Rise in construction cost for Thailand’s developers

Construction News

Despite logistics and construction costs increasing between 8-10 per cent this year in relation with 2011, residential prices are only expected to increase within a 3-5 per cent margin as a result of the steep competition and a sluggish demand to purchase residences for the first half of the year.

In a survey conducted by The Nation, construction price will increase in correlation with a higher minimum wage on average between THB 215 (US$7.00) to THB 300 (US$9.66) per day as of April 1 of this year. Logistic expenses will also increase do the rise in oil cost and NGV, while raw construction materials including steel, cement and decorative goods will also increase between 5-10 per cent.

Yet, land prices will remain last year’s price due to deficient stipulation to purchase land in areas effected by the floods and a lack of landlords selling off underdeveloped land.

However, land prices are increasing rapidly in areas that were unscathed by the floods. Additionally, many property firms are holding off on new property launches in the first half of 2012 as they are waiting for the new Bangkok city plan to come into effect at the start of this year. Condo development projects will be limited due to the fact that condos can only be built on roads wider than 12 metres which will cause property firms to hold off from purchasing grounds to construct residential projects on in the first half of this year.

These combined factors all contribute to construction cost that will increase between 5-10 per cent for a condominium and 8-10 for a single, detached house. The 5-10 percent increase in condos is in direct correlation to what stage of construction the project is in. If it is 50 per cent complete, it will only rise five per cent in comparison with last year. Yet, if the construction only commences this year, the construction cost will rise 8-10 per cent.

Source: http://www.property-report.com/rise-in-construction-cost-for-developers-18734

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