Property boom – firms acquire land worth nearly 100 billion baht

Twelve listed property firms have announced investment budgets worth between 98.04 and 99.04 billion baht to acquire land to develop residential projects worth between 385.15 billion and 385.64 billion baht during 2018, according to a survey by The Nation.

Over half of the investment budget from the firms will come from their initial cash while others will issue debentures worth a combined nearly 50 billion baht, along with seeking project financing from the commerฌcial banks, according to the survey.

For example, Land & Houses plans to issue debentures worth 14 billion baht this year, while Sansiri issued debentures for 4 billion baht early this year, and Pruksa Holding is planning to raise 5 billion baht from issue of debentures this year.

“We are confident the property market will experience strong growth of 510 per cent this year, thanks to the country’s estimated economic growth of 4 to 4.5 per cent in the year, while the country’s exports and tourism have seen strong growth following the global ecoฌnomic recovery,” said Naporn Sunthrnchitcharoen, Land and Houses chairman of the board of directors.

The strong economic indicators explain the company’s strong investment this year to both develop residential projects and invest in new business to boost its recurring income. Meanwhile, the government has expanded investments worth over 2 trillion baht from 2018 to 2020 to develop infrastructure projects nationwide.

That will boost the demand for residential project growth from this year through the next three years, said Pruksa Real Estate’ chief executive officer premium, Prasert Taedullayasatit.

With the nationwide infrastructure expansion, most listed property firms have continued to develop residential projects around both existing and new mass transit routes. Following the trend, land prices around existing and new mass transit routes have increased by double digits this year compared with last year.

“With land prices rising, it will boost residential price increases this year by five per cent,” said Pruksa’s Prasert.

“Land price rises were the main factor affecting residential price increases last year, while other cost factors such as construction and labour moved slightly.”

A January 2 announcement of the Treasury Department of the Finance Ministry noted that land prices nationwide were rising by double digits, especially in the central business districts of Bangkok. For example, land on Silom Road showed the highest appraisal value at 1 million baht per square wah, up 15 per cent from its price of 850,000 baht per square wah* four years ago. Ploenchit was next at the price of 900,000 baht per square wah, up 12.5 per cent from its price of 800,000 baht per square wah four years ago, while Sathorn Road price was 750,000 baht per square wah, up 15.3 per cent from 650,000 baht per square wah four year ago Meanwhile, the purchase last week of 25 rai (4 hectares) of land on Wireless Road, formerly part of the British Embassy grounds, topped out at 1.86 million baht per square wah.

Central Group partnered with Hongkong Land to buy the property to develop a mixeduse project. The price had risen by 95.78 per cent from 10 years ago, when Central Group acquired a ninerai (1.44hectare) slice of the UK embassy land. The opening bid in 2007 was 950,000 per square wah.

* 1 square was = 4 square metres