Land prices in Bangkok have varied wildly in the last 30 years. However, Since 1988, land prices have been on an upward trajectory and have risen a total of 1000%. Why has this happened? We take a look at how Bangkok has evolved, and how this has impacted land prices:
1988 to the Financial Crash – Dramatic increases
During the late 1980’s up until 1996, Asia went through a period known as the Tiger Boom years. During this period, various countries such as Thailand saw huge growth. Bangkok was increasingly developed with the increased income and land prices realised huge increases as a result. Prices rose from around 100,000 BHT per square metre to 200,000 BHT per square metre within a few years.
1997 to Early 2000’s – Stagnation
In 1997, Thailand was hit by a financial crisis. The country was plunged into disarray. Naturally, during this period land prices were stagnant at best.
2000’s to 2015 – Unprecedented growth
Once the country began to recover, land prices literally never looked back. Several factors caused the development of Bangkok to explode. Investment was poured into the city from within the country itself and elsewhere. This naturally caused land prices to soar. From peaks of 500,000 BHT per square metre in the early 2000’s, prices rose to approximately 1.7 million BHT per square metre in 2015.
2016 to 2018 – Continued growth
Today, land prices continue to rise. The growth is maintained but at a slightly slower pace. From 2015 to 2016, we saw possibly the largest jump in prices but more can be expected in the future. Examples of record prices include 2,000,000 BHT per square metre for land in Siam Square, and 1,950,000 BHT per square metre for land in Time Square, Sukhumvit. These prices are simply unprecedented and represent prime land positioning within the centre of Bangkok.
Why Bangkok’s Land Prices Continue To Increase
So why do land prices continue to rise? Surely there must be an upper limit? Can price continue to rise at the rate they have been? Is there actually any land left in Bangkok to purchase? To analyse this, there are five main pointers to consider:
Development of the Mass Transit System
The Bangkok Mass Transit System has transformed the city. Before this system was implemented, transport within the city was Spartan and chaotic. The city was fragmented and it was not easy to travel between the different districts. The Mass Transit System totally changed this. Areas of the city were opened up, and new regions saw development. In essence, the MRT line, for example, paved the way for investment within Bangkok – this inevitably increased land prices. Businesses and developers competed for land within prime areas, and prices obviously hiked as a result.
Urban planning and building regulations
Aside from the Mass Transit System, planning and building regulations have also had a huge impact. In the early development of Bangkok, regulations were slack. This meant that land prices were relatively cheap as practically anyone could build anywhere. As the city became centralised however into its current shape, regulations tightened. This meant that what you could actually build on a piece of land had tighter restrictions – as a result, land prices increased.
Improved infrastructure and amenities
If you look at Bangkok today, you can see just how far the city has come. Various districts are bursting with awesome amenities. You can enjoy public parks and huge modern shopping malls for example. The infrastructure and amenities within Bangkok have helped make it a highly desirable location. The capital of Thailand has finally grown into a metropolis and is easily the most important city within the country. As a result, people who want a slice of the action must pay a premium for land.
Increased investment from foreign business
As Bangkok developed, so did interests from other countries. Thailand (and subsequently Bangkok), benefits from a central location within South East Asia. It is connected to a myriad of developing countries such as Myanmar and Vietnam. Neighbouring Asian countries such as Singapore, Japan and China have noted how Thailand and Bangkok have progressed. Due to this fact, investment from foreign companies has increased. This is just another factor that drives up the popularity of the capital and also land prices.
Limited availability of prime land within the city centre
This is possibly one of the most important reasons. Within the last decade, Bangkok has begun to grow inwards. The layout of the city has stabilised and prime areas have been established. Everyone knows the prime areas such as Sukhumvit Road, Thonglor and Ekkamai. These locations are popular due to their location, amenities, and business opportunities. Locations such as these understandably command high land prices as the potential return on investments can be huge.
The Future of Bangkok Land Prices
Will this trend continue? Will prices rise to greater levels for prime areas within Bangkok? This is largely dependant on current economic conditions and ROI that developers can earn. What happens if land prices continue to rise, but the developer’s ROI diminishes? Land will then look less attractive, which could actually drive prices down.
Furthermore, as land becomes sparse, developers are turning to alternative options. Redevelopment and demolition, for example, are booming. Many old complexes and areas are being demolished, and their land sold for redevelopment. Several properties on Wireless Road, for example, have already been flattened to pave the way for new creations. This trend could also cause prices to hold as developers gain increased buying opportunities.
The next 5-10 years certainly look to be interesting. If past trends are anything to go by, who knows how far land prices could rise. Is it not out of the realms of possibility to expect prices to reach the 3 million THB mark and above per square metre.
Read more: Bangkok condominium price trends
Find Thai Property
Thailand Real Estate Agency – tailored service for international property buyers in Thailand