Land prices in central Bangkok have increased by 88% since 2007 and the upward trend is expected to continue despite the worst political unrest in almost 20 years which has left 21 dead and over 800 injured…
Research from real estate company Binswanger Brooker (Thailand) shows that prices for prime plots in the central Ploenchit area of the city have exceeded the heady levels of 2008 as listed developers such as Sansiri, Raimon Land and the Central Group invest heavily to secure prime plots for future development and major local investors look to diversify from their core businesses.
In March this year there has been an unprecedented amount of activity with two high value transactions taking place, belying the current political climate which has seen the violence on the streets escalate as opposition ‘red shirt' protestors demand that parliament is dissolved and new elections called.
The company points out that the purchase by Sansiri of a 3,200 square meter plot adjacent to the American ambassador's residence on Wireless Road for $36 million set a new record for land prices in Thailand, confirming that CBD sites are rapidly growing in value due to their scarcity.
Chief executive Nigel Cornick said that a limited supply of freehold land combined with high demand for central locations was driving prices up, even during the current political impasse. ‘There is very strong demand for compact but high-end residential condominiums in downtown locations from the domestic market which is boosting land values as suitable plots are increasingly few and far between for developers to purchase,' he explained.
‘Some of the developers also plan to construct hotels on the prime plots, which further demonstrates that this is an asset class that local investors still have confidence in,' he said.
Cornick added that prices would continue to rise sharply and one of the reasons for the flurry of activity in recent months was due to the withdrawal of the transfer fee, stamp duty and business tax exemption on the newly revised date of May 31.
‘The resale value of this category is also high as this aspect of the market matures, which is another factor drawing local investors to this product. We expect this positive outlook for these areas to very much continue in the future as values rise. It is also good news for Thailand generally as this research indicates the property market remains healthy despite the exposure Bangkok has to current political activities,' he said.
Cornick added that with land values for freehold plots increasing, there was a likely knock-on effect for leasehold sites that would also increase in value, with major benefits going to the Crown Property Bureau who have significant leasehold land holdings in prime central areas of Bangkok.
Although the Thai stock market has seen steep falls because of the political unrest there seem few concerns that it will affect the real estate market.