Struggling to recover
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Struggling to recover

With the Bangkok market slowly rebounding, developers are selling down their inventory rather than investing in new plots of land

People check out deals on houses and condos at this year's House and Condo Show held from March 21-24. (Photo: Varuth Hirunyatheb)
People check out deals on houses and condos at this year's House and Condo Show held from March 21-24. (Photo: Varuth Hirunyatheb)

With an unfavourable economy and expiration of discounts for the land and building tax this year, property developers are thinking twice about acquiring new land plots, shifting instead to draining inventory.

As a consequence, even though land prices in Greater Bangkok rose in the first quarter of 2024, the year-on-year increase remained lower than the pre-pandemic average.

Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC), said the economic recovery, both domestically and internationally, was not as robust as expected and has been sluggish since the onset of Covid-19.

"Negative factors include high household debt, which exceeded 90% of GDP, and elevated interest rates," he said.

"These directly affected home purchasing power."

Weak demand led to an increase in housing inventory. As of the end of 2023, the number of unsold residential units in Greater Bangkok totalled 209,894 units worth 1.17 trillion baht, up 13.7% and 26.7% respectively from 2022, according to REIC.

The rising inventory caused developers to exercise more caution in launching new supply and acquiring land for future projects.

Moreover, the land and building tax is collected at the full rate this year after a discount of 15% last year and a 90% reduction during 2020-22.

The higher rate is likely to dampen demand for land banks among developers, said Mr Vichai.

Acquiring land incurs land tax liabilities, adding to the cost of holding land, increasing development costs over the long run.

Developers also face constraints in raising funds amid concerns in financial and capital markets, he said.

Mr Kajonsit says Siamese Asset will pause land purchases for three years.


Kajonsit Singsansern, chief executive of SET-listed developer Siamese Asset, said the company would put land purchases on hold for three years and freeze new project launches this year.

"Buying new land leads to holding costs if we don't have plans to develop projects in the near term," he said.

"Even when a project is completed and there are unsold units remaining, those units are subject to the land and building tax."

The company will focus on increasing sales of units at existing projects, reducing debts and saving costs as issuing debentures and obtaining project finance has become more difficult, said Mr Kajonsit.

Wongsakorn Prasitvipat, managing director of SET-listed developer Property Perfect, said the company will prioritise cash flow management this year, aiming to reduce its inventory and land banks to avoid overstocking.

"We will focus on projects that meet prospective demand," he said.

"Rather than acquiring large parcels of land and waiting for future development as in years past, we will develop and launch projects soon after purchasing land."

Less competition for land purchases has led to reduced acceleration in land prices, said Tritecha Tangmatitham, managing director of SET-listed developer Supalai.

"The residential market recorded fewer new launches, and this momentum will continue this year as the economy is not favourable," said Mr Tritecha.

"Despite unfavourable conditions, we will launch more projects in 2024 than last year because there are fewer competitors, resulting in less competition for land and construction materials."


According to REIC, the price index of vacant land in Greater Bangkok in the first quarter of 2024 was 407.8, rising by 5.7% from the same period last year, and by 3.5% from the fourth quarter of last year.

The year-on-year and quarter-on-quarter increases were lower than the pre-pandemic averages of 14.8% and 4.1% per quarter during 2015-19, respectively.

From the second quarter of 2020, the year-on-year increase declined consecutively from 30.3% in that quarter to a low of 1.7% in the fourth quarter of 2021.

The figure rose consecutively from the first quarter of 2022 at 4.5% to a peak of 13.1% in the first quarter of last year, before falling again to 6.2% and 3% in the second and third quarters of 2023. The price index recovered to 3.4% in the fourth quarter of 2023.

Last year marked the first year in which the land and building tax was collected at a higher rate, followed a reduced levy from 2020-22.

Bangkok's skyline viewed from the King Power Mahanakhon skyscraper in the central business district, a top 10 location for newly launched condo units.


The location with the largest year-on-year increase in the price index of vacant land in Greater Bangkok for the period was Nakhon Pathom, rising 89.4%.

Coming in second was Muang-Phra Pradang-Phra Samut Chedi in Samut Prakan with a gain of 13.9%, Samut Sakhon (12.4%), inner Bangkok areas (10.1%), and Bang Khen-Sai Mai-Don Mueang-Lak Si-Min Buri-Nong Chok-Khlong Sam Wa-Lat Krabang (4.6%).

"These changes reflect the rise in land prices in the Bangkok suburbs, driven by urbanisation, the expansion of inter-city motorways and plans for mass transit lines, including both new routes and extensions," said Mr Vichai.

Land prices in these areas are not excessively high, making them suitable for the development of low-rise housing projects that cater to the purchasing power of prospective homebuyers, he said.

Inner-city locations recorded a moderate increase in land prices because of limited availability of vacant land and existing high prices, leading to a slower uptick compared with suburban areas, according to the centre.

However, inner-city locations ranked third in terms of the largest year-on-year increase in the land price index in the first quarter, suggesting some developers were interested in developing residential projects in these areas, particularly condos, noted the REIC.

REIC market research in the fourth quarter of 2023 found new condo launches in these areas grew by 10.8% year-on-year.

These areas include Pathumwan district and Silom-Sathon-Bang Rak districts, both of which ranked among the top 10 locations with the largest number of newly launched condo units in the fourth quarter of last year.

Pathumwan was seventh with 542 units, while Silom-Sathon-Bang Rak claimed 10th with 418 units. Remarkably, both areas had not been in the top 10 for several quarters.

In terms of value, Pathumwan ranked fourth with a sales value totalling 10.4 billion baht, while Silom-Sathon-Bang Rak ranked fifth at 6.52 billion.

Regarding the prices of vacant land in areas along mass transit lines, the top five locations with the largest year-on-year increases were primarily those along existing lines and planned lines connecting to major commercial zones.

These included the Green Line's Samut Prakan-Bang Pu and Bearing-Samut Prakan sections, with a year-on-year increase of 13.9%. In these areas, Phra Pradaeng and Phra Samut Chedi were the districts with the largest increases in land prices.

In Samut Prakan's Muang district, certain areas including Thai Ban and Thai Ban Mai also recorded an uptick in land prices.

The second-largest year-on-year increase in land prices was along the MRT Blue Line and the Dark Red Line's Bang Sue-Hua Lamphong section, with a rise of 10.1%. Phaya Thai, Khlong Toey and Huai Khwang posted the largest gains.

The Green Line's Mo Chit-Saphan Mai-Ku Kot section and the Dark Red Line's Bang Sue-Thammasat Rangsit section both increased by 9%. Bang Khen, Lam Luk Ka, Muang Pathum Thani and Sam Kok posted the largest gains.

Ranking fourth was the Blue Line's Hua Lamphong-Bang Kae section, the Gold Line's Thon Buri-Prajadhipok section, and the Orange Line's Taling Chan-Cultural Centre, with an 8.6% increase. Along these lines, Phra Nakhon, Khan Na Yao and Phasi Charoen were the districts with the largest increases in land prices.

Coming in fifth was the Dark Red Line's Hua Lamphong-Maha Chai section, rising 8.1%. The Muang district in Samut Sakhon, Bang Bon and Bangkok Yai districts posted the biggest gains.

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