Thailand's leading real estate agent

Bangkok Serviced Apartment Market Q1 2016

By on Jul 06, 2016 in Research, Residential

The serviced apartment market is diverse with some buildings focusing more on the long-term market while others are effectively being operated and marketed as hotels. There are two main drivers of demand for serviced apartments: the long-term demand is driven by expatriates working in Bangkok, while the daily rate business is driven by tourists and business travellers. Many serviced apartments have hotel licenses, allowing them to legally offer daily rates.

Bangkok Serviced Apartment Bangkok, CBRE Research

The number of expatriates with work permits in Bangkok increased in Q1 2016 to almost 83,000, growing by 1.3% Q-o-Q and 5.3% Y-o-Y. According to the Department of Tourism, tourist arrivals continue to be driven by the growth in Chinese tourists. Chinese tourist arrivals increased by 29% Y-o-Y in this quarter, mainly due to the Chinese New Year, and accounted for around one-third of the total tourist arrivals. This helped short term tenancies and slightly pushed up the overall occupancy rate.

The overall occupancy rate was relatively stable at 83.3%. There was a decrease in occupancy in the Sathorn/Silom area by 3.8% percentage points Y-o-Y. Many of the serviced apartments in this area are old.

The Silom/Sathorn area is not as popular as Lumpini and Sukumvit for expatriate tenants especially for Japanese tenants who make up a significant amount of the total demand for long term serviced apartment rentals.

The total supply of serviced apartments increased 3.3% Y-o-Y with only one new serviced apartment opened in Q1 2016. The average rent in Q1 2016 was relatively stable at THB 1,103/sq.m./month.

More serviced apartments are being included in planned mixed-use projects such as the BTS’s Phayathai project, which will have offices, a hotel, serviced apartment and a retail component.  Eleven serviced apartments will be completed by the end of 2020. Buildings due for completion in 2016 are expected to increase the total supply by at least 600 keys.

Although there is limited future serviced apartment supply, there will be continued competition with hotels for the daily rate market as hotel supply continues grows.  There will be an additional threat from people leasing out small condominium units at a daily rate through services such as Airbnb.

There will be some competition in the long term market from individual owners renting out small condominium units, but limited competition from single-ownership rental apartments because few new ones are being built.

Although expatriate numbers have increased, CBRE Research has no evidence that housing allowances have similarly increased.

CBRE forecasts that occupancy will remain stable for serviced apartments in Bangkok, but see limited possibility of rental rates rising unless hotel rates increase and expatriate housing allowances increase.

Nora has been in the Corporate Communications arena for a number of years. Nora's role is to communicate all newsworthy items that are of a PR nature.

No comment





 

emailSubscribe Via Email

Privacy guaranteed. We will not share your information.

Follow Me on Twitter

Follow Me on Facebook

Subscribe via RSS Feed

Copyright © 2020 CBRE (Thailand) Co., Ltd. All Rights Reserved.