Both rental rates and occupancy levels in Bangkok’s serviced apartments are expected to remain static this year, according to the latest research from Colliers International Thailand.
It its Bangkok Service Apartments Q1 2014 report, the real estate firm noted that Bangkok’s serviced apartment market has grown slowly in the last few years, due both to the rising number of condominium units in the city area and the many luxury apartment projects in the same location.
Rents are stable, it said, but occupancy is slightly lower than in the previous quarter, and some developers are building serviced apartments with a focus both on areas outside the centre of the city, and also on smaller sois further away from mass transit lines.
As of 1Q 2014, there were more than 18,260 serviced apartment units in Bangkok, with approximately 430 due to be built by the end of the year. Sukhumvit Road remains the most popular area for both developers and clients, with higher occupancy and rental rates than other locations. Most of the future supply due to be finished in 2013 – 2014 is located along this road.
Political instability in the past two quarters impacted the confidence of foreign tourists and investors,who are the main market for serviced apartments.
In its forecast, Colliers said that due to a limited number of large plots of land and the increase in land prices in the city area, especially along Sukhumvit Road, some developers are developing small serviced apartment projects on small lots in the City area or are including serviced apartments in their mixed-use projects.
“Both rental and occupancy rates for the rest of 2014 may be similar to this quarter, because there are many choices for expats, thus creating intense competition in the market.
Most of the future supply of serviced apartments is located in the City area, but in the smaller sois, not on the main road, because the target group for this market in Bangkok are foreigners who prefer staying in the city area close to mass transit lines.”
Colliers also reported that some foreigners have moved to condominiums or high-end and luxury apartments due to the lower rental rate.
“All serviced apartments are trying to retain existing clients and attract new clients by maintaining their rates with only a small increase for new clients and by establishing direct contact with multinational companies.”
Focusing on AEC 2015 which will come into effect in December next year, Colliers said: “The opening of some countries in ASEAN is the main driver of demand for serviced apartments, as Thailand is still the most suitable centre for investment in ASEAN, especially more so than Myanmar, Cambodia and Laos. But political instability in Thailand is the major concern of all foreign investors and business people.”
Read the full Colliers International Bangkok Service Apartment Q1 2014 report here.
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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