New Airport To Spur Property Market

[george]

Airport to spur property market

Investors urged to await new urban plan

BANGKOK: -- The Suvarnabhumi international airport is expected to spur growth in the commercial property market in eastern Bangkok, according to the property consulting firm Jones Lang LaSalle Thailand.

The new airport's impact on commercial markets was very positive but now opportunities are available to only two kinds of projects, those with existing vacant space and unfinished ones waiting for the relaunching of the Suvarnabhumi City plan, which will cover 800 square kilometres surrounding the airport, said Benjawan Suewongprayoon, the company's head of research.

``Property investors should wait for the new plan for Suvarnabhumi City to ensure that their projects fit in with the new plan. The plan allows retroactive land expropriation. It is now being studied and is scheduled to be completed within June and then submitted to the NESDB and the cabinet,'' she said.

Suvarnabhumi City is being set up to manage land utilisation in the areas surrounding the new airport.

Demand for industrial and warehousing space is expected to rise as manufacturing, logistics and services firms that rely on airfreight look to shift closer to the the new airport, Ms Benjawan said.

The manufacturing sectors that are likely to relocate near the airport include electronics, IT and fresh food industries that produce lightweight, high-value products or time-sensitive goods.

According to the Department of Industrial Works, a total of 33,710 rai of industrial land with about 7,000 factories are located near the new airport. About 10% of this land is still available.

``Expansion in industrial space is limited as land prices have already moved higher. After the 1997 crisis, land prices surrounding the new airport dropped by 50% but they have since rebounded to the pre-crisis level and will likely head higher as the transportation networks get built,'' she said.

In the office market segment, there ares now 32 office buildings near the new airport with combined space of 406,900 square metres, accounting for 5.7% of the total office stock in Bangkok. About 79,100 sq m are owner-occupied and the rest is available for rent.

Ms Benjawan said demand for high-rise office space in the area had been increasing since 2000, as indicated by declining vacancy rates and improving take-up rates. In 2004, the net take-up was at its highest level since the crisis while vacancy rates were at the lowest rate at 29.5%. Average rent in the area is approximately 250 baht sq m per month.

``Future improvement in infrastructure and higher employment after the completion of the the new airport will draw more people to live in the area. This will boost demand for retail space as well,'' she said.

Retail space near the new airport totalled 600,400 sq m as at the end of 2004. Of this space, 66% of it is in large malls including Central City Bang Na, Seacon Square and Seri Center located on Bang Na-Trat and Srinakarin roads.

The average vacancy rate of the retail centres near the the new airport dropped from 11.4% in the beginning of 2004 to 9.8% at year-end.

Mr Benjawan noted that there was good potential for Pattaya which will be only an hour's drive from the new airport compared to three hours from Don Muang.

``Pattaya will be able to support tourism business as there are now many property investments there,'' she added.

--Bangkok Post 2005-06-17