Railway Authority Prepares to Auction Land in the 'Klong San' Area
The Railway Authority Accelerates Revenue Generation in Commercial Areas, Planning to Auction Prime Land at 'Klong San Market' Next Year, with 5 Rai of Land Adjacent to the Chao Phraya River and Icon Siam, Confident of Higher Returns than Previous Contracts
Mr. Somyut Ruenngam, Deputy Director of Operations at the State Railway of Thailand (SRT) revealed that the SRT is expediting its long-term revenue enhancement policy by adjusting the compensation rates for leasing and renting its land. Currently, there are plans to auction the land around Klong San Market, or Klong San Plaza and the Klong San ferry terminal, covering a total area of approximately 5 rai for private entities to lease and develop for long-term commercial use.
This area is considered prime real estate in the heart of the city, with significant potential for commercial development as it is located along the banks of the Chao Phraya River. Nearby, there are five-star hotels and high-end shopping centers like Icon Siam, as well as public transport systems that support travel, such as the Gold Line monorail, which runs through this area adjacent to the Charan Nakhon station.
Currently, the Klong San Market area is still under lease agreements with two tenants, divided into two plots. Plot 1 is leased to a consulting firm for Klong San Plaza, with the contract expiring in April 2021, while Plot 2 is leased to an operator for the Klong San ferry terminal, with the contract ending in December 2021. The SRT has begun negotiations with both tenants to adjust the rental fees in line with the current economic conditions.
For the first plot, the SRT has proposed increasing the rent from 1.6 million baht per month to 15 million baht per month. The second plot has also requested an increase, but both private tenants have expressed no interest in renewing their leases. Consequently, the SRT has started studying the preparation for auctioning this area through a general invitation method and plans to hire consultants to study, analyze, and design initial concepts for the development of the area, as well as assess the asset value and suggest rental benefits and suitable investment models.
However, it is currently not possible to provide details on the development model, investment budget, and expected returns for the SRT, as the project is still in the study phase. A conclusion and detailed information are expected to be clarified by the end of this year. If the investment proves worthwhile, the auction is anticipated to open in 2021 to align with the expiration of the current land lease contracts. Initially, there is confidence that the return rates can be increased compared to before.
For the initial development approach, the SRT estimates that it may invest in a mixed-use model, comprising various projects such as condominiums, shopping malls, or others. The SRT will use a general auction method for private entities to lease and develop the area long-term, under the SRT's regulations, without needing to comply with the Public-Private Partnership Act of 2019, as it does not pertain to the development of areas for public services.
According to reports, the total land assets of the railway authority across the country amount to 234,976 rai, divided into five categories: 80.68% for railway corridors, 15.45% for other non-railway land, 2.27% for station areas (railway tracks), 1.6% for residential/office areas, and approximately 40,000 rai for commercial areas nationwide. Previously, private firms were hired to conduct detailed geographical mapping and create a digital database.
