KBank Private Banking has revealed three real estate trends to guide landowners, anticipating that changes in space utilization during the new normal will impact future property prices. The government's policy to cancel the reduction of land and building taxes in 2022 has prompted high-net-worth clients to consider converting land into collateral, along with investment limits, to seize opportunities for superior returns. The aim is to boost new loan disbursements for Land Loans for Investment this year to reach 15-30 billion baht.

Mrs. Korakot Attasukulchai, Chief of Non-Capital Market Solution Private Banking Group at KBank, stated that the government's announcement to cancel the 90% tax reduction on land and buildings this year has significantly raised awareness among landowners, especially those waiting for development or not yet ready to develop. Such land cannot generate cash flow to cover tax expenses, and if not carefully planned, holding real estate for speculation or passing wealth to heirs could lead to negative cash flow due to increasing expenses. Therefore, landowners or real estate investors should study market trends and seek opportunities to enhance the potential of their land holdings to generate returns that cover expenses or even grow their assets.

KBank Private Banking, as a leader in real estate advisory services for high-net-worth clients, has identified three noteworthy real estate trends this year to assist in investment or land development decisions:

  1. Changes in Space Utilization in the New Normal: The COVID-19 pandemic has significantly altered lifestyles, with remote work becoming more popular and expected to continue growing. This trend is likely to reduce commuting to urban workplaces, affecting space utilization. For instance, people may prefer homes with more space over condos, office spaces may shrink, and online shopping may replace mall visits. This shift could slow urban land price growth while increasing prices for land outside city centers. Additionally, the potential of the land for development that meets current demands is equally important.
  2. Investment Opportunities in Real Estate: The COVID-19 crisis has led many businesses to face liquidity issues or adjust strategies due to changing market conditions, resulting in more properties, including real estate, being sold at more accessible prices. Although some rare locations may not see price reductions, this presents a good opportunity for investors seeking to acquire additional real estate without the volatility of capital markets. However, before investing, one must consider tax burdens involved.
  3. Opportunities to Convert Land into Investment Capital: With the increased burden of land taxes after the government canceled the 90% reduction, and future adjustments expected due to rising land appraisal values and potential tax rate increases of 0.3% every three years, converting land into investment capital to generate returns for tax payments is gaining interest among high-net-worth clients. This involves using land as collateral for loans to invest, aiming for returns that exceed the interest burden sufficient to cover land and building taxes.

Mrs. Korakot further added that to meet the needs of high-net-worth clients who own land, KBank Private Banking has a team of experts ready to provide advice and manage the conversion of land assets into investment loans with real estate as collateral (Land Loan for Investment), including calculating taxes and interest, securing funding, and managing investments to achieve targeted returns. Additionally, they offer alternative products that can generate profits in a fluctuating market, such as KIKO structured notes, which have an expected average return of 8-12% per year, higher than the average interest rate of Land Loans for Investment. This year, KBank Private Banking aims to disburse new Land Loans for Investment totaling around 15-30 billion baht, with a current portfolio of approximately 25 billion baht and about 150 clients.

Mrs. Korakot concluded that investing in real estate today involves various factors that landowners and developers must adapt to in line with market conditions, similar to investing in other assets that present both attractive returns and risks. Investors should conduct thorough research or consult experts to foster growth in their assets and avoid investment traps.