Rental rates for expatriate standard apartments and condominiums in Bangkok are likely to rise for the first time in more than 20 years, according to international property consultant CBRE Thailand.
“Since the early 1990’s, there has been very little increase in total amounts of rent paid by expatriates for their residential accommodation, but this looks like it is about to change,” James Pitchon, Executive Director of CBRE Thailand.
The number of expats has been growing, but the number of two- and three-bedroom condominium and apartment units has not been growing significantly, according to CBRE Thailand. Many expats are posted to Bangkok with their families, and they generally stay in a limited number of locations; Sukhumvit Soi’s 1-63/2-42, Lumpini and parts of Silom and Sathorn.
There have been very few new apartments (single-ownership buildings) built, and although the condominium (multi-ownership) stock in the main expat areas has increased by almost 80 percent over the last five years, the majority of that new supply has been one-bedroom units.
CBRE has said the market is almost at the stage where a shortage is developing, or at least a limited choice of expatriate standard apartments and condominiums in the preferred locations – especially two- and three-bedroom units.
This means that for the first time in almost 20 years, CBRE expects that expatriates are going to need larger lump sum housing allowances for their accommodation.
The current occupancy levels within the most popular expatriate areas is more than 90 percent, and 70 percent for condominiums from owner-occupiers and tenants. Generally most single-ownership apartment buildings have been well maintained and both the interiors and common areas have been refurbished and most can still attract tenants.
There has been less renovation of older condominium buildings which generally have larger units than new condominiums. In some older condominium developments, individual owners have not refurbished their units or replaced furniture and appliances since the day they bought the property and, in some cases, these un-refurbished properties have become so unattractive that they are unlettable even at a discounted rent.
The current low rate of rentals means that few developers are building apartments (single-ownership buildings) in expatriate areas and there less than 100 units under construction.
CBRE estimates that there are about 22,000 condominium units under construction in expatriate areas, but only about 30 percent of these will be two- or three-bedroom units.
There were around 65,000 expatriates with work permits in Bangkok in Q2 2013, according to the Alien Occupational Control Division of the Department of Employment. This was an increase of 10 percent year-on-year, and does not include diplomats or people with work permits for locations outside of Bangkok but living in Bangkok.
Some long-term expatriates have bought property and are not potential tenants. Some expatriates are single and choose to rent a serviced apartment, a one-bedroom apartment or condominium, but a significant number of expatriates come with families or are couples who want a two- or three-bedroom unit.
“In 2012, CBRE was responsible for more than 400 expatriate leasing transactions, and 70 percent of these were for two- and three-bedroom units. We think this is representative of overall demand in the mid to upper-end of the market,” said Theerathorn Prapunpong, Director – Head of Residential Leasing Services at CBRE Thailand.
With the limited amount of good quality two- and three-bedroom existing apartment and condominium units and, with almost no new apartments and mainly one-bedroom condominium units under construction, there is likely to be a shortage of two- and three-bedroom expatriate standard residential units which is triggering an increase in rents, according to the real estate consultancy.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote
this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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