Property prices double in EEC rush

Developers in Chon Buri, Rayong and Chachoengsao provinces are prime beneficiaries of the government’s plan to develop the EEC in line with its policy to promote the Eastern Seaboard as a hub for technologically advanced industries. And they are counting on sustained demand to keep up the momentum in property prices. “We bought land at Bt3 million per rai to develop our residential projects in Rayong province five years ago, but now the price for land near our projects has jumped to Bt6 million per rai,” or Bt37.5 million per hectare, Pruksa Real Estate chief executive officer Piya Prayong said in interview. “This follows strong demand for land for the development of residential and commercial buildings driven by the needs of the EEC, which will be launched by the government this year.” Piya said that over the past five years business had been brisk, with the company having launched more than 10 residential projects in Chon Buri, Rayong and Chachoengsao by the end of last year. The projects, valued at Bt10 billion, had sold out, he added. Up to half of those sales came from people moving to the area to take up work at the industrial zones estates springing up across the zone. More than 10 such estates are near Pruksa’s properties, with prices for homes ranging from Bt1.5 million to Bt5 million. Locals largely make up the rest of the buyers who wanted to upgrade their homes to accommodate growing families, he said. Some Bt220 billion in residential projects were launched across the region earmarked for the EEC from 2012 to 2016, a survey by the Government Housing Bank’s Real Estate Information Centre shows. Chon Buri leads with up to 400 project launches comprising 53,000 units worth Bt157 billion. Rayong followed with project launches of around Bt50 billion for condominiums and low-rise homes, such as detached housing and townhouses, with a mix of local developers and Bangkok-based property firms putting them on the market. Chachoengsao recorded project launches comprising about 4,000 units worth up to Bt20 billion.Bt100 bn launches forecast Piya forecasts that from this year to 2021, the value of residential projects launched in the EEC will top Bt100 billion – with Pruksa accounting for Bt10 billion of that. “We see strong interest backing our launches of new residential projects, with buyers drawn by innovative, green designs and the healthy lifestyles in the area as more and more new workers move in – especially after the government finalises the incentives attached to the EEC and puts them forward to the National Legislative Assembly,” he said. Under government legislation, EEC investors will gain a package of investment incentives, including a sharp cut in personal income tax to 17 per cent, land leases of up to 50 years and a concession to engage in a free flow of foreign currencies in Chon Buri, Rayong and Chachoengsao. The government has targeted an investment budget of more than Bt700 billion to develop the EEC from 2017-21; more than 700 domestic and foreign firms have expressed interest in setting up in the zone. It is expected to employ more than 50,000 people, in estimates to 2021. Pruksa is among the developers seizing on the opportunities from this boost in demand for housing. Piya said that when people moved to the EEC their first priority was to find housing; the challenge for developers is to meet their needs. LPN Development, Sansiri, Property Perfect, CP Land and other listed property companies are also expanding their investments in housing projects to the east of Bangkok – especially in Chon Buri, Rayong and Chachoengsao – in order to serve the growing demand. In recognition of the development rush, Universal Utilities Group, which supplies tap water in the Eastern region, plans to invest an average of Bt200 million a year to develop water-treatment systems – especially in the three EEC provinces – to serve a growing population. The company is a subsidiary of Eastern Water Resources Development and Management. The company’s acting managing director, Cherdchai Pitiwacharakul, said that if the EEC project proves a success, the demand for water in the area would be more than five times that of the present. Therefore, the company needs a business plan to serve the long-term demand growth by budgeting for the ramped-up investment. The utility supplies 43 million cubic metres of water a year to Chachoengsao, Rayong and Chon Buri.