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Strong Demand for Apartments Despite Competition from Condominiums

By on Aug 01, 2011 in Residential

CB Richard Ellis (CBRE) has successfully leased Capital Residence and S59, two new apartment buildings in Sukhumvit where over 95% of the units have been leased within three months of the buildings being completed. The success of these two developments proves there is still strong demand for single ownership apartment buildings from expatriate tenants, despite the number of condominiums available for rent.

The reason for these successful leasing campaigns was a combination of the location, size, unit type, design and interior decoration of the two projects as well as a preference among some expatriate tenants for single ownership apartment buildings rather than individually owned condominiums.

Capital Residence is located on the main road of Sukhumvit Soi Thonglor. The building has 74 one to four bedroom apartments ranging from 58 sq.m. to 320 sq.m, with the majority of the units being 160 sq.m. three-bedroom units. The building was completed in October 2010 and was 95% leased within three months of completion.

S59 located on Sukhumvit Soi 59 comprises sixteen, 240 sq.m., three-bedroom units. The building was completed in December 2010 and is now 100% leased.

CBRE is the sole leasing agent for both buildings and also the project manager responsible for the construction supervision of Capital Residence.

There are a number of reasons for tenants favouring apartments. In an apartment building if there is a problem with the unit, the building manager is on hand to resolve this. In a condominium building the property manager is responsible only for the management of the common areas and not the individual units. Condominium building managers have no responsibility for repairs or maintenance inside individual condominium units.

Mr. Theerathorn Prapunpong, Director of Residential Leasing Services at CBRE said, “The locations of the two developments were an important factor behind their success, but location alone is not enough. The unit types and sizes matched market requirements as did the fixtures, fittings, furniture and appliances. It was the combination of both location and design that enabled both projects to succeed in a competitive market.”

In order to succeed, apartment developers need to clearly identify the needs of tenants in terms of unit type and size and examine the competition for each size of unit. The developer must optimize the size of each unit type creating the most efficient unit that satisfies tenants’ space requirements in order to maximise rental returns and the per sq.m. rent.

Getting the combination of location, size and design to maximize returns is complicated and need a depth of market exposure and experience, which is why CBRE now provides a design development consultancy service for developers, analysing and interpreting real market information from over 300 expatriate residential leasing transactions that company concludes each year.

For more info. on Bangkok condo for lease.

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