Sukhumvit 6 plot fetches record B1m a square wah

Sukhumvit Road

A land sale on Sukhumvit Soi 6 has set a record at one million baht per square wah, according to the property agency CB Richard Ellis Thailand (CBRE).

The price of the three-rai site in front of Jaisamarn Full Gospel Church beat the earlier record of 950,000 baht per square wah offered by Central Retail Corp for a nine-rai plot on Phloen Chit Road owned by the British Embassy in mid-2006.

”It’s a new era of land price adjustment. The market price in the past few years jumped from 650,000 baht per square wah due to very limited land plots in the area,” said CBRE managing director Aliwassa Pathnadabutr.

But she warned that high prices were likely to ease except for the best locations near mass transit.

An industry source said the Soi 6 plot was owned by an Indian-Thai textile businessman based in the Phahurat area. He bought the plot after the 1997 financial crisis and sold it to another Indian-Thai businessman for 1.2 billion baht in May.

Ms Aliwassa said the deal would set a new price benchmark for land plots in the Phloen Chit and Nana areas.

For the past two years, the asking price for the plot had been 700,000 baht per square wah when CBRE was an agent for the landlord. The location had potential for development into a condominium, hotel or office building.

”If it is a condominium project, the starting price per square metre will be up to 300,000 baht, close to the (current record) price of a penthouse at The Sukhothai Residences on Sathon Road.”

To be able to demand such a high selling price, a developer should be accurate on construction costs, the most challenging factor this year. He should be also concerned about the project’s quality, image and management.

”When the construction costs go up, the target customers and location will change. Developers should consider carefully which market segments will respond to their products.”

She said the Thai luxury property market remained strong as Thailand was a hospitality-based country. The two segments driving the property demand among foreign investors and developers in the next 10 years would be residential and resort markets as Thailand was famous for its tourist destinations.

Barring a coup, she said, Thailand’s property market would continue growing even in the face of political protests. Supporting factors are the elected government, its clear policy to stimulate the economy and the easing of concerns about the Foreign Business Act.

”We are optimistic about the Thai property market,” she said. ”Developers should have higher quality and better planned developments as market competition is no longer at a regional level.”

Ms Aliwassa said the company had at least four big deals pending worth more than 20 billion baht, involving investors from Middle East and European-originated funds based in Hong Kong.

CBRE celebrated its 20th anniversary yesterday. It handled about 1,600 transactions worth at least 20 billion baht last year and expects 7% growth in 2008.