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Soaring CBD land prices mean more housing projects in suburbs

By on Nov 06, 2012 in Property News

Limited land in Bangkok’s central business districts (CBDs) has caused residential developers to move their projects far from the inner city but still close to extended and proposed mass-transit routes.

According to a survey by The Nation, one of those locations is from Rattanathibet Road to Nonthaburi’s Bang Yai district, which is close to the MRT Purple Line that will run from Bang Sue to Bang Yai.

Detached-house and condominium projects worth more than Bt100 billion have been launched here.

Phetkasem Road close to the extension of the Skytrain’s Silom Line from Wong Wian Yai to Bang Kai has seen new residential projects worth more than Bt20 billion.

Chaeng Wattana Road to Ratchaphruek Road has been populated with new projects worth more than Bt10 billion since the government decided to build the MRT Pink Line from Chaeng Wattana to Bang Kapi district in Bangkok.

Rama II Road has lined up new residential projects worth nearly Bt20 billion since the Ring Road was completed, linking it to the CBDs in one hour.

Issara Boonyoung, president of the Housing Business Association and chief executive officer of Kanda Group, said yesterday that some developers turned to the new locations when CBD land prices rose to a level at which they could no longer develop projects suitable for the market.

Although some downtown locations continue to have land available for residential development, the cost is higher than in the outskirts, which means home-buyers would have to pay more.

The average price per residence in prime locations exceeds Bt5 million but purchasing power averages Bt3 million to Bt5 million, so developers have to find land outside the CBD, he said.

LAND INFLATION

Demand for outer-CBD locations has been driving land prices up since last year, especially for locations where land prices never increased in more than 10 years, such as the Rama II and Phetkasem areas. Issara, who is working on a residential project on Rama II under the Kanda brand, said land in that area started to increase from Bt40,000-Bt50,000 per square wah about two years ago to Bt80,000-Bt120,000 (Bt20,000-Bt30,000 per square metre) in some locations near and along the main road.

The popular housing types on Rama II are detached homes and townhouses.

Nat Manasomjit, CEO of Estate Guru Co, which is active in the Rama II and Phetkasem areas, said land prices in those areas had leaped 20-30 per cent this year.

For example, land in the Wong Wian Yai-Bang Kae corridor that had sold for Bt90,000-Bt120,000 per square wah last year would now fetch between Bt150,000 and Bt230,000.

Land prices on Rattanathibet and in Bang Yai also doubled this year from three years ago.

Opas Sripayak of LPN Development said that when the company developed Lumpini CondoTown Rattanathibet five years ago, the cost of land close to the main Rattanathibet Road averaged Bt50,000 per square wah. But now when the company is building the latest condo project opposite the existing project, its cost of land increased past Bt100,000.

“The mass-transit system is the main reason that land prices have surged in outer-CBD areas. But prices continue to be lower than in the CBD, so property firms have had to change their expansion plans to the suburbs. This will be the trend for property firms next year,” he said.

source : The Nation 6 November 2012

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