1# RECORD e2aec14baa7ef3008564e4685e546659579391392# TITLE: Determinants of Luxurious Condominium Prices in Bangkok CBD: A Case study of Encouraging Housing Affordability in Bangkok, Thailand3# YEAR: 2022.0 VENUE: International Review for Spatial Planning and Sustainable Development DOI: 10.14246/irspsd.10.1_1674# AUTHORS: Pornraht Pongprasert5# PAGES: 16 CANDIDATE TABLE PAGES (1-based): [12]6# ABSTRACT: : This study aims to find the factors influencing prices of luxurious condominiums within 1-km radius of urban rail transit stations in Bangkok CBD, where the property value rapidly increases since last decade. According to recorded data, the average price of condominiums in CBD is higher, nearly 28% during 2016-2019. Besides, the growth of luxurious condominium in these areas grows higher sharply. 52% of new condominiums are above Luxury class while housing affordability of Bangkok’s largest population is too low. Also, urban policy cannot control the unpredictable price of condominiums in CBD. As a tool for urban planners, post-windfall gain tax would be collected from real estate developers who get uplift property values as result of public infrastructure planning. It would be used to fund infrastructure such as transit, affordable housing. This paper can recommend urban policy planners which factors influencing unpredictable price of luxurious condominium in CBD should be considered in condition of windfall profit taxation. In addition, results suggest developers to set more reasonable price of new luxurious condominiums near rail station in CBD. In this study, 55 luxurious condominiums constructed within 5 years are research samples. Hedonic approach is applied to study the effects of location, structural and neighborhood attributes of luxurious condominium price in Bangkok CBD. Results are shown 6 key attributes; the number of units, percentage of car parking space/unit, locating private recreation park within project area, rate of common area fee, location of building in street corner and distance to expressway are interrelated to luxurious condominium price near urban rail transit stations in Bangkok CBD.789===== PAGE 1 (score 14, numeric-paren 0, table-words 0, var-words 14) =====1011167 12International review for spatial planning and sustainable development D: Planning Assessment, Vol.1013No.1 (2022), 167-182 14ISSN: 2187-3666 (online) 15DOI: http://dx.doi.org/10.14246/irspsd.10.1_167 16Copyright@SPSD Press from 2010, SPSD Press, Kanazawa 17Determinants of Luxurious Condominium Prices in 18Bangkok CBD: A Case study of Encouraging Housing 19Affordability in Bangkok, Thailand 20Pornraht Pongprasert1* 211 Department of Real Estate Business, Thammasat Business School, Thammasat University 22* Corresponding Author, Email: pondmail@hotmail.com 23Received: June 15, 2019 Accepted: Nov 06, 2021 24Key words: 25Luxurious condominium prices, Hedonic pricing model, Central business 26district, Bangkok 27Abstract: 28This study aims to find the factors influencing prices of luxurious 29condominiums within 1-km radius of urban rail transit stations in Bangkok 30CBD, where the property value rapidly increases since last decade. According 31to recorded data, the average price of condominiums in CBD is higher, nearly 3228% during 2016-2019. Besides, the growth of luxurious condominium in 33these areas grows higher sharply. 52% of new condominiums are above 34Luxury class while housing affordability of Bangkok’s largest population is 35too low. Also, urban policy cannot control the unpredictable price of 36condominiums in CBD. As a tool for urban planners, post-windfall gain tax 37would be collected from real estate developers who get uplift property values 38as result of public infrastructure planning. It would be used to fund 39infrastructure such as transit, affordable housing. This paper can recommend 40urban policy planners which factors influencing unpredictable price of 41luxurious condominium in CBD should be considered in condition of windfall 42profit taxation. In addition, results suggest developers to set more reasonable 43price of new luxurious condominiums near rail station in CBD. In this study, 4455 luxurious condominiums constructed within 5 years are research samples. 45Hedonic approach is applied to study the effects of location, structural and 46neighborhood attributes of luxurious condominium price in Bangkok CBD. 47Results are shown 6 key attributes; the number of units, percentage of car 48parking space/unit, locating private recreation park within project area, rate of 49common area fee, location of building in street corner and distance to 50expressway are interrelated to luxurious condominium price near urban rail 51transit stations in Bangkok CBD. 521. 53INTRODUCTION 54During the last 10 years, the average price of condominiums in Bangkok, 55especially in CBD, has grown higher because of an increase of land price in 56Bangkok. Moreover, some developers equip their projects with much more 57facilities and amenities and set the sale price higher. Some are necessary, but 58some are not needed among residents near rail services such as car parking 59space. This marketing strategy obviously contradicts to the concept of 60sustainable urban development near public transit station or transit-oriented 61development (TOD) which enhances real estate developers to design the 62surrounding area around transit station useful for rail ridership in the city, 63and for reducing car ownership and use by station-area residents. Low-and 646566===== PAGE 12 (score 54, numeric-paren 38, table-words 5, var-words 6) =====6768178 69IRSPSDD International, Vol.10 No.1(2022), 167-182 70 71units, higher number of available car parking spaces, locating private 72recreation park in the project, setting higher common area fee and location of 73building in the corner of street, the sale prices of luxury condominiums 74would be higher. 75Table 3. The regression coefficients of 3 functional forms 76Variables 77Model 1 Linear 78functional form 79Model 2 Semi-log 80functional form 81Model 3 Double-log 82functional form 83DIST_TO_ST 8414.93413 85(0.521) 86.00001 87(-.355) 88-.00781 89(-.267) 90CORE_CBD 912640.75367 92(.191) 93-0.0400 94(-.258) 95-.00833 96(-.216) 97UNITS 9869.28454* 99(1.786) 100.00008* 101(1.767) 102.03358 103(.513) 104FLOORS 105-483.23396 106(-.861) 107-.00038 108(-.600) 109-.04395 110(-.935) 111AREA 112-4.16441 113(-1.378) 114-.00001 115(-1.522) 116-.01511 117(-.329) 118FACILITY 119-13592.16403 120(-.921) 121-.01804 122(-1.089) 123-.00618 124(-.136) 125DEVELOPER 12613892.27443 127(.881) 128.01976 129(1.117) 130.05353 131(1.163) 132CAR_PARK 133528.34177*** 134(3.070) 135.00060*** 136(3.085) 137.10543 138(1.447) 139PARK 14046997.97505*** 141(3.115) 142.06900*** 143(4.076) 144.15030*** 145(3.525) 146FEE 1471530.39732*** 148(4.336) 149.00189*** 150(4.773) 151.38470*** 152(4.360) 153CORNER 15425253.07083 155(1.59) 156.04489** 157(2.277) 158.07695 159(1.519) 160MAIN_RD 16115.79588 162(.542) 163.00001 164(.288) 165-.00219 166(-.193) 167EXPWAY 168-24.97502*** 169(-2.734) 170-.00003*** 171(-2.760) 172-.08183*** 173(-2.855) 174DEPART 175.55753 176(.041) 177.00001 178(.361) 179.00861 180(.350) 181SCHOOL 1825.20411 183(.261) 184.00001 185(.298) 186.00813 187(.308) 188HOSP 1896.90188 190(.421) 191.00002 192(.961) 193.03615 194(1.176) 195 Constant 19688577.789** 197(2.168) 1985.18966*** 199(113.200) 20010.57771*** 201(15.153) 202Observations 20355 20455 20555 206R2 2070.805 2080.861 2090.830 210Adjusted R2 2110.722 2120.802 2130.758 214F-statistic 2159.777 (Sig. 0.00) 21614.669 (Sig. 000) 21711.593 (Sig. 000) 218Note: The number in the table is the coefficients of variables but the number 219in parentheses is t-statistic 220*** Significance level at 0.01; **Significance level at 0.05 and 221*Significance level at 0.1 222223224===== PAGE 13 (score 14, numeric-paren 0, table-words 0, var-words 14) =====225226Pongprasert227179228 2295. 230CONCLUSION AND RECOMMENDATIONS 231Bangkok is now one of the most expensive cities in Asia in terms of 232residential property price (Group, 2021), with a lack of available affordable 233housing. The lack of sufficient financial tools for ensuring new housing is 234truly affordable for low and middle incomes (the largest group of population 235in Bangkok). According to the data of average household income in 236Bangkok in 2019, it can be concluded that half of people from middle-class 237and below cannot afford to live in condominium because of their low 238housing affordability. The biggest size of condominium they could afford is 239only 20-sq.m. (smallest as required by law) in the middle range class and 240only 7.08 sq.m. (smaller than required by law) in luxury class condominium 241of which most developers prefer to launch the construction project near 242urban rail routes and set the high price. The prices tend to grow rapidly and 243they are difficult to predict. In addition, more speculators or real estate 244investors buy and sell condominium rooms in higher prices for their own 245benefit at the same time. The market pays no attention to residents needing 246to live near transit station in CBD area. In this situation, the inequality 247problem becomes critical. Low-and mid-income people cannot live near 248areas of employment, recreation and public mass transit systems in Bangkok 249CBD. Several people say, “You could not live in an urban area of Bangkok 250(especially in CBD area) unless you are rich”. This contradicts to the 251direction of sustainable urban development in the city as mentioned in the 252Sustainable Development Goal (SDG) no.11 as to make cities and human 253settlements inclusive, safe, resilient and sustainable. 254In 2018, The Thai government initially discussed how to increase the 255housing affordability among most people and how to manage the greater 256prices of residential property, including land speculation in Bangkok CBD. 257The Windfall Gains Tax was introduced and planned to use in Bangkok in 258the near future. It is a tool of urban policy planners to control unpredictable 259land and property prices and to create more sustainable urban development. 260The approach is to collect increment land value tax from land owners and 261real estate developers gaining profits from the transport infrastructure 262projects invested by government. First, the ceiling for the windfall gain tax is 263at 5% of the inflated value of property from infrastructure projects. As for 264benefits, this tax revenue is used by government to fund the new transit 265infrastructure and useful for the creation of more affordable housing and 266suppress the growth in land value when affordability is a critical. The 267inflated value of residential property is exactly affected from transport 268infrastructure projects. However, in fact, there are many factors related to 269unpredictable prices of luxurious condominiums like locational, structural 270and neighborhood attributes. These could be used in criteria of charging 271either the windfall gains tax system or other property tax systems in 272Bangkok. In this paper, the factors influencing the luxurious condominium 273prices in Bangkok CBD have been investigated. The expected outcomes 274should bring benefits to 3 groups of people; urban policy planners, 275developers and customers. Policy planners will deeply understand 276condominium attributes directly affecting to the inflated prices of luxurious 277condominium. The expected results would be their guidance to plan the 278policies such as property tax policy and sustainable urban development 279policy. At least, the factors can be set in the criteria of charging the higher 280rate of windfall gains tax from developers. When the city government gets 281more tax revenues, the infrastructure and affordable housing projects in a 282new town/village near urban rail stations would be subsidized in Bangkok 283