Bangkok Land Prices Poised to Reach Record Highs
The anticipated surge in land prices per square wah (4 m2) in Bangkok is poised to set a historic milestone, with projections indicating that a plot along Ploenchit Road, will command a staggering sum exceeding 10 million baht. This underscores the dynamic landscape of the city's real estate market, reflecting both the allure and the intensifying competition for prime locations.
The plot, sized around three rai (1,600 m2) , used to bethe Morakot parking lot located between Central Chidlom and Soi Somkid.
After the former British Embassy on Wireless Road fetched an average price of 2 million baht per square wah in 2018, several developers expressed interest in acquiring the land in the area. However, the landlords declined to sell.
Land and building tax
Nevertheless, the implementation of the land and building tax, which came into effect in 2020 and commenced full-rate collection this year, alongside the enforcement of new appraisal prices since last year, seems to be exerting influence on.
For example; Ploenchit Road's land prices from 2023 to 2024 have risen to 1 million baht per square wah (4 Sqm), marking an 11% increase from the 900,000 baht recorded during the period of 2016 to 2022.
With a tax rate of 0.6% applied to vacant or commercial land valued between 1 to 5 billion baht, a three-rai plot located on Ploenchit Road with an appraisal price of 1.2 billion baht would incur a tax obligation of 7.2 Million Baht.
Due to the significant influence of the land and building tax, certain landlords are now extending discounts ranging from 30% to 40% off their original asking prices.
Property developers
When condominium developers reduced land purchases, landlords shifted to renting out their lands instead.Developers continue to find land in the central business district appealing, even in the face of soaring land prices and rental rates.
In the Sathon area, a land transaction for several plots closed at over 2 million baht per square wah (4 Sqm) in late 2022, marking a significant increase from a previous deal valued at 1.45 million baht in 2017.
Between 2016 and 2021, the yearly total value consistently surpassed 1 trillion baht. However, in 2022, it plummeted to 790 billion baht, marking the lowest figure in the past decade. This decline is largely attributed to the impact of the pandemic-induced.
Bottom line
While land transactions continue to show activity, the focal point has shifted towards outer city areas or locations adjacent to new mass transit lines or extensions. This trend is predominantly driven by developers' preferences towards low-rise housing or affordable condominium developments.
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