Bangkok land prices continue to rise despite political woes

File photo of downtown Bangkok.

BANGKOK - Bangkok land prices have increased by between 20 per cent and 30 per cent annually during a period of continuous residential market growth since the beginning of 2011, according to experts.

"Despite the country's political turmoil, the price of land in Bangkok is still rising by at least 10 per cent [this year] because the residential market faces high competition and strong demand," said Kitisak Champatippong, CEO of property agency Century 21 (Thailand).

Ploenchit Road is fetching the highest prices, with one plot having gone for Bt1.5 million (S$58,430) per square wah (4 square metres), and negotiations expected to be completed soon for another at Bt1.82 million per square wah, he said.

Meanwhile, Kulwadee Sawangsri, head of Investment and Land Services at CBRE Thailand, said the price for a prime site on Sukhumvit Road had increased by some 480 per cent since 2002 to Bt1.5 million per square wah, which is the highest percentage increase of all of the capital's prime areas.

This is followed by the Silom/Sathorn area, with a rise of about 400 per cent to Bt1.4 million per square wah over the same period, and the Ploenchit/Lumpini area with an increase of around 320 per cent to Bt1.5 million per square wah. Despite the current political turmoil, the demand for prime central business district land in Bangkok for investment remains robust, she said, adding that CBRE does not expect the political problems to impact CBD land prices adversely because there is a limited supply of freehold prime land in the centre of the city.

There are few willing sellers and the majority of land is held by cash-rich owners, who inherited their family land, she explained. Land-holding expenses are very low, as most land was not acquired through debt financing.

Moreover, there is virtually no land-holding tax and no inheritance tax, which all adds up to the fact that the majority of land owners have very little pressure to sell.

Over recent years, land prices have been driven upwards by developers buying sites to build condominiums for sale. This is because condominium developers have been able to outbid other types of property developer due to the high development margins and quick project turnover.

There have also been significant land-price increases in some suburban areas where construction progress of new mass-transit lines has triggered an increase in demand for condominium development sites in areas such as Rathanathibet, along the route of the Purple Line. Land prices in the Rathanathibet area have increased by 30 to 50 per cent per year since the start of construction on the rail route.

CBRE expects expansion of the mass-transit system will have similar effects in other suburban areas.