How mass transit moves condominium market
published : 27 Jun 2018 at 11:44
Developing property along mass transit lines is not an automatic guarantee of success.
Developers and buyers all want to know the impact on the property market of the 197-kilometre mass transit lines under construction in Bangkok.
These new infrastructure developments, in addition to the 110km of existing mass transit lines, will improve access to and from inner city areas and link midtown areas. This will affect the property market, especially the residential market.
The popularity of each line can be seen from its ridership, as well as the number and prices of residential units along the line. These factors show not all lines are equal.
Currently, the BTS Light Green Line, with 750,000 passengers per day, has seen the most developments of residential, office, retail, and hotel properties. It is followed by the MRT Blue Line, with 350,000 passengers per day, where developments have been concentrated along Ratchadaphisek road.
For the MRT Purple Line, many condominiums were launched during its construction with high expectations. However, with currently only 51,000 passengers per day, it will be less attractive for developers to invest further in projects along the line until the passenger numbers improve.
Residential developers are also acquiring land plots before the completion of the new lines under construction.
Speculative residential property buyers are willing to purchase soon after construction starts on the lines. End-user buyers who represent real demand only make decisions when they see there is significant progress on the lines and the projects they are planning to buy can be completed about the same time the line becomes operational. Many end users need the line to be operating before they decide to live in the property.
Office and retail tenants will only decide to rent in a location when they are certain that the line will open by the date that they occupy the property.
For retailers, their business depends on the traffic generated by the line.
CBRE Thailand, a property consultant, predicted the BTS Light Green lines would continue to be the most popular thanks to the number of developments which in turn increases their ridership.
The most popular line in terms of the number of new launches and future supply of condominium units in 2017 was the BTS Light Green North Extension, with around 4,900 units launched and under construction, followed by the MRT Dark Blue Extension 2 (4,500 units), and the MRT Dark Blue Extension 1 (2,200 units) and the BTS Light Green South Extension (900 units).
The completion of the MRT Dark Blue Line, expected in 2020 will be a big step forward as this will be the first circular line connecting many different parts of the central midtown area rather than a line connecting a midtown/suburban location with the city centre.
The number of passengers, and therefore the popularity of locations near train stations on this line for development, could increase significantly.
The challenge for developers is to forecast which of the Pink, Yellow, Orange and Gold Lines will be the most popular.
As construction has just started, it is too early to tell the real demand for the locations next to the stations along these lines. Not all mass transit lines are equally attractive today and that will continue to be the case in the future. The development potential will drive traffic on the line and in particular the traffic at each station.
Malin Phlernjai and Onchanok Nawapruek are analysts at Research and Consulting, CBRE Thailand. They can be reached at email@example.com Facebook: CBRE.Thailand LinkedIn: CBRE Thailand LINE@: CBRE Thailand Twitter: @CBREThailand and website: www.cbre.co.th