Understanding Appraised Value Expanding Your Investment Repertoire

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In the real estate industry, the frequently seen term "Appraised Value" can refer to two distinct yet interdependent attributes of a property: Land Appraised Value and Condominium Appraised Value.

Land Appraised Value is calculated for individual plots of land. Normally, this value rises each year in relation to a location's prospects and level of development. Factors that may increase value include newly laid roads, transport facilities (expressways, train lines), and tourist draws like shopping malls.

Condominium Appraised Value is instead calculated for the condominium unit itself. This value, like Land Appraised Value, is determined by the Treasury Department. Both values ultimately depend on the prospects for the land that the property is built on and the overall quality of the condominium.

Good to Know

The primary uses for land and condominium appraisal prices are calculation of fees, income tax, specific business tax, and duty stamps associated with real estate ownership transfer and mortgaging.

The values are used to calculate fees on the day of the ownership transfer at the Department of Lands, with 1-2% of the appraised value typically charged. When lawsuits occur, the court uses the appraised value to determine damages. It is also referred when the property is used as collateral for investment or banking purposes.

For the real estate investor, appraisal data can be useful in the decision-making process when evaluating a location's potential or the prospects of a condominium project.

Updating the Appraised Value

The appraisal value is updated every 4 years, for both land and condominiums. The current set of appraisal data is for years 2016-2019 and demonstrates a nationwide average price increase of 27.72%. The highest appraisal values are found in the following 3 locations:
  • Silom Road, from Sala Daeng Intersection to Narathiwat Ratchanakharin Intersection. One square wa is currently valued at THB 1,000,000, whereas the previous appraisal was THB 850,000 per square wa. This represents an increase of 17.65%.

  • Ratchadamri Road, from Ratchaprasong Intersection to Saen Saeb Canal; Rama 1 Road, from Pathumwan Intersection to Ratchaprasong Intersection; and the entire stretch of Ploenchit Road. The current appraisal is THB 900,000 per square wa, an increase of 12.5% from the previous appraisal of THB 800,000.

  • Ratchadamri Road, from Sala Daeng Intersection to Ratchaprasong Intersection; Witthayu Road, from Ploenchit Rd. to Rama 4 Rd.; and Sathon Road, from Rama 4 Rd. to Surasak Rd. The current appraisal is THB 750,000 per square wa, an average increase of 13.09% from previous appraisals of THB 600,000-700,000.

    • The following are examples of appraised values for land presently situated in localities with good condominium development prospects:
  • Thong Lo Road (Sukhumvit 55); THB 420,000 per square wa.
  • Phetkasem Road (Phasi Charoen District); THB 120,000-175,000 per square wa.
  • Phahon Yothin Road (Chatuchak District); THB 200,000-280,000 per square wa.
  • Rama 9 Road; THB 170,000 per square wa.

    • The listed appraised values are determined by the public sector. Actual buying prices, however, would exceed the appraisal values, with the tendency being for market prices to steadily increase in proportion with the prospects of their respective locales. This is especially true of locations marked for electric train project development, such as Phetkasem Road (Blue Line) and Rama 9 Road (Orange Line).

    Appraised Value vs. Real Market Price

    Changes in the Land Appraised Value for each zone determine the buying and selling price of plots that will be used for real estate development. The cost of a plot of land is one of the main factors used to determine the price of the real estate that is to be developed there and later sold.

    Whether a property is cheap or expensive depends primarily on the cost of land. Thus, there is an investment advantage to being familiar with the tendencies of appraisal values.

    Comparing the figures, the difference between the appraisal by the Treasury Department and the purchasing price of the property once on the market is obvious. The appraised value, evidently, is not the conclusive determining factor for the market price, which ultimately depends on the satisfaction of the buyer and seller.

    Generally, the sales price of properties in downtown locations exceed the appraisal. In some locales, the real price exceeds the appraisal by more than twofold. An example of this is Thong Lo, where the appraisal currently stands at THB 420,000 per square wa, while the real market price is as high as THB 1.3-1.4 million per square wa.

    This is also the case for the appraisal value of condominiums; there is a significant disparity in appraised value and actual market price. The appraisal is instead used as a reference when calculating the transfer and mortgage registration fees during ownership transfer.

    The Department of Lands will also refer to the appraisal when conducting finances. The buying price is instead reached by agreement between the buyer and seller.

    High Land Prices & Lack of Availability

    One might hear in the news that downtown plots of land are increasingly difficult to obtain. This is especially true for land along electric train lines, such as on Sukhumvit Road, Silom Road, and Sukhumvit 55.

    Plots that have the potential for condominium development are even less available. In areas like Chidlom and Ploenchit, land availability is scarce, with any available plots fetching at least several hundred thousand baht per square metre.

    Prices in these locales have rocketed to as high as 2 million baht per square wa, with new projects having to be developed for an exorbitant cost. In some locations, supply of new projects is non-existent. The best option for those looking for a condominium, as a residence or for investment, is to focus on the resale condominium market, where units are still available for purchase.

    Resale Condominiums: A Good Opportunity

    In this climate of exorbitant land prices and incredibly expensive newly developed projects, those in search of condominiums for residential or investment purposes have a wealth of choice in the form of resale units, which are 20-30% cheaper than new properties.

    There is currently no supply of new units in areas such as Sukhumvit 39 and Phrom Phong. Here, relatively new projects with available supply are selling at a minimum of THB 300,000 per square metre. The ready-to-move-in condominium project THE XXXIX launched at THB 200,000 per square metre. After just 4 years, the resale price has already risen to THB 250,000 per square metre.

    One benefit of resale units is that they exempt the buyer from guesswork. The real ambience and defining characteristics of these projects are established and can be clearly observed. Hence, a project's prospects can be evaluated and weighed against its price, allowing for easier decision-making.

    For example, the environment of the project HQ Thong Lo in Soi Sukhumvit 55 (Soi Thong Lo) consists of community malls, restaurants, and the BTS Skytrain. At launch, the original starting price per square metre was THB 120,000; however, this too has ballooned to more than THB 200,000 per square metre.

    The Benefits of Understanding Property Appraisal

  • In some locales, the appraisal can be directly referred to when buying/selling.
  • On the day of property transfer, the appraisal is used to calculate fees, income tax, specific business taxes and duty stamps at the Department of Lands.
  • The appraisal allows an investor to accurately pre-calculate expenses and organise ahead of time.
  • An investor can use the appraisal as supporting information during negotiations.

    • "An investor should frequently practice appraising land prices for the purpose of making various forms of investment. This is achieved by following news regarding the progress of important infrastructure, such as electric trains, new roads, and large shopping malls. The information can be used for analysis of future prospects and in determining valid investment locations."


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