Thai Railway Unveils Ambitious Land Development Programme

 

The State Railway of Thailand (SRT) has announced an extensive plan to unlock the commercial value of its vast land holdings, with 28 prime plots slated for auction over the next two years.

 

The move is set to significantly increase the railway's revenue streams through its asset management subsidiary.

 

Currently, the SRT controls approximately 246,880 rai (around 39,500 hectares) of land across Thailand.

 

Of this, 201,868 rai are designated for core business operations such as stations and railway lines, while 45,012 rai fall under 'non-core' assets, with 33,761 rai identified as having substantial commercial development potential.

 

In September 2020, the Thai Cabinet approved the establishment of SRT Asset Co., Ltd. (SRTA), a wholly-owned subsidiary, to manage these assets more efficiently.

 

SRTA was officially registered in April 2021 and has since taken over the administration of existing commercial lease agreements.

 

Veeris Ammarapala, Governor of the SRT, clarified that while the SRT retains 100% ownership of all assets, SRTA's mandate is to significantly enhance revenue generation from them.

 

SRTA will manage current leases, allocate new land, negotiate with third parties, and forge joint ventures with private entities for land development.

 

This includes leasing land from the SRT or acquiring plots from other organisations for development and management. SRTA will ultimately return 5% of its contract management income to the SRT.
 

 

"The SRT has entrusted SRTA with the management and detailed study of development models for all major land plots, including the lease agreement for the Phahonyothin area, where Central Group is a key tenant and whose contract expires in 2028," Veeris stated. "While Central Group has expressed initial interest in renewing their lease, the SRT must first update the land valuation before commencing negotiations."

 

SRTA is currently assessing the suitability of developing 28 additional large land plots with significant commercial potential. These will be put up for tender within the next two years, in three distinct phases:

Phase 1 (2025) – Seven plots earmarked for development:

• Bang Sue-Khlong Tan Project (RCA)
• Sila-At Sub-Plot Project
• Khlong San Market Project
• Ratchaprarop Station Project (OA Plot)
• Phahonyothin Road Project (Or Tor Kor Market Corner)
• Bang Sue Area Project (A2 Plot) – Transport Station
• Nong Khai Station Area Project (Plot 5)

 

Phase 2 (2026-2029) – A further 18 plots are scheduled for development, including sites at Mae Nam Station, Bang Sue, Hat Yai Junction, Makkasan Station, and Khon Kaen.

 

Phase 3 (2030-2034) – Nine long-term development plots are planned, encompassing areas at Thon Buri, Hat Yai Junction, Bangkok (Hua Lamphong) Station, and multiple plots within the Bang Sue area.

 

SRTA acting president Supakorn Supasincharoen elaborated on the ongoing negotiations concerning the returns from the commercial centre in the Phahonyothin triangle area (Central Ladprao).

 

Since November 2024, SRTA has taken over the management of 12,233 commercial (non-core) lease agreements from the SRT, covering 38,469 rai. A thorough review of these contracts is now underway.

 

 

With the Central Ladprao land use agreement due to expire on 18th December 2028, SRTA has commissioned consultants to reassess the asset's current value and income.

 

"We are engaging consultants to ensure the land price is appropriate, as the current contract's valuation was done over 20 years ago," Supakorn explained. "We expect this new valuation to be completed within three months, after which SRTA will form a negotiating committee to engage with Central Group, likely beginning new contract talks in 2026."

 

Supakorn emphasised that SRTA's objective is to secure a return no lower than the current rate, as the existing price is no longer aligned with contemporary land values.

 

He noted that while Central Group is keen to renew the lease, a new agreement would necessitate a revised valuation and discussions on joint land development.

 

Under the existing lease, Central Group has provided a total return of 21.298 billion baht over the contract's duration, comprising 18.687 billion baht in annual rental income and 2.611 billion baht in rights acquisition fees.

 

The annual payment for the Phahonyothin commercial centre is due by 19th December each year, with 20 annual instalments throughout the lease.

 

Most recently, on 18th December 2024, SRTA received 1.47 billion baht for the 17th year of the lease (covering 19th December 2024 to 18th December 2025).

 

This payment adheres to the SRT's 20-year land use agreement, granted to Central Inter Development Co., Ltd. on 9th December 2008, for the 47.22-rai site.