Little change in demand for serviced flats in Bangkok last year

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Little change in demand for serviced flats in Bangkok last year
The Nation

BANGKOK: -- Demand for serviced apartments last year remained unchanged in most areas of Bangkok despite the political turmoil, according to CBRE Thailand, an international real-estate adviser.

The average occupancy rate for the whole year stood at 81 per cent, a slight decrease from 2012, as a result of lower occupancy rates in some serviced apartments located close to the areas where there were demonstrations.

Serviced apartments in Bangkok are usually targeted at two types of customers: long-term tenants who are usually single expatriates working in the city, where serviced apartments compete with non-serviced apartments and condominiums for rent; and short-term-rate tenants who are usually tourists or business travellers, where serviced apartments compete with hotels. Most serviced apartments have one-bedroom or studio units.

The number of expatriates with work permits based in Bangkok increased by 12 per cent year-on-year. Japanese nationals working in Bangkok make up the highest percentage of the long-term rental market for serviced apartments.

Serviced-apartment rental rates did not increase because of competition from the many one-bedroom condominium units available for rent in the long-term market. As of the fourth quarter, the average rent of Grade A serviced apartments in Bangkok was just above Bt1,000 per square metre per month, and the Sukhumvit area achieved the highest average rents of almost Bt1,200 per square metre per month.

According to CBRE Research, there are very few serviced apartments under construction. However, there are more than 5,000 hotel rooms begin built in Bangkok, increasing the competition for the short-term-rate market.

There are more than 20,000 condominium units under construction in downtown Bangkok, of which 70 per cent will be one-bedroom and studio units, many of which have been bought by investors looking to rent them out. This will increase competition in the long-term rental market for studio and one-bedroom units.

To date, the political unrest has had limited impact. The short-term-rate market has suffered from a decline in visitor numbers, especially in those properties located close to the protest areas.

There has not been a decline in expatriates working in Bangkok, and so the long-term market remains largely unaffected.

As of the fourth quarter, the average occupancy rate of the overall serviced-apartment market stood at 80 per cent, only a slight decrease from the third quarter.

Demand for serviced apartments is concentrated in a limited number of areas, principally Sukhumvit, Lumpini and Sathorn. These are the areas favoured by expats living in Bangkok and by tourists.

CBRE believes there will be limited potential to develop serviced apartments outside these core locations as rental rates for such properties decline considerably.

Despite competition from hotels and rental condominiums, the limited new supply of serviced apartments means that there is a possibility that owners will be able to raise rental rates.


-- The Nation 2014-04-07

[californiabeachboy]

Asking an "international real estate adviser" about demand for real estate products is like asking a used car salesman whether now is a good time to buy a car. Real Estate companies always make things look better than they are, because many of their clients are, you guessed it, owners of real estate projects, including serviced apartments. If they were to say publicly "the market for serviced apartments is horrible", they would be hearing from their clients.

I stayed in a serviced apartment in Bkk in December, a place I have stayed at many times before. Their occupancy was significantly down. In speaking with one of the front office people, she said occupancy was way down all over the central parts of Bkk.

The statement in the article "To date, the political unrest has had limited impact" simply cannot be believed.

[noitom]

The facts published on Thai rentals is always distorted. Look around at 8-11PM and see how many lights are on - night after night, month after month - high rise apartments in Bangkok are pitch dark.

[lawrence1366]

The facts published on Thai rentals is always distorted. Look around at 8-11PM and see how many lights are on - night after night, month after month - high rise apartments in Bangkok are pitch dark.

Seeing is believing, as the saying goes.

[bushwacker]

Too bad that Thai's have their own philosophy on economics. i.e. Massive decrease in Demand, OK ... increase price.

[WoopyDoo]

More 'blame it on the pretests' crap.

The protests didn't even start until the end of the year and were actually very peaceful until January, so how the hell were they affecting condo and apartment occupancy?

[Jonmarleesco]

'... there are more than 5,000 hotel rooms begin built in Bangkok, increasing the competition for the short-term-rate market.' Increasing the competition? Or simply diluting the market?

[Dibbler]

I have followed the Bangkok property market for a decade or more and I consider that rental apartments are at best a highly speculative property investment for the following reasons;

1) no legal protection for landlords due to absence of standard agreements for letting to tenants

2) a pool of tenants but huge range of options and alternatives due to massive oversupply throughout the CBD, and expected continued saturation with new apartment and hotel construction projects

3) likely of migration in short-medium term of international business to safer, less politically unstable country capital cities

4) complicated work permit and visa requirements discouraging long-stay by foreigners

5) possibility of short-term (day, week) renting but problem of lack of reliable, international standard property management. DIY property management defeats the purpose of the investment as generating passive income.

In summary, it's a really excellent renter's market and a horrible market for owners/investors. A shame as prices for condos and 1-bedroom apartments, and bank interest rates are very reasonable.

[MarkCyr]

I just came back from 2 months in BKK, renting in Phra Kanong. As Noitom wrote, all of the newer high-rise condos are about 90% dark all evening. And there are TONS of people trying to rent their flats (but at the same time won't lower their prices to be competitive with older places), which is what Dibbler just said. Don't believe the hype. The rental market in BKK is hurtin' If and when I buy, it will be a reasonably-priced older place where I plan to live. I definitely won't buy with the idea of paying off any loans with rent money.