The property market in Thailand continues to witness increasing rent rates in relation to both commercial and residential buildings. Although this is partly attributed to the premium designs, services and specifications that property developers introduce, the main driving factor is the ever increasing cost of land that continues to be recorded in both cities and upcountry areas.
Indeed, latest findings released by the Department of Treasury that carries assesses value of land after every four years shows that the cost of land in and around Bangkok City has risen by at least 17% from THB 715,500 per square wah (1SW = 4 square meters) to THB 850,000 (US$27,000) per square wah. The actual market price is most likely to be higher considering that Department of Treasury often undervalues cost of land.
This ever increasing cost of land is not limited to cities. The cost of land in Chiang Mai and upcountry areas has also risen by between 17% and 21% over the last four years. Interestingly, other areas of Bangkok have dethroned China Town as the most expensive location to buy land. Another interesting development is the fact that land in Songkhla Hat Yai District, a district that is very insecure, is the most expensive outside the capital.
Several factors continue to make cost of land expensive in Thailand of which location is the main factor. Commercial plots are generally priced higher than residential plots. Similarly, plots near amenities are sold at higher prices compared to those in far-flung areas.
Scarcity of desired plots is the other main reason for the ever increasing cost of land in Thailand. It can be very difficult to find plot on sale in and around Bangkok and the price of any on sale is always very expensive.
The new land and building taxation measures introduced will no doubt push price of land upwards. This is significant considering that both household and municipal tax rates have remained low for many years.