The number of new serviced apartments in Bangkok has decreased every year since 2009, and this trend is unlikely to change according to real estate firm Colliers in its latest research.
One reason, the firm noted, is that serviced apartments were intensely competitive with condominiums in the same location, but were offering lower rents.
Increasing land price along existing mass-transit lines, especially in the inner city area, is another factor affecting new serviced apartment developments in the area – due to the lower returns available.
Colliers also noted that serviced apartments and apartments will face legal problems in the future. The Thailand Hotel Association (THA) is trying to force the Ministry of the Interior to control serviced apartments and apartments that apply for hotel licenses. Some serviced apartments have applied for hotel licenses already and are shifting their focus more towards daily accommodation.
Average occupancy rates and rental rates in all locations have continuously increased, and average occupancy and rents may slightly increase in 2015, noted Colliers.
Serviced apartments are still the most popular with foreigners, especially Japanese, and the number of expatriates in Bangkok is increasing every year.
Most serviced apartments in Bangkok are located along Sukhumvit Road and all future serviced apartments that are under construction are located in this area.
Looking forward, Colliers reported: “The political situation in Thailand was the major concern for foreign investors during the past few years. The new government has restored confidence and improved Thailand’s image, so many foreign investors came to Thailand in the last quarter of 2014, and the number will continuously grow during 2015.
“Many foreign businessmen are still focusing more on Thailand than on other countries in ASEAN for their investment base.
“The increase inland prices along Sukhumvit Road is the main factor affecting new serviced apartment project development in the area. This is because condominium projects are the most suitable, given the high land prices.
“Average rents and occupancy rates in 2015 will continue to increase however, the increase may only be a few percentage points given the substantial increase in the third quarter.”
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
