While smaller prime land plots around central Bangkok are becoming scarcer, numerous large sized sites exist across the city ready for new development or redevelopment. While a few of these sites are in private control, many are owned by state or quasi-state enterprises or agencies. With increased political stability and strong economic outlook, developer interest in these large plots is likely to grow, according to observations by property management services company Jones Lang LaSalle.
“After Bangkok’s real estate boom in the late 1980s and early 1990’s, developer interest in large public sites virtually disappeared for several years as the Asian financial crisis curtailed economic activity and new real estate development,” said Dan Tantisunthorn, Head of Research and Consultancy at Jones Lang LaSalle. “The prospect for such large sites was sparked by economic recovery in the middle of the last decade, with the Suan Loom Night Bazaar site owned by the Crown Property Bureau representing the last leasehold site of over 50 rai to be publicly tendered in central Bangkok in 2005.
Bangkok’s burgeoning demand for prime real estate could see developer interest return to large public land sites.
“However, an uncertain political environment and global financial crisis again put these types of projects on the backburner, “he continued. “The return of a more stable political environment over the past year and a half and strong economic growth are again raising the prospects for these types of sites to come back to the market.”
Potential waiting to be unlocked
A number of these large public sites connect to existing mass transit infrastructure while transit oriented development has evolved organically in Bangkok, with businesses, retailers and residents being drawn to mass transit stations. For this reason, these large plots have strong potential for development or redevelopment.
Some of the most visible sites include the Crown Property Bureau’s Lumpini and Ratchadapisek sites, the State Railway’s Makasan and Mae Nam port sites, or the Port Authority’s Klong Toey riverside site.
As a result, various stakeholders in these plots have continued to evaluate the process for bringing development sites to market.
Investment opportunities must be cautiously studied
Despite strong locational advantage, a fair amount of caution needs to be exercised when undertaking development, says Jones Lang LaSalle. Master planning should account for the amount of new supply that can be introduced to the market and a particular catchment over a given period of time.
“Our studies in Bangkok and urban centers around the world show the amount of various real estate uses, whether for hotel, office, retail or residential purposes, that can be optimally absorbed. In a rapidly evolving market like Bangkok, this is what should largely determine feasibility on these sites”, said Mr. Tantisunthorn.
“Modern cities around the globe are looking to maximize the use of scarcer prime land resources. Bangkok is no exception. The development of available large prime plots across the city is sensible and will also contribute to the development of the city itself. Relevant parties just have to make sure that these plots are best used and any development on the sites is well aligned with Bangkok’s real estate dynamics for sustainable success,” he concluded.