The Growth of Bangkok Mass Transport Network and Property Construction
Bangkok opened its 23.5 kilometer overhead Skytrain in 1999, which provided the first mass transit rail system to the traffic clogged capital. However it took almost ten years for this new transportation system to be accepted by local commuters, and longer among property developers.
When under construction five star hotels and luxury department stores didn’t see to think that a Skytrain station built here then would be desirable. The general feeling that mass transit would bring an undesirable clientele.
Now there are concerns that the mass transit system has become too successful as property values and new developments are prospering along the expanded line, across the city and to the outskirts.
During 2000, the first year of operation, Skytrain had less than 150,000 passengers per day, which was much lower than anticipated. By 2010 the figure had grown to 400,000 per day and now there are at least 750,000 passengers daily and packed to capacity during rush hour.
Along the route many upscale department stores and mixed-use luxury hotels have cropped up or are under construction near most of the central stations. Along the track in Bangkok’s central business district (CBD) the land prices have jumped over 1,000% between 1998 to 2017.
Condominiums have grown from 2,600 units in 1998 to 630,000 today, with most of the building along the mass transit tracks. The condominium-building boom took off in 2004, right after the Mass Rapid Transit Authority (MRTA) launched the MRT, known as the Blue Line. This subway line added over 21 kilometers of addition transit to the urban area.
The construction and expansion of mass transit has been key in the explosion of condominium development. Bangkok’s downtown area has 32,517 future units available with 22% located within 800 meters of the MRT and 44% within 800 meters of BTS. In addition only 32% are located more than 800 meters from any mass transit system.
As Bangkok’s city spreads future into the outlying suburbs during the 1980s and 1990s, mass transit has cemented the city center during the past two decade around downtown and midtown stations.
Future grown of the condominium market is staying close to the extensions of the mass trans rails outside the CBD. Currently 110,175 units are under construction of midtown and suburban locations. Of these unit 72% are located 800 meters or less of mass transit stations, with only 28% more than 800 meters away
Other factors that impact condominium market growth include rising disposable income, growing urbanization, higher availability of mortgages and foreign buyers. Foreign buyers are a growing segment of the condominium buyers. However, Thais have proven the main market for the first phase of the condominium boom, which has been impacted by rising incomes, urban lifestyle and trending away from older suburban housing.
The last three years have shown fairly slow economic growth in Thailand with unsold condominiums in Bangkok more than 30,000 in 2017. Most of these units being in the medium price range, between 100,000 to 200,000 baht per square meter. Sales have improved somewhat in 2018 as the gross domestic product expected to grow more than 4%.
As the medium price condominiums levels off, some of the larger developers have started to build “super luxury” condominiums. However, there is a feeling that maybe there are too many of these high-end units are on the market. Several years ago there were one or two projects priced above 300,000 baht per square meter, now there are 20 or more at this price level. Currently the Thai market at the top end isn’t that deep.
Developers have started to look abroad for sales and have been targeting the wider Asian market. Currently Sansiri PCL, which has a large range of condominium blocks, ranging from medium price to super luxury, are expecting 25% grown in international sales in 2018, compared to 2017, with the China and Hong Kong markets contributing around 70% of that, about 35% each. Sansiri has targeted sales of 45 billion baht this year, up 14% year-on-year, with an estimated 13 billion baht to come from foreign sales, he said.
Develops have started building the super luxury markets in part because Bangkok’s CBS land prices have sky rocked over the past three years, coupled with growing unavailable land. Finding the right location, even if a developer has the financial security to build a luxury property, is proving difficult as most of the prime locations have already been purchased or under construction.