Bangkok’s emerging re-urbanisation : will big plots lead the way?

December 17, 2013 / By

Since at least the early 1990s, Bangkok’s landscape has been characterised by a move to the suburbs, underlined by the fact that between 1990 and 2010, more than 96% of the city’s population growth occurred in areas we categorise as either Suburban or Exurban (see Figure 1 below), with retailers following suit. For example, in 1990 when we began tracking retail supply data, 61.7% of stock was located in these central areas. In 2013, the figures are quite different, with only 39.4% of stock now located in Core/Urban areas. At the same time, Core/Urban areas have retained the lion’s share of office space, with 77.7% of supply in 2013 versus 87.0% in 1990.

Figure 1: Bangkok Taxonomy

Source: Jones Lang LaSalle

As local residents and foreign visitors alike have rapidly adopted a preference for residences, workplaces, hotels and leisure destinations located near mass rapid transit stations, Bangkok’s landscape is beginning to exhibit signs of re-urbanisation. For example, we estimate that roughly two-thirds of all condo units developed in the last decade are located within 1-kilometre of a transit stop. During the same period, all Prime and most Non-Prime office space has been built within 500 metres of transit, including all known projects in the pipeline.

The re-urbanisation process has driven raw land prices in Central Bangkok to all time highs, with some ultra-prime plots reportedly selling for more than USD 16,000 per square metre in recent months. As land prices continue to rise, public sector stakeholders are increasingly looking at disposing (utilising leasehold tenure) several large plots in highly desirable urban areas with excellent transit accessibility (See Table 1).

Table 1: Large State-Owned Plots in Bangkok

Source: Jones Lang LaSalle

The State Railway of Thailand’s (SRT) Makkasan and Bang Sue sites have significant greenfield development potential, while the Khlong Toey Port site owned by the Port Authority of Thailand is also attractive, though as an active port at present and a brownfield site in the future, it faces a different set of challenges in being developed for commercial purposes. With an estimated total potential NLA of 12.4 million square metres compared to the 8.2 million square metres (NLA) of retail and office space in Core and Urban areas, actively developing these large sites could easily accommodate Bangkok’s long-term commercial real estate needs, in addition to serving as readily accessible infill sites for public facilities amenities such as schools, hospitals, affordable / low-income housing and parks / green spaces.

As the SRT makes preparations to publicly tender the development of Makkasan and Bang Sue in 2014, large domestic and multi-national corporates looking for large spaces are taking note as they look to consolidate operations under one roof while providing the best possible accessibility and amenity for their workforce. Similarly, though leasehold sites are not ideal for condo projects in the Bangkok context, residential developers are also keeping tabs on the situation. While there are bureaucratic hurdles that must be overcome before development can begin, we expect that these large plots have the ability to catalyse re-urbanisation, ultimately making Bangkok more resilient, competitive, and environmentally sustainable.

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