Sale of prime land in central Bangkok sets new record for Thailand.

Land prices for prime plots in central Bangkok have almost doubled since 2007, despite the global economic crisis and ongoing political instability in Thailand.

Research published today by real estate company Binswanger Brooker (Thailand) revealed that
prices of prime plots in the central Ploenchit area of the city have risen by 88 per cent since 2007 as listed developers such as Sansiri, Raimon Land and the Central Group invest heavily to secure prime plots for future development. Major local investors are also looking to diversify from their core businesses, the report says.

In 2006, Tiang Jirathiwat Co., Ltd, a subsidiary of Central, purchased a nine rai site in front of the British Embassy for a price approaching THB1 million per square wah. This was followed by Raimon Land Park View Development Co., Ltd, a Raimon Land subsidiary, securing a prized four rai plot (the site of the 185 Rajadamri development) at a cost of approximately THB800,000 per square wah in 2007.

In 2008 Ploenchit Residence Co., Ltd, a joint venture with Raimon Land and Dubai-based IFA Hotels and Resorts, invested again, paying approximately THB1.2 million per square wah for a prime nine rai plot in Ploenchit shortly before the global financial collapse.

March 2010 saw unprecedented amounts of activity, with two high value transactions taking place. A plot a little under three rai (1,105.7 square wah) next to Wave Place on Wireless Road was bought by Thai Summit Grand Estate for THB1.2 million per square wah. The company is understood to be planning to build a hotel on the site.

Also in March, the purchase by Sansiri of a two rai plot adjacent to the American ambassador’s residence on Wireless Road for THB1.5 million per square wah set a new record for land prices in Thailand, according to the research, and confirmed that sites in the central business district of the Thai capital are rapidly growing in value due to their scarcity. Nowhere is this more apparent than in the Ploenchit district.

Binswanger Brooker (Thailand) Chief Executive Officer, 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.

He said: “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. Some 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.”

Mr. 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.

Mr. 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.