With landowners now more willing to sell vacant plots of land in order to avoid paying higher taxes, local media outlets are reporting that Pruksa Real Estate is considering increasing its purchases to take advantage of these favorable conditions. The developer will spend up to THB17 billion per year on new land.
The new land and buildings tax will go into effect in 2017 and Pruska CEO Thongma Vijitpongpun believes land prices will decrease as landowners try to avoid paying the higher tax rates. JLL noted earlier this month that landowners have been more willing to sell since taxes were approved.
“The market mechanism will make land prices fall. We will slow our land purchases and wait until next year,” Thongma told the Bangkok Post. Pruksa has planned an annual budget of THB15-17 billion for new land purchases during the next three years and the newspaper pointed out that the developer could be willing to spend more than THB20 billion in the future.
This is in stark contrast to the THB7.5 billion the company has spent on new land in 2016. In 2015, Pruska shelled out THB16.71 billion on new land acquisitions, a total that easily surpassed its THB14 billion budget. A change in land appraisal prices that impacted transfer fees was the main cause of going over budget.
Like many other Thai developers, Pruska also thinks the property market is set for growth after some difficult times. Thongma explained to the newspaper that property market growth should be noticeable in 2016 despite some negative events such as the recent bombings possibly worrying some potential buyers. He added that the market could grow by as much as eight percent this year with the property tax incentives that ended in April having greatly helped matters.
“There are several positive factors, including the country’s economic recovery and government investment in infrastructure projects, that should boost the property sector,” Thongma concluded.
