Bangkok land prices set for record

Bangkok land prices set for record

Central expected to buy Ploenchit plot

People walk to office buildings in Klong Toey district, Bangkok. (Photo: Wichan Charoenkiatpakul)
People walk to office buildings in Klong Toey district, Bangkok. (Photo: Wichan Charoenkiatpakul)

The land price per square wah in Bangkok is expected to reach a new record high of more than 4 million baht for a plot on Ploenchit Road owned by the Sukosol family being purchased by Central Group, according to a source in the property industry who requested anonymity.

The source said this plot, sized around three rai, used to be Morakot parking lot located between Central Chidlom and Soi Somkid.

"After the former British Embassy on Wireless Road was sold at an average price of 2 million baht per sq w in 2018, some developers approached the landlord of this plot to buy it, but the landlord did not sell," the source said.

However, the land and building tax, which took effect in 2020 and began collection at the full rate this year, in addition to the application of new appraisal prices starting last year, is apparently influencing the landlord's decision to sell, said the source.

According to the Treasury Department, the appraisal price of land on Ploenchit Road for 2023-26 is 1 million baht per square wah, representing an 11% increase from 900,000 baht for 2016-22.

As the tax rate for vacant or commercial land worth between 1-5 billion baht is 0.6%, a three-rai plot on Ploenchit Road with an appraisal price of 1.2 billion baht would be required to pay 7.2 million baht in taxes.

"Given the impact of the land and building tax, some landlords have offered discounts of 30-40% from their initial asking prices," said Wutthiphon Taworntawat, managing director of commercial property developer UHG.

He said UHG concluded several leasehold land deals during the pandemic, benefiting from reduced competition with condo developers as that market faced several challenges.

"When condo developers reduced land purchases, landlords shifted to renting out their lands instead," said Mr Wutthiphon.

"Some of them are siblings with different views; some want to sell, while others do not, so renting is sometimes an agreeable solution."

Phattarachai Taweewong, research and communication director at property consultant Colliers Thailand, said for prime locations, leasing lands or joint venture development on lands were new models as landowners are hesitant to sell their plots.

"Land in the central business district remains attractive to developers despite high asking prices for land or rent," he said.

In the Sathon area, a land transaction for some plots closed at more than 2 million baht per sq w in late 2022, up from an earlier deal worth 1.45 million baht in 2017 when residential developer Supalai won a bid for the former Australian embassy, said Mr Phattarachai.

Plots in prime Sukhumvit zones were purchased at 2 million baht per sq w for most transactions, with prices rising 10% annually.

In the Thong Lor area, some deals closed at 2.86 million baht, marking a new record high, noted Colliers.

"The record for land price per sq w remains the plot on Sarasin Road for 3.9 million baht, purchased by Sansiri in 2020," he said.

Colliers reported the value of land and building transactions nationwide in the first three quarters of 2023 totalled 780 billion baht, representing a 26% increase from 619 billion year-on-year.

During 2016-21, the total value each year exceeded 1 trillion baht, then dropped to 790 billion baht in 2022, marking the lowest figure in the past decade, largely attributed to the impact of the pandemic-induced economic slowdown.

"Land transactions remain active, but the majority are in outer city locations or along new mass transit lines or extensions because most developers shifted to low-rise housing or low-priced condo development," said Mr Phattarachai.

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