LOCATION, LOCATION, LOCATION: Bangkok's electric train network is undergoing a significant expansion. Photo: Bangkok Expressway and Metro

The development and expansion of mass-transit lines in Bangkok has had a profound impact on the real estate market over the past 15 years. Many areas of the capital have changed dramatically with the arrival of new residential and commercial developments located close to mass-transit stations.

High prices for the most desirable land plots along urban rail lines have made high-rise condominiums the main choice of developers seeking to maximise returns. At the same time, condo living has attracted a new generation of younger buyers keen to own their own homes while also enjoying the convenience of easy commuting.

Work is planned or under way on a variety of new lines and extensions intended to make the capital region even more commuter-friendly. Further extensions of the Green Line, the original BTS skytrain route, are expected to open late this year and early next year. The State Railway of Thailand is developing the Red Line to serve northern areas of the capital, while the MRT Orange Line, expected to open in 2023, will open new routes to the east. Also in the pipeline are the Yellow and Pink monorail routes.

From the standpoint of the property industry, the MRT Blue Line is the most significant development since construction is now under way on its extensions after a series of delays. The 27km Blue Line extension will form a loop consisting of 19 stations (four underground and 15 elevated). It will serve communities on the west side of the Chao Phraya River and ultimately run all the way to Phutthamonthon Sai 4 on the city's western boundary.

photo: Pornprom Satrabhaya

As construction of the extensions is expected to be completed in 2019 and 2020, many developers have been looking to buy land plots along the main roads closest to the new route, namely Pracha Rat Sai 2, Charan Sanitwong and Phetkasem roads.

Initially the main focus for condominium developers was Pracha Rat Sai 2, but more developers have been looking at sites along Charan Sanitwong and Phetkasem roads, where land prices allow them to build projects with units that can be sold for below 100,000 baht per square metre. Many condominium projects in the area attracted high bookings and some developers managed to sell out all of the units they offered.

Since the first condominiums were launched in the areas along the Blue Line in 2013, the total has reached 30,418 units. About 6,000 units were launched each year and more than 8,200 units in 2017, when the completion schedule for the extensions became clearer.

Many developers in the area are offering units with starting prices below 3 million baht per unit, in line with purchasing power in the area. Pricing is critical as developers also expect sales will take longer than they would on the east side of the river.

The average selling price for all condominium projects in the area along the Blue Line is around 78,000 per sq m, but units in some buildings are being offered at around 100,000 per sq m. This suggests that some developers are confident of the purchasing power in the area, although these higher-priced units might take longer to sell than similar units closer to the city centre.

Some developers are finding willing buyers at 120,000 baht per sq m, in buildings located within 10 metres of a station. That price is still considered a bargain compared with comparable condominiums along existing mass-transit lines.

The average take-up rate for the 30,418 units along the Blue Line extensions so far is approximately 85%. While high, it is still lower than in some other areas.

Western Bangkok is not currently considered a prime location by many developers, who are accustomed to high sales rates over short periods when they offer new units close to mass-transit routes.

Many more projects are scheduled to be launched in the area in the next few years depending on construction progress, especially in the year before the extensions open. Rising land prices could make newer units even more expensive, as we have seen in all areas close to existing or planned mass-transit lines.

Land prices in the area along the Blue Line have already risen by about 20% in the past few years but they are still lower than in areas along other new lines.

The average land price in the area along Pracha Rat Sai 2 and Phetkasem roads is now between 170,000 and 400,000 baht per square wah.

At these prices, developers can still offer low- and medium-priced units but their projects will be located farther away from the stations.

Some developers are now looking to buy land in the area or have already acquired sites but have not announced any plans yet. They are waiting until they see signs of higher condominium selling prices, and also for word on the official completion date of the Blue Line extension.

Surachet Kongcheep is a veteran local property market analyst.

He can be reached at surachet.jock@gmail.com