Ratchathewi: A Location for Transferring Wealth Across Generations
This article discusses something greater than just real estate investment; it’s about passing on wealth from generation to generation. According to global data on wealth, there is a significant generational wealth gap, with each generation holding different levels of wealth. Many international articles offer advice on maintaining wealth status to pass on to future generations. Investing in real estate is certainly one way to preserve wealth, especially in high-potential locations. Among the many potential areas in Bangkok, Ratchathewi stands out as one of them.
Transferring Wealth Across Generations
Among wealthy individuals of various ages worldwide, Baby Boomers are the wealthiest generation, holding a combined wealth of over $78.3 trillion. Following them is Generation X, with a total wealth of $47.8 trillion, which is half that of their parents' generation. Millennials, on the other hand, hold only $14.2 trillion, significantly less than their predecessors.
While it’s not surprising, as younger generations have less time to accumulate wealth than their parents, data from Gobankingrates clearly shows that wealth is not only about the time taken to accumulate it but also about transferring it across generations. Research indicates that 70% of wealthy families lose their wealth in the next generation, and 90% lose it thereafter. This suggests that in the next generation, we may see fewer wealthy individuals than in the previous one.
Wealth management is thus a priority for affluent individuals, with investment proportions varying across different wealth levels. Whether one is worth a million or a billion, real estate investments are commonly held, alongside business ventures and other investments. These assets are what parents pass on to their heirs.
Ratchathewi: A Growing Location Ready to Transfer Wealth
Before discussing why TerraBKK views Ratchathewi as a potential wealth-transferring location, let’s first look at the current overview of Ratchathewi. According to the Bangkok Master Plan 2013, Ratchathewi is designated as a zone that can fully utilize land, classified as red for commercial use.
The current land use in Ratchathewi aligns with the master plan, featuring a dense mix of commercial and residential properties. The area along Phaya Thai Road primarily consists of office buildings for rent, condominiums, and commercial buildings. However, if you venture into the side streets, you will find residential areas and small shops, along with several government institutions in the vicinity.
The dense land use along Phaya Thai Road, from Rama 4 Intersection to the area near Khwai Bridge, showcases a blend of three types of quality demand: medical institutions, office buildings, and educational institutions, housing over 163,000 residents. The area continues to grow with the introduction of new mixed-use projects, intensifying land use and attracting demand. Therefore, purchasing a residence in this zone can cater to individuals from university age to working professionals.
So how does Ratchathewi facilitate wealth transfer? The answer lies in the current condominium prices in the area, which start at around 7-9 million baht but continue to sell well. This reflects the monthly income of buyers in this zone, indicating they must earn no less than 100,000-140,000 baht per month, typical of executives or business owners who are stable and ready to pass on wealth to their descendants who may study and live in this area in the future.
Prime Land on Major Roads: A RARE ITEM in Ratchathewi
Although Ratchathewi is a location with new condominium projects continuously launching, there are not many beautiful land plots adjacent to Phaya Thai Road, the main thoroughfare and BTS line, which is the heart of the area. Most have been developed into mixed-use projects that utilize land more intensively, and if there are condominiums, they are often older developments.
Focusing on the Phetchaburi-Phaya Thai intersection, a potential zone in Ratchathewi, it is not only close to the BTS station just one stop from Siam, filled with shops and hangout spots, but also has Grade A office projects at both corners. This area is undergoing significant changes, with only one plot of land adjacent to Phaya Thai Road set to be developed into the SHUSH Ratchathewi project by Sansiri. The adjacent vacant land is still for long-term lease. The arrival of the SHUSH Ratchathewi project in Ratchathewi is therefore very interesting.
Overview of the Condominium Market in Ratchathewi
One thing that reflects the potential and wealth of the area is the “increasing property values.” Ratchathewi has seen a continuous rise in the prices of newly launched condominiums. Back in 2007, the average launch price was around 82,000 - 120,000 baht per square meter, but currently, the average price has risen to 250,000 baht per square meter, with an average growth rate of 6% per year.
Despite being in the city center, the supply of condominiums is not overly dense. Each year, an average of two projects are launched, with a manageable number of units. In the past 2-3 years, no new supply has entered the area, but recently, two new projects are set to launch: SHUSH Ratchathewi, a new project from Sansiri, launching in October with 383 units, almost 100% loft-style, with 58% parking, starting at an average price of around 240,000 baht per square meter, and MARQUIS Ratchathewi from Major Development, with a starting launch price of 265,000 baht per square meter, expected to launch in Q4 of this year. Both developers have previously established projects in this area, with Major having developed Maestro 12 Ratchathewi and Maestro 14 Siam - Ratchathewi, while Sansiri has developed PYNE by Sansiri and The Line Ratchathewi, both of which received excellent responses and sold quickly.
Currently, there are five ongoing projects for sale, with 60% sold. The current selling prices range from 230,000 - 265,000 baht per square meter (excluding the loft levels in some projects). All are high-rise projects, with room types available ranging from Simplex to Loft, starting from 1 Bedroom units to Penthouse sizes from 30 - 177 square meters. Each project is accessible within 400 meters of the BTS stations Ratchathewi or Phaya Thai.
Ratchathewi Condominiums: Average Returns of 5% Per Year
Terra Research surveyed the prices of second-hand condominiums in the market and found that the selling prices have grown at an average rate of 3% - 5% per year, depending on the condition of the project and room type. Currently, second-hand condominium prices in Ratchathewi are around 160,000-250,000 baht per square meter. As for rental investment returns, they can yield approximately 3.5% - 5.6% per year, with rental rates ranging from 14,000 - 60,000 baht per month.
With Ratchathewi's potential connecting to all key areas in Bangkok, surrounded by leading educational institutions, hospitals, offices, and lifestyle spots, the supply and demand for condominiums in this area continue to grow for both personal residence and investment. There is demand from various groups, including medical personnel, parents buying for their children during their studies and into their working lives, those looking to retain assets to pass on to future generations, executives, business owners, and individuals seeking diverse lifestyles.
With the continuous growth of the area, the development of various projects, the rising property values, and the comprehensive amenities that meet all living needs, it is undeniable that “Ratchathewi” is one of the potential locations worthy of investment and capable of transferring wealth.
