K Village and Crystal Park are two retail malls in Bangkok that are very different. Large open areas, low – slung buildings and lots of parking area make malls like this popular very quickly. Developers of these malls are newcomers in the retail business, but they have proved that having the right product translates to success in a competitive market. The right product in this case means good location, design and functions that represent what customers want.
A mall like the low-rise, open-style K Village would possibly not be developed if the land were to be purchased at the current prices, because returns on investment would not be feasible. Options for developers who have purchased land at current market prices are definitely more limited. Most recently purchased land is typically developed at the ratio allowed, resulting in development options which offer high returns but do not guarantee success.
As for landlords who have long been holding their land in excess of a decade or more, their original land cost would be negligible compared to the overall development cost. This certainly gives old-time landlords a competitive edge in product differentiation.
Nowadays, owners of land in prime locations tend to stick to the proven formula of building residential condominiums for sale, or in some instances, if they want to hung on to the land, a mixed-used development comprising of either a shopping centre, hotel, office or residences for rent.
Landowners, instead, should think out of the box and consider what the best use of their land would be because sometimes the best option does not mean developing to a maximum plot ratio. The fact is that developers with little or no experience should not just aim for maximising profit, but consider minimising the risk as well. They should opt for small-scale developments, which would translate to low investment and risk.
Bangkok has several flea markets selling everything from food to fashion. Most of these markets are located near office buildings and play a significant role in the lifestyle of locals. Given the right location and land size, developing a flea market is an option that should not been overlooked. One great example of this is Soi La Lai Sap, which has expanded into the successful Trinity Mall. Other options could be converting the land into a car park. This would work particularly well in prime CBD areas with a high concentration of restaurants and entertainment venues such as Langsuan or Thonglor, where there is often a lack of parking space.
These options require minimal investment, generate consistent income and allow the owner to hold on the land. In comparison, developing large-scale projects requires significant expenditure up front, and that often means taking a bank loan with most of the receivables coming in after project completion.
As a landowner, if you can think out of the box, there are enough untapped opportunities and uses for your land that do not necessarily conform to the norm. In some cases, these alternative uses can be hassle free compared to other large-scale developments.
Source: Property Report
