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Apartment Rental/Leasing Market Report – Q4 2008 – Overview

By on Jan 30, 2009 in Research, Residential

Highlights

  • bangkok-apartment-rental2The average occupancy rate for downtown Bangkok was89.7% in Q4 2008, up 1.8% q-o-q, but down this by 1.2% y-o-y. The total number of occupied units was 9,749 in quarter, up 3.9% q-o-q and 4.6%.
  • The average achieved rents for Grade A apartment units declined in all areas from 1.2-5.6%, especially in Sukhumvit(-5%), and Riverside/ Rama III (-5.7%).
  • The number of expatriates in Thailand stood at 152,806, up by 15.3% y-o-y. Japanese accounted for 20.7% of the expatriates in Thailand in Q4 2008.

Bangkok Residential Leasing Report

Four apartment projects were completed during Q4 2008, including The Residence, 14 Place, The Harmonized and L.ThreeAvenue, which added up to a total of 199 units. The total supply of apartment units in downtown Bangkok now stands at 10,866, up from 10,677 (+1.9% q-o-q and 6+1% y-o-y) in Q3 2008.

The number of work permit-holding expatriates in Bangkok and provincial areas increased to 84,616 and 68,190 respectively, rising 15.4%  and 15.2% y-o-y.
The total number of expatriates .  in Thailand as of November 2008 stood at 152,806, up 15.3% y-o-y. However, we are concerned that expatriate numbers will taper off or decline in 2009 as many companies are looking to cut costs.

The average achieved rents for Grade A and B apartments in all downtown areas declined by 1.2-5.6% as a result of weaker demand. The occupancy rate stood at 89.7% in Q4 2008, improving by 1.8% q-o-q, lower but down 1.2% y-o-y.  A higher occupancy rate combined with lower rents suggests that landlords are willing to negotiate with tenants given economic conditions.

Historically, the apartment sector has shown itself to be the most stable of all property sectors, with occupancy rates within the 87-93% band since 2000.  However, we are now seeing a softening of rents, and expect a further weakening in 2009 as companies look to cut costs further.  Additionally a large amount of condominium stock (as, many as 11,880 units) is scheduled to be the completed during the year, and many of these units will find their way onto the rental market, further pressuring apartment rents

We believe Grade A landlords may have to offer discounts and other incentives to tenants in order to fill their buildings, since many salaried employees are now faced with the prospects of reductions in pay or other benefits.

If you wish to review the full report in detail (Apartment Rental/Leasing Q4)

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