Rental and occupancy rates in Bangkok’s serviced apartment sector have witnessed mild declines, although the sector has continued to benefit from the increasing number of expatriates living in Bangkok as well as the number of tourist arrivals.
According to a special report from CBRE average rental rates in the Thai capital dropped by 0.6 percent year-on-year during Q1 2013 while occupancy rates declined by 2.2 percent year-on-year over the same period. The agency noted that this is partly because the new management of some serviced apartments lowered rental rates, and some newly completed serviced apartments are not yet operating at full capacity and are offering introductory rates.
The performance of serviced apartments varies by area. The Sukhumvit area remained the most popular area with the highest occupancy rate of 83.3% percent compared to the average of 80.4 percent, with the highest proportion of occupied units with 7,752 units or 61.7 percent of the total take-up for Q1 2013.
Despite a sharp increase of 20.0 percent in tourist arrivals over the last 12 months, owners of serviced apartments have found it difficult to increase rates. This is because serviced apartments faced increasing competition from hotels where supply has expanded by 10.2 percent over the same period. This has limited the ability to increase both hotel rates and the daily rate for serviced apartments.
The increase in tourist arrivals has alleviated concerns of oversupplying the market as it has generated much needed demand in order to fill all these newly completed hotels and serviced apartments, noted CBRE.
For the longer stay guests, the expatriate housing allowance has not increased for more than ten years which has limited the ability to increase monthly rates for serviced apartments.
Andrew Batt, International Group Editor of PropertyGuru, wrote this story. To contact him about this or other stories email andrew@allproperty.com.sg
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