The land price index in Greater Bangkok witnessed a significant surge in the first quarter of 2023, with a double-digit increase driven by land price hikes on the outskirts of the capital.
This marks the third consecutive quarter of double-digit year-on-year increases, continuing from 12.5% in the fourth quarter of 2022 and 10.3% in the third quarter of 2022. This surge is having a significant impact on property development and investment in mass transit lines and means bolsters the future of Bangkok’s real estate market.
Top 5 Locations with the Highest Increase in Land Prices
According to Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC), the top five locations securing the highest year-on-year increase in the price index of vacant land were all located outside of Bangkok. The growth rates were between 25.7% and 68.2%. The top five locations witnessing this surge were:
Nakhon Pathom at 68.2%
Bang Phli-Bang Bo-Bang Sao Thong in Samut Prakan at 52.4%
Samut Sakhon at 39.1%
Muang Pathum Thani-Lat Lum Kaew-Sam Kok with 28.7%
Muang Nonthaburi-Pak Kret at 25.7%
The significant reason for a spike in these locations was due to their low base price, which led to affordable land prices suitable for developing low-rise houses at prices that are affordable and meet mass demand.
Impact on Property Development Along Mass Transit Lines
Investment in property development along existing and future mass transit lines has also contributed to a surge in land prices in those areas. The highest year-on-year increase in the price index of vacant land among all locations near the current and future mass transit lines was in areas near the Purple Line, which runs from Bang Yai in Nonthaburi to Tao Poon, with a growth of 9.8% to 420.8 in the price index.
The second-highest increase was in areas near the Green Line running from Ku Kot to Lam Luk Ka in the future, with a rise of 9.2% to 339.8. The Lam Luk Ka district had the highest increase in this location. The third was the Green Line from Mo Chit-Saphan Mai-Ku Kot and the Red Line from Bang Sue to Thammasat University’s Rangsit Campus, with a 7.8% increase to 446.5 and 439.6, respectively.
REIC’s Report on Bangkok Land Prices
In their recent report, the REIC reported on May 5 that the price index of vacant land in Greater Bangkok rose to 385.7 in the first quarter of 2023, a 13.1% increase from the same period in 2022 and a 1.1% increase from the fourth quarter of 2022.
Despite this surge, the index remains lower than the average rate for five years before the COVID-19 crisis. The main factor slowing down land price growth is the sluggish economy and a persistently high inflation rate, which has led many businesses to adopt a cautious investment approach while awaiting clearer signs of economic recovery.
What This Means for Bangkok’s Real Estate Market
The surge in land prices on the outskirts of Bangkok reflects increasing demand for affordable housing in peripheral locations, where low base prices allow for more cost-effective development opportunities. As investment in property development and mass transit lines continues to grow, land prices in these areas are expected to rise even further.
For investors and developers, this trend presents an opportunity to capitalize on the growing demand for affordable housing and property development along mass transit lines. As Bangkok’s real estate market evolves, keeping an eye on the land price index and its fluctuations can help stakeholders make informed decisions about future investments and developments.
Conclusion
The surge in Bangkok land prices in Q1 2023 reflects a growing demand for affordable housing solutions and increased investment in property development along mass transit lines. As the city’s real estate market evolves, understanding these trends and their impact on land prices can help investors and developers make informed decisions about their next projects. By staying informed about the latest developments and monitoring the land price index, stakeholders can better position themselves for success in Bangkok’s ever-changing real estate landscape.
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