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Raising property standards will help prepare Bangkok better for AEC
One of the policies promised by the re-elected Bangkok Governor, MR Sukhumbhand Paribatra, during his election campaign was to prepare Bangkok for the opening of Asean Economic Community (AEC) in 2015. The policy makes a good sense because Bangkok has many advantages that could help position itself as a hub of Asean. It is also welcomed by the Bangkok real estate industry as the city’s property markets are expected to enjoy stronger demand when the AEC opens.
More companies from Asean and other countries looking to set up business operations or regional head offices in this new economic community may choose Bangkok as a hub because of a number of advantages that the city has to offer.
The city occupies a strategic location in the centre of the region, connecting the emerging economies of Myanmar and Indochina with the rest of Asean countries. Infrastructure has seen continued improvement. Skilled labour is available.
In addition, the cost of doing business in Bangkok remains very competitive. Corporate occupancy costs represent a major indicator in this respect. Bangkok offers relatively low office rents compared to more economically established cities such as Singapore. Office rents in Bangkok are even lower than those in emerging markets such as Yangon, Ho Chi Minh City and Hanoi where the international quality office markets are under-supplied.
An increased number of foreign companies in Bangkok will mean more demand for office space and an increased number of expatriates working in the city. In most cases, senior expat executives will come with their families. This will benefit Bangkok’s residential sectors that cater to expatriates, whether they be luxury apartments, serviced apartments, rental houses or condominiums.
It is obvious that Bangkok also offers a favourable living environment for expat families, with an abundance of quality housing, recreational facilities, international standard hospitals and international schools. This represents Bangkok’s another major advantage, compared to other major cities in Asean.
Whilst Bangkok has many advantages as a hub of Asean, there remain a number of issues that need to be addressed:
Should the commuting time issue be managed efficiently, more property developments -- office buildings, shopping centres and residential properties -- can be built to serve both Thais and foreigners. The emergence of the Asoke area as a new prime commercial location exemplifies the case. The area was previously a less preferred location due to heavy traffic congestions. With the opening of BRT and MRT systems, the area has emerged as a prime commercial location, accommodating a number of Grade A office buildings and retail centrers, and today become one of Bangkok’s popular business locations. Though heavy traffic congestions continue, people working or living in the area have an option to use the mass transit systems.
Moreover, additional measures may be required. For example, the present Building Control Act stipulates that buildings 23 metres tall or taller, or covering more than 10,000 square metres must be designed and constructed to resist an earthquake of at least magnitude five on the Richter scale. However, the regulation was enacted in 2007 and thus does not cover older buildings. Likewise, the present Building Safety Control Act requires owners in high-rise buildings to adequate sprinklers. But the regulation covers only buildings that were built before 1992, when the regulation was enforced. Whilst some owners of older buildings may not be willing or able to afford upgrading building safety standards, the BMA may consider some measures to incentivize these building owners.
All these may or may not be direct responsibilities of the new Bangkok Governor. But the new governor will be in the best position to drive these initiatives, which will not only help bring the Bangkok real estate sector to the next level and consequently prepare the city for the AEC better.
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