Demand for serviced apartments remained unchanged in most areas of Bangkok during 2013 despite the political turmoil.
International real estate advisor CBRE Thailand reported that the average occupancy rate for the whole of 2013 stood at 81 percent, a slight decrease of 1 percent from 2012 as a result of lower occupancy rates in some serviced apartments located close to areas that were impacted by political demonstrations.
Generally, is said, serviced apartments in Bangkok target two types of customers; long-term tenants who are usually single expatriates working in Bangkok, 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 in Bangkok increased by 12 percent year-on-year, with Japanese nationals making up the highest percentage of the long-term serviced apartment rental market.
Serviced apartment rental rates did not increase, CBRE Thailand said, due to competition from the many one-bedroom condominium units available for rent in the long-term market.
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As of Q4 2013, the average rent of Grade ‘A’ serviced apartments in Bangkok was just above THB1,000 per sqm per month. The Sukhumvit area achieved the highest average rents of almost THB1,200 per sqm per month.
According to CBRE Research there are very few serviced apartments under construction, however there are more than 5,000 hotel rooms under construction 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 percent will be one-bedroom and studio units. Many of these have been bought by investors looking to rent out their units, and this will increase competition in the long-term rental market for studio and one-bedroom units.
CBRE Thailand said that 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, so the long term market remains largely unaffected.
Demand for serviced apartments is focused on a limited number of areas, principally Sukhumvit, Lumpini and Sathorn. These are the areas favoured by expatriates living in Bangkok and by tourists.
CBRE Thailand said it believes there will be limited potential to develop serviced apartments outside of these core locations because rental rates for properties outside of these areas 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.
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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