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Bangkok Property Investors to Focus on Quality of Location

By on Mar 22, 2011 in Investment-Land

2010 proved to be a busy year in terms of commercial building sales in Bangkok, according to the leading international property consultant CB Richard Ellis (CBRE).    Ms. Kulwadee Sawangsri, Executive Director and head of CBRE’s Investment and Land Services believes that more office buildings were sold in 2010 than in the last five years combined.  During the year, the CBRE’s Investment and Land team handled the sale of six office buildings with a total value in excess of THB 5.6 billion.  The types of building varied considerably, ranging from both freehold and leasehold office investments to freehold offices sold with vacant possession after large companies decided to dispose of non-core assets.

Overall investor sentiment in 2010 was positive – a marked change from 2009 when there was very little investment activity.   Last year was very active for land sales, with transactions concluded by CBRE in excess of THB 1.5 billion.  The large stock-listed developers were particularly active and a number of land in the core Wireless Road and Ploenchit area were sold at prices well over THB 1 million per square wah.

CBRE handled land sales transactions for many of Thailand’s biggest developers, including Pruksa Real Estate Plc. and Noble Development Plc.  Developers focused not only on the established areas in Bangkok and sites close to mass-transit stations, but also on areas located along the mass-transit extensions and less developed areas in the centre of town, including Rama IV Road, Petchaburi Road and Si Phaya Road.  Private investors were also active, particularly in seeking land plots of 1 rai – 2 rai, primarily in the established core areas of Bangkok.

Ms. Kulwadee confirms that developer interest remains strong for well located land plots, particularly either in the centre of Bangkok or along the mass transit routes.  Developers looking to launch condominium projects continued to focus on the areas close to BTS stations between National Stadium station and Ekamai station (along the light green line) and between Ari and Chong Nonsi (on the dark green line).   In addition, developers adopted a similar approach when acquiring land along the MRT route.  Developers also looked at sites along the extensions of the existing BTS and MRT routes and many have already acquired significant land holdings in these areas.

Although there will be continued interest in many of the emerging areas along the BTS and MRT extensions, a number of developers are starting to be cautious about the number of condominium developments focusing on this segment of the market.  Overall, the outlook for 2011 is positive and we have already seen healthy levels of demand across all sectors.

In 2011, CBRE expects that investor interest will continue and that developers will narrow their search to suitable land plots in established areas.  Depending on the nature of the project, the traditional prime central areas including Wireless, Ploenchit, Sukhumvit, Rama I, Rajdamri, and Sathorn Roads are most in demand, as they are suitable for the development of residential, commercial and hospitality projects.  The optimum plot size is normally between 2 rai and 5 rai in order to allow for a high-rise project without it being too large to develop in one phase.

CBRE expects land values for prime locations to continue to appreciate as there are fewer land plots available. CBRE has started to market the Alliance Francaise site on South Sathorn Road. The land plot, which is 3 rai and 89 square wah, has over 80 metres of frontage to South Sathorn Road and will be sold by formal tender subject to the French Government remaining in occupation for one year after transfer to allow them time to move to a new site. CBRE expects a wide variety of interested parties because the site is suitable for both commercial and residential development.

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