Land prices in greater Bangkok expected to hold up

Land prices in Bangkok and its suburbs are at worst expected to be maintained, and at best to rise by between 3 and 5 per cent this year, even though the property market is showing signs of falling amid prevailing uncertainties.

“The price of land has never dropped since the economic crisis in 1997, although the country’s economy and property market slumped that year,” said Pruksa Real Estate president and CEO Thongma Vijitpongpun.

With most landowners not needing to sell if they cannot get the best price, the cost of land is showing no sign of falling despite the property market being negatively impacted by the political turmoil, he said.

Greater Bangkok land prices have increased by a yearly average of 5 per cent, and by more than 10 per cent in some locations, since the revised appraised values announced by the Treasury Department in 2012.

The agency’s appraised values – running from the middle of that year through 2015 – represent an average rise of 21.34 per cent nationwide from the appraised value covering the 2008-2011 period.

For example, in Bangkok the increase over the two-and-a half-year period would be 17.13 per cent, and in the provinces about 21.4 per cent. 

In terms of appraised value, southern Thailand had a higher increase than other locations, with a record rise of 32.25 per cent, followed by the East (26.04 per cent), the Northeast (22.58 per cent), the North (14.84 per cent), the West (15.55 per cent), and the Central region (12.9 per cent).

In Bangkok, Silom Road saw the biggest jump in appraised value, with land priced at Bt850,000 per square wah (Bt212,500 per square metre) – well above the appraised value of Bt650,000 per square wah in 2011. 

Then come Rajdamri Road and Rama I, both with an increase from Bt350,000 to Bt800,000 per square wah, while Phloenchit rose from Bt430,000 to Bt800,000 per square wah.

The new appraised values for Bangkok and its suburbs were drawn up after the severe flooding hit the city and surrounding areas late in 2011.

“Demand to buy land for residential development is strong every year, with leading property firms expanding their business and facing high competition to purchase land in the best locations in the central business district of Bangkok. As a result, land prices in Bangkok and its suburbs show no signs of dropping, even though the overall property market is falling,” said Issara Boonyoung, adviser to the Business Housing Association and also the owner of property firm Kanda Group.

According to a survey by the Agency for Real Estate Affairs, land prices in the capital increased by 4.6 per cent on average last year. 

However, AREA believes the current political problems will ensure they increase by only 3 per cent over the course of this year.

Sopon Pornchokchai, the agency’s CEO, said land prices in Bangkok had grown by an average of 3-4 per cent a year since the economic crisis of 1997.

Meanwhile, land prices at Siam Square and Rama I Road are the highest in Bangkok, at Bt1.65 million per square wah, the survey found.

However, land for sale on Rama I is limited as most owners are reluctant to sell.

A survey by The Nation found that the latest sale, in a deal struck last year, recorded a high price of Bt2 million per square wah for a plot located on Sukhumvit 24. 

This was paid by Proud Real Estate – owned by politician Suwat Liptapanlop – for 600 square metres of vacant land between sois 22 and 24. 

The company will develop the Bt15-billion Park 24 condominium project on the land.