State Railway of Thailand plot entices developers

Construction News
SRT is developing Bang Sue Grand Station. Set to open in 2019, it will be the region's largest railway interchange. Krit Promsaka Na Sakolnakorn
SRT is developing Bang Sue Grand Station. Set to open in 2019, it will be the region’s largest railway interchange. Krit Promsaka Na Sakolnakorn

The vast 279-rai plot owned by the State Railway of Thailand (SRT) and located behind PTT’s head office in Chatuchak district is expected to emerge as a promising location for mixed-use development.

However, developers and investors said the leasehold period, traffic and mass-transit systems to support a large number of people working or living in the area in the future must be tackled first to make the plot more enticing.

Prasert Taedullayasatit, president of the Thai Condominium Association (TCA), said the plot had property development potential, as it was close to the future Bang Sue Grand Station, the country’s and Bangkok’s newest transport hub.

The SRT said Bang Sue Grand Station, scheduled to open in 2019, would be the largest railway interchange in the region, connecting to all destinations across Thailand and in neighbouring countries.

There will be three mass-transit lines to the station — the Red Line from Bang Sue to Rangsit, the Light Red Line to Taling Chan and the Blue Line to Hua Lamphong and Bang Khae. It is also one stop away from the BTS and the Purple Line.

“The plot is interesting to develop as a mixed-use project,” Mr Prasert said.

“But the lease period should be taken into account, as the current term of 30 years is too short to be worth investing in.”

The plot, which the SRT calls Nikom Km 11, is located between Vibhavadi Rangsit Road and Kamphaeng Phet 2 Road near the Si Rat Expressway and to the north of Wachira Benchatat Park or Suan Rotfai. It is now a residential area for SRT staff.

Takun Indarachome, director of the SRT’s property management and development department, said the plot would be offered for bidding under a leasehold contract for a mixed-use development for which the SRT estimated a combined investment of more than 100 billion baht.

“We’re finalising a feasibility study and master plan, which will be completed by next month,” he said.

“We’ll submit the project, called the Nikom Km 11 Development Project, to the cabinet by mid-year before opening for bidding early next year.”

The National Institute of Development Administration and property consultant Knight Frank Chartered (Thailand) are advisers to the project, he added.

According to the preliminary master plan and feasibility study, there will be five zones comprising office buildings, a conference and exhibition centre, an international hospital, a residential area and the SRT.

Office buildings will be located in two plots sized 30.5 and 35 rai, respectively, along the main road, which will link Vibhavadi Rangsit and Kampaeng Phet 2 roads.

The plots will have a total construction area of more than 800,000 square metres, according to Bangkok city planning’s floor-area-ratio regulation.

Near the office zone will be an international conference and exhibition centre. This zone will be located on 88 rai, where a construction area of up to 540,000 sq m can be developed.

Of the total, 120,000 sq m will be an area for exhibitions, 10,000 sq m each for conference rooms and retail space to support visitors and office workers, and a 357-room hotel.

The residential zone will be located near and facing Suan Rotfai Road comprising two plots.

The 66-rai plot is designed to be a long-term leasehold residential project for high-end condos comprising a 40-storey tower with 2,400 units and a 28-storey building with 800 units.

The other plot for residential development is sized 23 rai, where three mid-market condo buildings of 44, 46 and 47 storeys will be developed comprising 1,400 to 1,470 units apiece.

A plot sized 24 rai behind PTT headquarters will be allocated for an international hospital, which the SRT will build itself.

The zone, which the SRT will use as a residential area and workplace for its staff, will be located on a 34-rai plot on Kamphaeng Phet 2 Road that the SRT will ask the winning bidder to develop.

The SRT two weeks ago conducted market sounding for the master plan with property developers and investors including listed developers Major Development, Pruksa Real Estate, Quality Houses, Sammakorn, Singha Estate and Supalai.

Retail operators including Central Pattana Plc, The Mall Group, MBK, Platinum Group, Siam Piwat, Siam Future Development and Home Product Center participated.

Hotel investors such as LH Mall & Hotel, Erawan Group and Narai Property and conglomerates such as CP Land and TCC Land also took part.

Other developers and investors included Bhiraj Buri, BTS Group Holdings and AIA as well as bodies such as the TCA, the Thai Hotel Association, the Thai Real Estate Information Centre and the Housing Business Association.

Many developers agreed the lease contract period should be at least 50 years, and the project would be more attractive if the period was set at 99 years.

Aliwassa Pathnadabutr, managing director of property consultant CBRE (Thailand), said a lease contract term of 30 years was not feasible for property development today due to the high cost of land plots.

Since 2009 the cost of land, particularly in the inner city, has soared to more than 1 million baht a square wah.

As a result, a leasehold plot is not attractive for development.

Ms Aliwassa said with a lease period of up to 99 years, it would be easier to estimate investment and development value, as the term would be close to that of a freehold plot.

Mr Prasert said for residential development, a lease period of only 30 years would not attract developers and condo buyers, as financial institutions were reluctant to give a credit line of only 60-70% of the unit price.

“The project’s infrastructure and facilities is another issue, as it will be a huge development, with many people living, working and visiting there,” he said.

“The SRT should provide a feeder or mass-transit system to support them.”