May 2013 City Plan Presents Major Challenges for Bangkok Real Estate Developers
Bangkok’s new city plan, which will take effect on May 2013, will present plenty of challenges for the Thai capital’s real estate developers. Because of the multitude of significant restrictions that will be imposed by the new plan on the development of residential property, developers raced against time last year in order to complete their various projects. The first five months of this year, though, will see a delay in the purchasing of additional land for new residential ventures. Most firms are choosing to wait and see before they buy up new land as they may not be able to develop it according to their wishes.
Real Estate Firms: Delayed but not Deterred
Although the implications of the new city plan on residential property development is clear enough to cause a delay in land purchase, real estate firms are still pushing through with their plans to develop the lands they’ve already bought and secured an Environment Impact Assessment (EIA) permit for.
LPN Development’s managing director, Opas Sripayak, said that they will not be purchasing additional land in Bangkok in the first five months of 2013. This is for the reason that they don’t really know whether they’ll be permitted to construct residential projects at the location where they’ll be making a real estate purchase. He also added that the new draft may cause the prices of land to drop in some areas and climb in others. All the same, this five-month holdup won’t have much impact on the company’s business plan because they’ve already acquired 13 land plots last year for this year’s residential projects. Environmental Impact Assessment permits have already been secured for all the said projects to ensure that there won’t be any conflict with the new regulations.
Sansiri’s Srettha Thavisin also believed that the new city plan will have an impact on all property companies dealing in residential projects in Bangkok. Thavisin admitted that the new regulations will definitely be a major factor that their firm has to consider before making any land purchase in the Thai capital. Nevertheless, Sansiri’s plans to launch 45 new ventures this year won’t be in conflict with the new city plan. Furthermore, Thavisin revealed that they are still purchasing land in the provinces and suburbs to be developed as residential property in the year 2014 and land in Bangkok to be developed as townhouses and single detached houses.
Thongma Vijitphongpun, Pruksa Real Estate’s CEO and President, also acknowledged the new city plan’s effects on their company’s stance on buying land for condominium projects. The firm has postponed purchasing additional land since the last quarter of 2012 since they could not apply for a permit that would allow them to push through with condominium projects. Pruksa, however, already has adequate land for its THB55-billion projects this year.
Bangkok’s New City Plan
The new city plan will connect the capital to the suburbs, particularly the areas that Bangkok’s mass transit system serves such as Taling Chan, Ram-Indra, Bang Na, Min Buri, and Bang Khen. The new city plan will also impose regulations on the floor area and size of residential properties depending on the width of the road where they will be constructed. Minimizing population density and making Bangkok a more sustainable, eco-friendly city are the aims of the new city plan.
Property developers may have been delayed by the new city plan, but they have already adopted their business strategies and plans to the coming changes. For now, it’s too early to predict if they’ll be able to turn the new city plan to their advantage.