicinity has now become the Japanese haven, being near to Japanese main school and conveniences in buying things Japanese.

However, the price has also been driven by speculators especially in the past year when the plus potentials become more obvious to tenants. The risk of losses in paying high price now is a slowdown of foreign direct investment thereby reducing a number of potential expatriates requiring such accommodation. What I fear most from this high-priced investment is scarcity of tenants and one earthquake. Hence, I always ask for an insurance coverage on earthquake. With that fear in mind, I always have to hum the words of Bob Hope to pacify me that God does not manufacture any more land (especially in the most demanded area like Mayfair or Bond Street). (Bob Hope was famous for buying property in Los Angeles).

Personally, I would not buy those that are not real close to the three gems of easy transportation, easy shopping for food, and open air space of a park. A ten-minute walk to BTS is still not good enough for me. It should not exceed five minutes. Walking in Bangkok is no comparison to UK or US.

Once you have these three gems, you have more leisure time and better lifestyle than the majority Bangkokians. You don't even need to own a car.

As they say, location, location and location. The definition of a location is not the most pricey area of land but the area that is most wanted by residents wanting to live there. The price of Silom, Wireless and Sathorn is historically good for offices but not for residence. But Asoke is a quaint one where it can satisfy both office dwellers and residential dwellers. The price for some residential condos in that area also shot up to 130k/m2 range and office rental shot up from 450/m2 to 600/m2.

[Moonfruit]

Irene, i do respect your views very much, and agree with many of them.

However, i have to say that the newest building on Soi 24, being Siri 24 (there may be a newer completion, but unless ive lost my hat i dont see it!) is more than 70% empty. Complete speculation on the part of all of the buyers, and the unit owners are expecting almost 1000thb/sqm. Completely unreasonable i would say but understandable considering the sale price and thus their expected yeild.

However, Soi 24 is a misnomer. Siri 24 is at least a 10 minute walk from the BTS (Ive done it many many times!). The soi itself is becoming over developed and impassable at certain times of day. Indeed, my Thai friend lives in a large house behind Emporium (i forget the name of the soi but we all know it, the one that connects soi 24 to Sukhumvit, via Emporium Suites) and walks home from soi 24 leaving their driver to sit in the traffic on the soi, often beating them home by over an hour.

I agree with your location, location, location completely. However, Soi 24 is indeed a misnomer. The Soi is unwalkable for 30% of the time as you are stood at the side of the road waiting for the car to pass you by inches.

[Irene]

Moonfruit,

The questioner asked why this soi is able to command the high price of 150k/m2. I gave the answers from my own commitments of "why". Naturally, when one make a decision, one has to override other points that may be small and irrelevant in a buyer's mind.

Your reference of the unwalkable sois was related to sub-sois where Emporium cleverly has made it so accessible to its other fronts thereby causing incoveniences to those houses and condos in the sub-soi areas. For the condo I bought on the main soi 24, we are not affected because we are almost next door to Emporium. For our tenants who live in Siri Residence (now fetching 120k-140k/m2), they could not care less of the effects of the sub-sois.

Granted that even on the main soi 24, during festive seasons, you may also be stuck there for ages. However, the condos with more than five-minute walk to the BTS or MRT station is outside my consideration. Those condos in that soi do not warrant my second glance. The condo (Siri Residence) I referred to is currently in the process of transferring to buyers. But enquiries for rental are plenty and todate I have rented out with the previous quoted yield. That also explains why the light is not all turned on.

I am not trying to urge anyone to agree with me on my choice of investments but purely thought that the questioner could get insights into the mind of the one who has committed the resources. I also thought that by putting my mind on the table, others could also tell me where I have gone wrong. Knowing is easy but the hardest part in life is making a decision. I therefore like to uplift this forum to another stage of maturity.

[quiksilva]

Emporium has made this Soi what it is. It is an anomaly, there is no good reason for this to be considered a prime location, it is far outside what we consider to be prime CBD but Emporium was the first luxury shopping mall that catered to the high net worth hinterland that runs down to Ekamai, it put this Soi on the map and as such it now stands in a class of its own.

[Captain Chaos]

Emporium has made this Soi what it is. It is an anomaly, there is no good reason for this to be considered a prime location, it is far outside what we consider to be prime CBD but Emporium was the first luxury shopping mall that catered to the high net worth hinterland that runs down to Ekamai, it put this Soi on the map and as such it now stands in a class of its own.

Guess I generally agree - although President Park down the other end of the soi with access to Rama IV and the Bangna tollway also pulled in a fair amount of expat and rich Thai money - it was (is?) very convenient for those who want to live within a central-ish city location but work in SE BKK or towards the Eastern Seaboard region (like I did for 4 years)

Emporium at one end and Pres Park at the other and everything else moved in to fill up the gaps

Actually I still enjoy a wander around that area when I'm in BKK but I agree it is showing signs of getting choked up which should be considered by anyone looking at one of those condos being built mid-soi.

CC

[quiksilva]

True enough, I used to manage Pres Park, but can't honestly say that it put Soi 24 on the map in quite the same way as Emporium did. If anything I'm not so sure Pres Park would have fared so well if it wasn't for the Emporium.

I cant quite remember which came first, they both came on stream at about the same time (1996, a year before I arrived), but I suspect that Emporium finished first. Perhaps someone can save me a phone call?