Competition Grows In Bangkok S Serviced Apartment Sector

Category: Finance, Real Estate.

CB Richard Ellis reported that according to the latest figures from the Alien occupational Control Division, Department of Employment there were 65, 337 expatriates based in Bangkok with work permits as at August 200This represents a 19% increase on the total in August 200 The growth in expatriates has increased demand for residential rental accommodation in Bangkok both for apartments and condominiums. Some expatriates whose place of work is outside of Bangkok for example on an industrial estate will live in Bangkok and commute to their place of work.

The work permit figures exclude diplomatic and United Nations staff and the 52, 045 expatriates with work permits for locations outside of Bangkok. Japanese nationals account for 22% of work permits in Bangkok followed by Indians( 12% ) Chinese( 9% ), and British( 8% ). There are13, 347 condominium units under construction and CB Richard Ellis estimates that 40- 50% of these new condominium units could be available for rent. CB Richard Ellis forecasts that there will be limited new apartment supply in the Central Business Districts with only about 870 units under construction. Much of the existing supply of apartments and condominiums is now more than ten years old and CB Richard Ellis classifies many of these as being grade B in terms of quality. Theerathorn Prapunpong, Associate Director and head of Residential Leasing Services at CB Richard Ellis. Rents for grade A or luxury condominiums and apartments have been rising at a faster rate than grade B developments. "We see the gap between grade A and grade B rentals increasing, " said Mr.

CB Richard Ellis is seeing strong demand for well designed new projects especially mid size three bedroom units of between 150- 220 square metres which are achieving rentals of 70, 000- 85, 000 baht per month. Much of the demand for this development has come from Japanese tenants who have been paying average rents of between 60, 000- 80, 000 baht per month for 2 and 3 bedroom units of 91- 150 square metres. Queens Park View Residence a 36 unit new development recently completed on Sukhumvit Soi 24 is already 83% occupied. CB Richard Ellis expects that demand from tenants will continue to be strong for well located, well designed apartment and condominium developments in Bangkok s prime locations. The total supply of serviced apartment units in Bangkok grew by 11% on an annual basis and occupancy rates dropped by 8% , according to CB Richard Ellis. Competition grows in Bangkok s Serviced Apartment Sector.

Owners were able to increase rental rates for grade A serviced apartments but at a slower rate. The total supply of serviced apartments increased to 8, 744 units a further 3, 500 units are under construction and more projects are at the planning stage. Future supply will continue to increase which could put downward pressure on both occupancy and achieved room rates. Most of the new supply will be grade A in terms of quality. Average rents increased by 2- 3% for grade A developments on a year on year basis the growth rate in rentals has slowed due to the increase in supply. Occupancy increased slightly quarter on quarter but fell year on year from 88% to 81% .

CB Richard Ellis believes that based on the forecast increase in supply competition will increase. The Sathorn area appears to be the most competitive location at the present time rental rates have fallen by about 7% year on year and occupancy by about 18% year on year. Much of the new supply is grade A in terms of quality and will be managed by international operators and this will put pressure on older developments.

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