Average Land Prices Up 5.5% In Bangkok

[george]

Average land prices up 5.5% in Bangkok

Megaprojects already driving speculation

BANGKOK: -- Land prices in Bangkok rose 5.5% last year due to pressure from a string of proposed government megaprojects including new mass transit systems, Suvarnabhumi Airport and new roads, according to property consulting firm Agency for Real Estate Affairs (AREA).

Managing director Sopon Pornchokchai said land prices rose 3.2% in 2002 and 3.9% in 2003, a rate exceeding bank deposit interest rates. At 2% higher, he said the figures showed that investments in land were more attractive.

He said the land price index in Bangkok has shown an overall recovery in land prices. With the baseline set at 1.0 in 1985, the index stood at 29.1 in 2004. The peak was in 1996 at 30.3, he added.

``The 5.5% increase also reflects possible speculation in the early stages. In the past, we called it speculation when land prices rose anywhere from 3.9-6% within one year,'' said Mr Sopon.

He said locations near the government's megaprojects saw prices increase by 5-10%. Areas around Rama V Road and the new airport had the highest increases in the past two years, largely due to new road and infrastructure construction.

``The government plans to make Nonthaburi province a residential city, so more land has been developed and opened up by new access roads. In some locations, land prices rose five-fold, from only two million baht per rai to up to 10 million. There will be more residential development as they are still many available undeveloped land plots,'' said Mr Sopon.

Average land prices in the area around the new airport increased by 7-8%, higher than in central Bangkok.

Meanwhile, price hikes in some locations around the new airport were supported by the current city zoning laws. Land prices on Bang Na-Trat KM 24 rose from 30,200 to 35,900 baht per square wah, since the area has been designated as a ``red zone'', which means construction for commercial purposes is allowed.

The new mass transit system also affected land prices in central Bangkok with an average increase of 5.26% and 8.7% in areas near the skytrain and the subway, respectively. Neighbouring plots, meanwhile, saw prices rise only 2.63-3.23% and 3.45-5.6%, respectively.

In the Asoke area, a prime location near both the skytrain and the subway, monthly office rents last year rose from 150-180 baht per sq m to 250-300 baht and will likely hit 400 baht this year.

Condominiums in the area also have seen brisk sales with up to 30-60 units sold per month, compared to sales of only 5-10 units per month in other areas.

Mr Sopon added that there would be many more high-rise developments on the western side of Ratchadaphisek Road than on its eastern side due to floor area ratio limitations in the new zoning rules.

Deputy managing director Wasan Kongchan said the Bang Krachao area, situated on the opposite side of the Chao Phraya River to the 3,000 rai owned by the State Railway of Thailand and the Port Authority of Thailand, currently zoned for residential purposes only, would see a dramatic price shift as it changes to become a commercial area.

AREA representatives planned to visit Phuket by the end of January for land surveys and price estimation.

``We cannot tell how much land prices in Phuket will change. But from our study on land prices in Hawaii, once hit by a tsunami, prices did not change much. But the first two months after the disaster will be the worst,'' said Mr Wasan.

Phuket tourism is expected to be fully recovered within four months, he said.

--Bangkok Post 2005-01-13