SUNDAY, February 25, 2024

Opening of Yellow Line to spark red-hot property growth: Colliers

Opening of Yellow Line to spark red-hot property growth: Colliers

The Yellow Line's explosive growth point is at "Samrong", where land prices continue to rise steadily, according to research by real-estate consultancy Colliers International.

Land prices in the "Srinakarin-Suan Luang'' area are reaching 420,000 baht per square wah (4 square metres), while developers set to anchor the location for the next 10 years with 19,000 condo units. 

Colliers research noted that the area is now a “yellow zone”, but city planners may reclassify it as a "red zone", which will accelerate real-estate development and push up land prices by an estimated 50%.

Infographic: Land prices along MRT Yellow Line

The Yellow Metro Line will open for free trial rides from Lat Phrao to Samrong, covering a distance of 30.4 kilometres, on Saturday. 

Opening of Yellow Line to spark red-hot property growth: Colliers

The monorail system consists of 23 stations, starting from the Ratchada-Lat Phrao junction. It runs along Lat Phrao Road to the Bangkapi intersection, where it turns right onto Srinakarin Road. It passes through the Srinakarin, Sri Udom, and Sri Thepa intersections. From there, it turns right onto Theparak Road and ends at the intersection with Sukhumvit Road, at the Samrong Station. 

A significant rise in land prices along the Yellow Metro Line has occurred over the past 10 years, with a continuous upward trend expected in the future, Colliers said.

Phattarachai Taweewong, director of research at Colliers International’s Thailand office, said that in the past 10 years the development of real-estate projects along the Yellow Metro Line has included the opening of over 19,229 condominium units. 

Opening of Yellow Line to spark red-hot property growth: Colliers

There has been continuous investment by developers, including completed projects, projects under development, and projects awaiting development opportunities, he added.

Developer Pruksa had purchased a 12-rai land plot in Happyland Market with a value of over 2 billion baht. It planned to construct six buildings with a total of 2,000 units, estimated to be worth 4 billion to 5 billion baht.

However, the project was eventually cancelled, leaving the land in the middle of the Lat Phrao area undeveloped.

Zoning restrictions

Despite the opportunity, there are significant challenges and obstacles in the development of real-estate projects in the Lat Phrao area, including restrictions imposed by urban planning laws on high-rise projects. 

This has resulted in overall slower development compared to other metro line areas, leaving land prices in this area relatively moderate compared to other locations. 

For example, at the beginning of Lat Phrao Road, where it intersects with the Blue Metro Line, land prices average between 500,000 and 600,000 baht per square wah, while along Lat Phrao Road, the average price ranges from 250,000 to 300,000 baht per square wah.

Opening of Yellow Line to spark red-hot property growth: Colliers

"The improved prices are seen in the Bangkapi zone, where they reach 300,000 baht per square wah. Another location is Samrong, with prices ranging from 400,000 to 500,000 baht per square wah. It can be observed that land prices along Ladprao Road are relatively low at 250,000 baht per square wah when compared to other zones.

This is due to limited project development opportunities as the area falls within the yellow zone, primarily designated for residential, government, or public utility purposes," Phattarachai added.

Phattarachai explained that in the fourth quarter of 2022, there were a total of 19,229 condominium units in the Lat Phrao area. The prices in the initial area of the Yellow Metro Line were relatively high, ranging from 70,000 to 80,000 baht per square metre over the past 10 years. However, they have increased to 120,000 to 130,000 baht per square meter. 

“The Lat Phrao area is a city zone that has easy access to the city centre, but it is restricted by urban planning laws regarding building height.

Therefore, real-estate projects in this area are not as prominent as those in the Pink or Orange Metro Line areas in the past. We have to wait for new urban planning unlocking [the potential] in order to see more active real-estate development in the Lat Phrao area," Phattarachai said.

In 2022, the offering prices increased to 250,000-260,000 baht per wah, representing an average increase of 3%. In the Bangkapi area, which is a community hub with large shopping centres, the prices moved from 200,000 baht per wah to 320,000 baht per wah, reflecting an average increase of 6%. The Srinakarin area saw prices rise from 150,000 baht per wah to 260,000 baht per wah, indicating an average increase of 7.3%.

As for the Samrong area, the prices rose from 250,000 baht per wah to 420,000 baht per wah, representing an average increase of 6.8%. 

Phattarachai said the arrival of the Yellow Line has transformed the Lat Phrao area into a vibrant community. However, the distinctiveness lies in the Sri Nakarin area, which is surrounded by shopping centers. The introduction of the Yellow Line has further enhanced the attractiveness of this neighborhood, providing easy access and the potential for high-rise development.

Opening of Yellow Line to spark red-hot property growth: Colliers

As an example, Land and House Plc has prepared to launch "The Key Sri Nakarin" project with a value of 6.5 billion baht. The development is divided into two phases and consists of three buildings.

Phase 1 includes Tower A and Tower B, both 36 floors. Phase 2 comprises Tower C, 33 floors, and Tower D, 27 floors. The selling price is 100,000 baht per square metre. This large-scale project includes a mall.

"Overall, the Yellow Line has shown improvements, particularly in the Sri Nakarin area. Previously, Noble Development launched the project 'Noble Sri Nakarin-Lasalle', which primarily featured low-rise developments in the alleys. However, the entry of Land and House has significantly increased the buzz and activity in this location," Phattarachai said.

He believes that land in this zone has already been purchased by developers, but no projects have been launched because they are waiting for a new urban plan that will designate the zone red after the Yellow Line is operational. 

This is considered a significant turning point that will cause land prices to increase by 50%, he said, adding:
"As soon as the urban plan is released, those who purchased land earlier will have obtained it at a much lower price. If developed into condominiums, the new selling price is expected to exceed 100,000 baht per square metre, while the land price at 250,000 baht per square wah is considered very favourable. Many developers are waiting for the transformation of Lat Phrao into a red zone."

MRTA also announced that on Saturday, June 3, 2566, the Yellow Metro Line (MRT Yellow Line) will be ready for the general public to participate in the Trial Run between 09:00 AM and 08:00 PM. 

The Trial Run will cover 13 stations, including Hua Mak Station, Kalantan Station, Si Nut Station, Srinagarindra 38 Station, Suan Luang Rama IX, Si Udom Station, Si Iam Staion, Si La Salle Station, Si Bearing Station, Si Dan Station, Si Thepa Station, Thipphawan Station, and Samrong Station. 

However, at Hua Mak Station, the public will be limited to entering and exiting via Gate 2 (Phattanakarn Intersection) and Gate 3 (Soi Srinagarindra 16), which will be operational first.