The surrounding area of the new Suvarna-bhumi International Airport is teeming with development projects, according to research by Jones Lang LaSalle.

However, the research paper said uncertainty over the Suvarna-bhumi City Plan remained a key factor overshadowing prospects for the area's property market.

One impact of the new airport is the fast growth of the residential sector surrounding it. Over the past few years, many new housing projects have been constructed as developers anticipate that support infrastructure will boost their marketability following the opening of the airport, Jones Lang LaSalle said.

The warehouse rental market is another sector that currently enjoys strong demand given the upcoming opening of the new airport.

Leasing activity has become increasingly buoyant. While international couriers TNT and FedEx have recently acquired more than 3,000 and 4,000 square metres, respectively, of warehouse space near the new airport, others are looking for land in the same area. The rising demand has pushed up the rentals for warehouse space with rates ranging between Bt140 and Bt180/sqm/month, compared to Bt100-Bt140 in 2003.

The office market has likewise benefited from the new airport. The study by Jones Lang LaSalle shows that areas along Srinakarin, Bang Na-Trat and Kingkaew roads, which were previously amongst the least preferred office locations, are now enjoying buoyant leasing activity. Rental rates have risen to the Bt300-Bt380/sqm/month range, compared to a range of Bt150-Bt200 in 2003. Some newer buildings in the area can fetch higher rentals of up to Bt500/sqm/month.

The fast growth of the residential market in the area, combined with an anticipation of strong demand for commercial property from companies related to airport operations and logistics, has boosted demand for development sites near the new airport. Consequently, the surrounding land has been subject to high speculation. It is estimated that prices have doubled from 2003 to the present.

Nonetheless, there are a number of risk factors that may decelerate the development of the property market in the area. These include disputes about whether Suvarnabhumi City should be set up as the country's 77th province, the uncertainty over the Suvarnabhumi City Plan, and the environmental impact of airport operations, particularly noise pollution and flood management.

Details of the airport city plan have remained uncertain despite its forthcoming opening. As the city plan has not yet been finalised, the government has been considering a number of regulations to restrict land use in the area.

Amid the uncertainty, a number of property projects around the new airport may have to be postponed to ensure that these are not against the new city plan and building regulations. Some developers who have not yet started on their projects have adopted a wait-and-see approach.

As a result, downward pressure on land prices around the airport is expected.

Suphin Mechuchep, managing director of Jones Lang LaSalle, said land values depended mainly on the best use of each plot.

For example, a plot suitable for a retail centre normally has a much higher value than one that can only accommodate a warehouse or a housing estate. Therefore, as long as the new airport city plan is not finalised, identifying reasonable prices for the land near the airport is difficult.

Many believe the details of the draft of the Suvarnabhumi City Plan will not see much change when it becomes approved, and therefore could be used as a reference to indicate land use in each area around the airport, Suphin said.

However, as the city plan has not yet been finalised, there are always risks. In the most recent case, the government has issued a regulation to increase the building-restricted area around the new airport from the previous three kilometre radius to five.

"Once the new airport city plan is settled, the picture of the property market around the airport will become clearer," Suphin said.

"While prices of land in certain restricted areas may see a sharp fall, those in areas that see no effect from the completed city plan will likely continue to enjoy value appreciation, particularly plots with easy access to transportation projects supporting the new airport."