CBRE: Prime plots cheaper
Landowners in prime Sukhumvit areas are offering land prices 30% lower than previous years as condo developers delay purchases, according to property consultant CBRE Thailand.
Kulwadee Sawangsri, executive director and head of capital markets for investment at CBRE, said the pandemic affected land transactions and prices last year.
"The pandemic acted as an accelerant," Mrs Kulwadee said. "The property market became more tenant- and buyer-friendly, with occupiers gaining more bargaining power."
There were more properties up for sale as landlords and property owners put their assets in the market to generate cash flow.
As a result, land prices will become more realistic as overall land prices in prime locations remain relatively flat.
Last month CBRE was approached by many land owners who offered their plots at lower prices than before.
They wanted to close sales and transfer land more quickly. Some needed cash due to a lack of financial liquidity.
Mrs Kulwadee said some plots in prime Sukhumvit areas earlier offered prices of 1.6-1.7 million baht per square wah, but have lowered them to 1.4 million baht.
Many plots surveyed by CBRE in terms of size were around 200-400 sq w for sois in inner city locations, where low-rise towers of up to 23 metres are allowed.
They cut prices from 600,000 baht per sq w to 300,000 baht.
According to CBRE, land sale transactions in the central business district saw an increase in prices during 2010-20.
The highest rise was in the Ploenchit area, from around 1.5 million baht per square wah in 2010 to 1.7 million baht in 2017, before escalating to 3.93 million baht in 2019.
In prime Sukhumvit area, a plot sized around 1-2 rai was sold at 1.6 million baht per sq w in 2018. In 2020, another plot nearby was sold at 1.7 million baht per sq w.
Land prices on Sathon Road remained unchanged with 1.7 million baht per sq w in 2017 and 2020.
Mrs Kulwadee suggested land owners manage their portfolios after the land and building tax came into effect since last year.
"Some plots may be suited for sale, some for rent," Mrs Kulwadee said. "Another alternative is a joint venture with foreign investors to develop a condo project."
Landowners whose plots are too small to develop a high-potential project may consider acquiring plots nearby to boost potential and price.
Aliwassa Pathnadabutr, CBRE's managing director, said the outbreak and the economic slowdown caused a decrease in purchasing power.
"Some developers bought plots in inner city areas at high prices. They needed to launch high-end condo projects but could not to do so because of high supply in the areas and low purchasing power," she said.
"The government's stimuli are too weak to revive the market. The cut in transfer and mortgage fees should cover units priced up to 15 million baht while the leasehold period should extend to 60 years as the longer period is a more attractive investment."