Wednesday, March 14, 2007

More Sufficiency Economics From The Crown Property Bureau

CPB pushing city land development

Lang Suan residents face eviction this year


The Crown Property Bureau will turn away from small lessees and instead invite large-scale property developers to build megaprojects on its land in the heart of Bangkok for the sake of bigger returns, in a move which surprised some residents but was welcomed by estate developers. A source at the bureau said the change would start with a plot on Phloenchit road within this year.

The plot stretches from a corner next to Mater Dei school to near the Ton Son Tower building, and its width extends from Phloenchit road down Lang Suan road to Nguan Lee restaurant on the curb between Lang Suan and Sarasin roads.

Most of the contracts with small-scale lessees are about to expire. Seeing the opportunity for large-scale developments, the bureau will not extend their contracts, the source said.

''The property bureau views that returns from small lessees are too low and if there should be a change in the future, it will be difficult to terminate their contracts. So there is a plan to invite large-scale operators whose businesses are estimated at billions of baht to launch mega-projects there in exchange for 30-year-long concessions,'' the source said. The bureau would also invite large-scale developers onto many other plots where lease contracts are to expire this year.

Most Lang Suan area residents said they had not yet been officially informed about the project. Those whose houses have sat on the rented land of the bureau for a few decades said they had heard nothing from the land owner so far.

''There were rumours about an evacuation plan three or four years ago, then everything went quiet. I don't know if they will actually come down on us or not,'' said a resident of Soi Lang Suan 6 who declined to be named.

Chanpen Supho, 34, a fruit vendor in the area, said she knew nothing about the project, but she had already lost her stall at the mini-shopping arcade in Soi Lang Suan 4 over a month ago.

''The land owner told us to move to a new place in the middle of Soi 6. But I gave up because I couldn't afford the rent of 9,000 baht a month,'' said Ms Chanpen, who is now selling her fruit from a cart.

However, some restaurant owners whose contracts are going to end have already prepared to leave.

Pawalee Kruaboonraj, owner of Ad Makers pub and restaurant, said she will have to close and look for a new location after the end of this year. ''Our land lease contract will end in December, and the owner has already informed us that it won't be renewed,'' said Ms Pawalee. She said she had heard that a luxury condominium will be built instead.

Ad Makers has rented the land for 15 years, and is popular with Thai and foreign customers. Some customers already know about the relocation.

Ms Pawalee said she wanted the new location to be near the old site. ''Closing the restaurant will certainly affect our business and more than 40 employees here, but what else can we do? This is not our land. Since the owner will terminate the lease, we have to go,'' she said.

Chainid N. Sirimanee, managing director of Property Perfect Plc, said gathering small plots of land in the Lang Suan area would create great development potential for property projects.

Mr Chainid said the plots would be suitable for the development of hotels, serviced apartments, offices and commercial complexes.

If the capital controls were abolished, there would be a lot of overseas investors entering the bidding, he added.

But Anuphong Assavabhokhin, chief executive of Asian Property Development Plc, said it would not enter the bidding as it focused on housing sales and was not interested in rental-income businesses.

He said the area covering Ratchadamri road to Lang Suan and Phloenchit was Bangkok's prime location, with the highest investment. New big land plots would add more value to the location.

He felt the plots would have potential for development of residential projects like serviced apartments as Lang Suan was popular among expatriates who sought apartments for rent. The occupancy rate of the projects in the area was more than 90% throughout the year, while their asking price was very high.

Ironically, this used to be my old neighborhood. I moved away because of all the noise from the construction. Also, with all the skyscrapers going up, I no longer had a view of anything except other buildings.

When I first lived there, it was quiet, and the occupancy rates were low. The area has taken off and has totally transformed in the last five years. I'm surprised that the occupancy rates are as high as reported. From what I could tell, there were still many vacancies in the buildings around that area. Hard to believe that foreigners will continue to come in droves to rent and own condos that are fairly expensive, especially 30 year lease holds. But I remember when they were auctioning condos off as low as a million Baht a piece. I thought of buying a couple, but back then I thought Thaksin would be a disaster for the economy. Hahahaha. What little did I know!!

In the next five years, Lang Suan will be the premiere area of Bangkok.

If there is another financial crisis, maybe one day it will be quiet and desolate again. Thailand normally has a recession every ten years or so. And it looks like an economic slowdown is coming. But I doubt it will ever be as bad as the 1997 crisis.

1 comment:

Anonymous said...

Just found your blog, there is so much to read! :) Bangkokpundit has been my main source before, but your things are fantastic additional venting out!

About the crown's holdings - it is funny how they are ok to kick out poor families out and introduce more profitable property holders...I thought they should be on the "little mans side", "sufficiency economy", anyone?