The up and coming Bangkok city plan which will be set into motion in 2020 will change the atmosphere of Bangkok yet again
Real estate developers are becoming more aware of the possible changes. In fact, some have held their land purchasing and new development plans in check until there are clear details.
The City Planning Department hopes to market Bangkok as a compact city with efficient routes that connect the city centre with suburban areas. The 2020 city plan will undergo revisions and public hearings, which will start around mid-2019. This will be the 4th revision to the capital’s city plan since its first revision way back 1992.
Some proposed key changes have been revealed to the public, including higher floor area ratios (FAR) in specific quarters, improved land zoning controls and implementation of new measures to support development near major mass transit stations. All these changes will affect the country’s real estate market.
What are Floor Area Ratios?
The FAR pertains to the ratio of total constructed area of a building permitted to be built on a site to the overall land area. At present, the maximum FAR is 10:1 with bonuses up to 20 per cent if specific features are added to the building design. This signifies that the overall constructed area can be up to twelve times the size of the site. The FAR is less than 10:1 in a number of areas.
According to the department, the maximum FAR of 10:1 will not be increased but there will be increased in FAR in many areas, this will allow for more saleable space on a designated plot area, a higher FAR will then increase the value of a site. Potential sellers of sites are likely to wait until details are confirmed in anticipation of being able to achieve higher prices.
There will be changes to the land zoning regulations in various places that are at present restricted. This will pave the way to a more diverse and bigger property development in the target areas. In addition, this may also result in a betterr range and density of developments in several locations.
Land Reductions and Development in the Midtown and Suburban Areas
The department said that the total land allocated as green zones (rural and agricultural) will be cut back by 23.73 percent. Furthermore, rural and agricultural conservation zones will be reduced by 64.21 per cent.
The high-density residential zone (brown zone) will be slightly expanded by 0.59% and the commercial zone (red zone) will be 14.65 per cent bigger. On one hand, the total land areas designated as a low-density residential zone (yellow zone) will be decreased by 10.15 per cent, the medium-density residential zone (orange zone) will be increased by 39.36 per cent,
In effect, CBRE wants to see more developments in condominium and commercial properties, particularly in suburban and midtown districts.
We can expect new regulations that will allow denser development within a radius of 500 meters along major mass transit stations. But final regulation details have yet to be released.
All in all, development controls seem less restrictive in a number of place. However, restrictions may likely continue for buildings standing on narrow pathways,
Market Forces Will Drive Real Estate In Bangkok
The Bangkok property market will become increasingly driven by market forces of supply and demand instead of government control should these measures come into effect.
CBRE Thailand research and consulting manager, Rathawat Kuvijitrsuwan, said that developers will need to guarantee that there exists an actual demand for what they plan to construct. Filling the allotted maximum land area does not suffice. The implication? Real estate investors, developers and lenders will have to research actual figures concerning demand evels. Moreover, they should have a clear understanding of the market’s strength, weaknesses, opportunities and threats.
Photo by punyawee chansriwong / Flickr
This article was originally written on 3rd April 2019 by an analyst at CBRE Thailand’s Research and Consulting department, Khanachai Kittisorayut, for the Bangkok Post.
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