SIGNS OF RECOVERY IN THAILAND: Developers snap up land

Original article: The Nation August 31, 2009 

Confident that the country's economy is recovering, property firms have revised their investment plans to allow for the purchase of more land in the final four month of this year on expectations that prices will rise after a period of stability. 

According to a survey by The Nation, property firms including Preuksa Real Estate, Land & Houses, Sansiri, LPN Development, Noble Development and Asian Property Development have increased their investment budgets to buy land between now and the end of the year for the purpose of developing residential projects next year and in 2011, believing the economy will return to strength in 2010. 

Most are convinced that land prices are likely to rise after remaining flat since 2008. 

Land & Houses senior executive vice president Naporn Soonthornchitcharoen said the company has enough cash to revise its spending plans and buy land worth Bt3 billion to Bt4 billion by the end of the year. 

"When the government begins construction on the [next phase of the] mass-transit system, that will affect the property market, especially land prices in areas near the rail system, which will increase. So this is a good time to buy land," he said. 

Preuksa Real Estate director and chief operating officer Prasert Taedullyasatit said the company will buy another Bt3.5 billion to Bt5 billion worth of land this year for new projects to be launched this year and next, taking the firm's total from 22 to 30 projects. 

"We have seen signs of economic recovery since May, and believe this sentiment has sufficient momentum to drive demand in the residential market in the second half of this year. As a result, we've decided to collect land to support our business expansion in the last four months," he said. 

Noble Development president Thongchai Busrapan agreed that now is the time to buy. 

"We believe this is a good time to pick up land, before prices rise on an economic recovery and construction on the government's mega-projects - especially the rail system - gets underway," he said. 

According to a study by the Agency for Real Estate Affairs (AREA), the new rail system development will drive up land prices by between 20 per cent and 100 per cent, depending on the location and type of property. 

As an example of this process, he cited land prices on Silom Road, which have increased from Bt500,000 to Bt800,000 per square wah since the opening of the Skytrain in 2000. (One square wah is equal to 4 square metres.) 

The area around Times Square Building on Sukhumvit Rd has seen the strongest growth, rising from an average of Bt400,000 per square wah in 2005 to Bt750,000 now - an increase of nearly 97 per cent. The area near Soi Ekamai on Sukhumvit has seen prices rise an average of 89 per cent to Bt500,000 per square wah.

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