Developers keen on Ratchada-Ladprao following mass-transit extension
February 19, 2014 00:00 By The Nation
The Ratchada-Ladprao area is the prime location for both commercial and residential following the extension of the mass transit network to and beyond the location, according to survey by Knight Frank Chartered (Thailand) Co Ltd.
The research shows that in the past five years, the Ratchada-Ladprao area has undergone many changes. Factors such as convenient access to the mass transit system and connectivity to major city roads has encouraged robust expansion in every segment of the property market. In the condominium market, large SET-listed developers have entered the market, causing the supply to surge while enhancing the area’s high-end offerings. Since 2011, the condo supply has exceeded demand; however, the take-up rate remained relatively high at approximately 62.6 per cent as of the end of 2013. In the office building segment, Ratchada-Ladprao, especially Ratchadapisek, Phaholyothin and Vibhavadee roads, was characterised by new supply at all levels, from Grade A to Grade C buildings. The average occupancy rates fluctuated from 2008 to 2013. From a low of 91.72 per cent in 2011, the rate rose in 2012 and 2013 to 92.73 per cent and 95.23 per cent, respectively. Given the density of vehicular and foot traffic in Ratchadapisek and Ladprao, the retail segment saw intense competition between large players. The major retail centres achieved high occupancy rates, where seven out of 16 centres reported 100 per cent occupancy. Rents largely depended on the nature of the tenants’ businesses, with those in the fashion retail category paying the highest rates.
The company’s head of research and consultancy Risinee Sarikaputra said that looking back in the last five years, the supply of condominium units in the Ratchada – Ladprao area have significantly increased. In 2013, a continuous increase of new supply caused the condo market to overheat. Also, selling prices of the units were found to have increased approximately by 8 per cent per annum, reflecting an increase in development costs, including land price, labour and material costs. Ratchada – Ladprao attracted many SET-listed development companies with well-known brands, such as Pruksa Real Estate, Asian Property Development and Noble Development. These developers have started to develop high-end products.
At present, the Ratchada – Ladprao area features many condominium projects with sale prices that can be over Bt100,000 per square metre, such as Quinn Condo Ratchada, Centric Huai Kwang, Noble Revolve Ratchada, Rhythm Asoke and Condolette Midst Rama 9. This has never been seen before, even though these condominium developments are mostly located on the main road, and it reflects the area’s strong potential to be another prime location in Bangkok. Additionally, the area houses many commercial properties such as department stores, hypermarkets and office buildings, and it is served by the existing Mass Rapid Transit system.
Meanwhile, the office market in the Ladprao 5-junction area covers Ladprao, Vibhavadee – Rangsit, Phaholyothin, Rama IX and Ratchadaphisek roads. By the end of 2013, there were approximately 804,263 square metres of office space in this area. Of this, Grade A office space comprised 171,795 square metres, while Grade B and C offices encompassed 392,800 square metres and 369,660 square metres respectively.
The average occupancy rate was at 97.18 per cent in 2008. It then increased to 98.68 per cent in 2009. In 2010, there was a 6 per cent drop to 92.62 per cent due to the political uncertainty in Thailand. The occupancy rate dropped further in 2011 to 91.72 per cent, and rose in 2012 and 2013 to 92.73 per cent and 95.23 per cent, respectively.
The average rental rate in this area was about Bt495 per square metre, as of the end of 2013 – an increase from Bt465 per square metre in 2012.
She added that the total retail supply in the vicinity was 306,804 square metres, of which 124,122 square metre was in the Ratchadapisek area, representing about 41 per cent of the total retail supply, as of the end of 2013. This was followed by the Ladprao area, representing about 40 per cent. These two areas represent the core retail districts in the city fringe area, with intense competition among its large retail developments.
The total retail supply in this area was 300,826 square metres, of which 194,965 square metre were shopping malls, representing about 65 per cent of the retail supply, as of end of 2013. However, we believe there is an opportunity for the development of smaller retail centres that can leverage the area’s high-density, where only two quality community malls can be found. However, this endeavour will require a wider frontage, as an appropriate frontage is one of key success factors for any retail development. Other successful large retail centres, such as Tesco Lotus and Makro, mainly focus on their own retail sales businesses rather than renting out space as a revenue driver.