Land Prices in Bangkok
In the past 30 years land prices in central Bangkok have increased by 1,000%. Rising dramatically from 1988-1996, the price of land stopped rising with the onset of the 1997 financial crisis. Growth regained strength in the early 2000s and recently in the past two years there has been a rapid rise of prices for prime central business district (CBD) sites.
Recent land price increases have not been uniformand the development patterns in Bangkok have changed dramatically.
During the 1970s and 1980s Bangkok grew as a city but did not have clear city centre boundaries and as new roads were built the development spread. But this has changed with the opening of the BTS with the first skytrain in 1999, the MRT line in 2004.
With almost 460 kilometres of mass transit lines by the mid-2020s Bangkok will out preform the London Underground system at 402 km. Mass transit has changed Bangkok immensely. Over 1.2 million users each day use the popular transit routes and this has increased land values next to the stations. The more popular the routes then the more valuable the land.
Another factor is that building, and planning regulations have become stricter and sophisticated throughout the years and this has become a key factor in determining land prices.
In the 1980s and 1990s, Bangkok spread outward. However since 2000s, Bangkok has focused on growth of modern office space and nearby high-rise condominium living. The increase of land prices has had a dramatic affect on the total development costs, which has in turn increased the prices of the condominiums. Land prices now can be a much greater proportion of the development costs.
Land prices will continue to rise as the number of potential freehold development sites decline. In some cases, land prices will be higher than the value of the existing buildings as older buildings are demolished and redeveloped. So far, only single ownership buildings have been re-developed, but there is potential for condominiums to do so if 100% of the owners agree to a block sale.
Bangkok will continue to be developed with a clearly defined city center with construction along the mass transit lines and clusters around the popular stations. Land price increases will depend on what returns that can be generated from the development, what can be built and how much a consumer can afford to buy or rent after the development is completed.
Source: Bangkok Post, CBRE