Bangkok--May 17--CB Richard Ellis
The residential property rental market in Bangkok is creating more opportunities for developers to launch new residential projects in downtown areas, according to Mr. Theerathorn Prapunpong, Associate Director of Residential Leasing Services at the international property consultants, CB Richard Ellis.
The main demand is from expatriates who work in Bangkok and who, on average, stay in Thailand for two to three years. Statistics from the Alien Occupational Control Division of the Department of Employment show that there were 54,413 expatriates with work permits in Bangkok as of December 2004, a 13% increase from the 47,989 expatriates in 2003. This excludes diplomats and permanent residents.
As of the first quarter of 2005, there were 55,645 expatriates in Bangkok, a further 2.3% increase compared to the previous quarter. Japanese, Indian, British, Chinese, and Americans were the top five nationalities and account for 22.7%, 10.9%, 9.3%, 9% and 7.1% of the total expatriates respectively.
In recent years, as the Thai economy has continued to grow, the multi-national companies engaged in, for example, the consumer products and automotive sectors have expanded and increased the number of expatriate employees accordingly.
Based on the latest survey conducted by CB Richard Ellis’ Research & Consulting Services team, the supply of expatriate apartments in downtown Bangkok grew to 9,574 units in the first quarter of 2005, from 9,392 units in the same period last year. Grade A supply accounts for 13.9% of the total stock while the remaining 86.1% is grade B and below.
Over the past few years, supply has only increased by 1-2%, according to CB Richard Ellis’ research. In 2005, 350 apartment units are scheduled to be completed and a further 350 will be ready in 2006. Current occupancy levels are at around 91% for single ownership apartments.
Mr. Theerathorn said “the supply side is increasing at a slower pace compared to the number of expatriates, which continues to grow at 10-13% per annum. Developers are taking the opportunity to launch new projects to capture this demand, particularly in the CBD area, including Sathorn, Ploenchit, Wireless and Sukhumvit”. Thus, CB Richard Ellis believes that if expatriate numbers continue to grow, demand could exceed supply in certain areas particularly in the grade A sector.
Much of the existing apartment stock is now more than 10 years old and the interior design and decoration of many projects is looking dated. Tenants, and particularly newly arrived expatriates, are increasingly looking for a more modern style of interior design, and high specification bathrooms and kitchens, and living areas with good natural light.
The market is therefore becoming clearly split between new well-decorated projects and older developments. Rents in older properties have remained flat, whereas rents in new or fully refurbished developments are higher than similar sized properties in comparable locations. CB Richard Ellis has also seen that new or fully refurbished projects lease faster and achieve higher occupancy levels.
This division will continue as new apartment and condominium projects are completed.
There will only be a limited number of new condominium units completed and decorated in a ready-to-rent condition this year. However, CB Richard Ellis predicts more supply in 2006.
The apartment sector will be competing with units in recently completed condominiums where owners are seeking to rent out their units.
If existing apartment owners and landlords of individual condominium units wish to benefit from the upswing in the market, they will have to look at redecorating interiors of units and modernizing common areas.
Developers of new projects need to see where there are niches in the market that are undersupplied and where returns can be maximized. This requires a combination of optimum unit size and type together with interior decoration, appliances and facilities that match tenants’ requirements.
A prime example of the performance of new property is Park Royal Residence located on the corner of Soi Ruam Rudee and Wireless Road.
“The developer has designed units that are similar in decoration to a five-star hotel with separate showers in the bathrooms and very modern, bright interior design. Park Royal Residence is now ready for occupation, and so far, the three and four bedroom units are achieving some of the best rents in the market because of the design and location,” Mr. Theerathorn concluded.
About CB Richard Ellis
CB Richard Ellis (NYSE:CBG), a FORTUNE 1000 company headquartered in Los Angeles, is the world's leading commercial real estate services firm (in terms of 2004 revenue). The company serves real estate owners, investors and occupiers by offering strategic advice and execution for property leasing and sales; property, facilities and project management; corporate services; debt and equity financing; investment management; valuation and appraisal; research and investment strategy; and consulting. Including partners and affiliates, the company has over 300 offices in more than 50 countries around the world.
CB Richard Ellis established an office in Bangkok in 1988 and in Phuket in 2004. CB Richard Ellis (Thailand) Co. Ltd. has grown to be a leading real estate services provider, offering a full range of services including sales and leasing for all types of property, property and facilities management, valuation and advisory services, and research and consulting. For more information, visit the company's website at www.cbre.co.th.
* Includes partner offices
For further information:
Mr. Theerathorn Prapunpong
Associate Director02 654 1111 ext.421
Ms. Ngamjai Jearrajarat
Corporate Communications Manager
02 654 1111 Ext. 522 End.