The loss-making State Railway of Thailand (SRT) is taking a major step to clear its huge debts by offering up three precious plots of land for commercial development.
They include a piece of land near Mae Nam railway station in Klong Toey district covering a total of 277.5 rai (44.4ha), a 270.57-rai plot of land behind the Energy Ministry in Chatuchak district and 218-rai of land at Bang Sue station.
The plot of land near Mae Nam railway station lies on the bank of the Chao Phraya River, opposite tambon Bang Kachao in Samut Prakan's Phra Pradaeng district, a vast area of green space across the river.
Major domestic and foreign investors are known to be interested in this prime land which could serve as a new landmark, a business hub and high-end residential space.
SRT governor Wutthichart Kalayanamitr said the land near Mae Nam station is one of the most beautiful pieces of land owned by the SRT. It lies along 1.16km of the river bend and costs 13.32 billion baht.
The area was previously used for cargo and fuel storage facilities as well as other activities linked to rail and water shipments.
The storage facilities were later removed due to the use of pipelines to deliver oil instead as the government wanted to reduce traffic congestion and accidents resulting from oil tank trucks.
Mr Wutthichart said the land is not fully capitalised on now and it certainly will be developed for commercial purposes.
The plot's northern area is connected to the Treasury Department while the eastern part leads to the Port Authority of Thailand. It connects to Wat Chong Lom to the west and has the river to its south.
Under the development plan, the land will be divided into five zones. The first will have shopping malls, parks, residential spaces and eco-offices. The second will include a marina, hotels, residential spaces and duty-free malls.
The third zone will consist of a promenade, high-rise buildings for residences and hotels, shops, walkways next to an artificial beach, restaurants and swimming pools.
The fourth zone will include service apartments and retail business zones.
The fifth zone will include an affordable housing project and a community market.
Regarding the land plot behind the Energy Ministry near the 11th kilometre marker on Phahon Yothin Road, worth around 22.3 billion baht, the SRT plans to develop it as a new town since it is close to Bang Sue station — slated to be the major hub of railways in Bangkok in the future.
Keeree Kanjanapas, chairman of BTS Group Holdings Plc, is reportedly interested in developing the project. He is said to have offered to invest in 10 condominium buildings, comprising 10,000 room units, half of which will be set aside for SRT staff and the rest for low-income earners for a lease of 10-30 years.
Other developments include shopping malls, parks and a 400-500 bed hospital.
According to Mr Wutthichart, the SRT board on May 24 approved the commercial development for these two prime land plots and granted an extension of the land lease period from 30 to 46 years, plus four years for construction, to private developers.
The leasing time frame is in line with a 50-year ceiling under the law. The SRT will forward the development plans for the projects to the Transport Ministry, which will present them to the State Enterprise Policy Office (Sepo).
Afterwards, private firms will be chosen for public-private partnership (PPP) ventures to invest in the projects. The selection is expected to take place between July and August next year.
"The SRT board believed a 30-year lease contract which does not include a four-year construction period would be unattractive to investors, so it granted the extension of the land lease to reach a total of 50 years," said Mr Wutthichart. "The revenue therefore would be a lot more than before, which would be advantageous to the SRT."
The 218-rai of land at Bang Sue station is another prime area for commercial development.
It will be developed to serve a range of businesses, including office buildings, hotels, food courts and retail stores and will also feature other amenities.
The land plot will be developed under the "Transit Oriented Development (TOD)" concept since the station is expected to serve as the key rail transport hub someday.
The terminal is being built to handle the Red and Blue Line electric trains, the Airport Rail Link as well as high-speed trains.
Mr Wutthichart said the SRT has approved the development plan at Bang Sue station and forwarded it to the Transport Ministry for consideration.
The project will later be proposed to Sepo and the PPP committee. This land development project is expected to be the first among the three land plots to get a private firm to jointly invest, the governor said.
The organisation plans to build a monorail which connects Bang Sue station with the new town behind the Energy Ministry, which should help support transport links.
Mr Wutthichart said private companies are likely to be sought for the development of the three plots in the middle of next year.
At least 100 billion baht is needed for the development in each land plot and these projects would, in the future, become the key financial source to offset the SRT's losses from train operations, he said.