Asean transport link plans boost property prices

Construction News Laos Myanmar Vietnam

PROPERTY PRICES continue to rise in Southeast Asia, especially in Thailand, Vietnam, Laos and Myanmar, driven largely by plans to develop the countries’ infrastructure to link their transportation systems and serve demand under the Asean Economic Community.

In Thailand, land prices close to the mass-transit system in Bangkok have risen over the past five years around the existing BTS Skytrain and MRT underground rail routes, as well as along the new mass-transit routes that will be completed this year and next – the Purple Line from Bang Sue to Bang Yai, and the Blue Line from Bang Sue to Tha Pra, respectively.

In the latest appraisal by the Treasury Department, effective for the 2016-2020 period, land prices across the Kingdom are on average 27.27 per cent higher than under its previous appraisal, which expired in December.

The price of land located close to the Skytrain mass-transit system on Silom Road through to Saladaeng is now appraised at Bt1 million per square wah (4 square metres), up 17.65 per cent from the appraisal price of Bt850,000 at the end of last year.

The highest market price for land successfully sold is for 3 rai (about half a hectare) on Chidlom Road, located close to the Orakarn building and BTS Chidlom station, worth Bt2.3 billion in total or Bt1.9 million per square wah.

The plot was bought by SC Asset Corp in a deal completed last July, with the listed developer planning to develop luxury condominiums for sale this year.

Meanwhile, land and condominium prices around the new Purple Line and Blue Line routes have risen over the last five years, while the projects have been constructed.

Knight Frank Chartered (Thailand) said the State Railway of Thailand plans to develop Bang Sue into the central terminal for the two high-speed rail routes: the northern line to Chiang Mai, and the Bangkok-Hua Hin line, on standard double-track with a gauge of 1.435 metres.

The Bangkok-Nong Khai line, with 1m gauge tracks, will serve as a connection to the northern, northeastern and southern lines.

Bang Sue station will also become the centre for Bangkok Mass Transit System (BTS), the property agency said.

Selling prices for condominiums around the development area for the mass-transit system, especially at Bang Sue, are therefore likely to increase further, said the company’s managing director, Phanom Kanjanathiemthao.

At present, the average price of a condo in the area is Bt88,000 per square metre, compared to Bt66,360 in 2011.

Furthermore, increasing investment at the current land price of more than Bt350,000 per square metre will affect the selling price for units in future condominium projects, at an estimated average of Bt100,000 per square metre, he added.

 Provincial prices

Land prices outside of greater Bangkok, in areas located close to the government’s master plan to invest heavily in land transportation infrastructure – double-track rail, high-speed trains and motorways – are also expected to continue to rise.

“Land prices in Khon Kaen increased from an average of Bt2 million per rai in 2012 to Bt6 million per rai last year,” said Mana Jiranapakul, managing director of Norm Boon Real Estate.

Khon Kaen is at the centre of the East-West Corridor, with China developing a high-speed rail link from Kunming to the Lao capital, Vientiane.

With the Thai government also planning to build a double-track rail system to Khon Kaen, this has the potential to link with the Northeast of the Kingdom, he said, adding that the province is a hub for logistics businesses that will link the region’s east and west.

“Land prices in the southern, northern, eastern and northeastern provinces of Thailand located close to major transit routes have seen land prices rising since the beginning of last year, compared with when we started to buy land around the country for expanding our business five years ago,” said CP Land’s president and chief executive officer, Sunthorn Arunanondchai.

CP Land, which has expanded investment in several property categories, including residential, hotel, office, warehouse, exhibition centre and logistics, is invested in 33 provinces around the country.

Asean land prices

Meanwhile, others countries in Asean have also seen land prices rising as a result of their governments’ policies to invest in the development of infrastructure projects.

For example, Vietnam’s property price are skyrocketing along Ho Chi Minh City’s proposed metro lines, according to a report by Viet Nam News agency.

According to the country’s Tuoi tre (Youth) newspaper, there are around 45,000 units in a series of apartment projects along the eight planned metro routes.

The first line, work on which began in August 2012, will run for 19.7 kilometres, including 2.6km below ground. It will have 14 stations, three of them underground.

Meanwhile, Yangon’s real-estate market in Myanmar is expected to show moderate growth this year, according to JLL, a property agency.

After peaking near US$100 (about Bt3,600) per square metre per month in mid-2013, grade-A office rents have since tumbled by 35-40 per cent as new supply entered the market.

Foreign investors have played an important part in the early development of Yangon’s real-estate markets, with investment coming from all over Asia, including well-known developers based in Singapore, South Korea and Japan, as well as lesser-known but equally impactful investors from Thailand, Hong Kong, China and Vietnam, JLL said.

In Laos, meanwhile, investment to develop the railway system will turn the landlocked nation into a land-link, according to a Vientiane Times report.

A collaborative venture between the Lao government and its Chinese counterpart plans to construct a high-speed rail route from Vientiane to Boten, a Lao-Chinese border checkpoint, over a distance of 417km.

The rail line will link Kunming in China all the way down to Singapore, passing through Laos, Thailand and Malaysia, which will boost investment and property-market growth in Laos. The investment in Asean countries’ transportation systems over the next five to 10 years will drive land prices and property market in the region, with a change in emphasis from central business districts in the capitals to upcountry provinces in each country.

“We are expanding our investment in the provinces and are looking at the investment opportunity in other countries in Asean, such as Myanmar and Vietnam, when see an opportunity for our expansion in the long term, due to the huge investment in the development of infrastructure and the commencement of construction,” CP Land’s Sunthorn added.