Bangkok--20 Mar--CB Richard Ellis
New well designed apartments are succeeding in capturing market share in the expatriate rental market even though the units are often smaller than existing older buildings, according to the latest market research from CB Richard Ellis.
The total apartment stock in central Bangkok was 10,048 units. 337 new units in 9 buildings were completed in 2006. However, a number of existing developments were converted to other uses; therefore, the total stock only increased by 1% in 2006.
The current occupancy rate is 89%, a slight drop on the previous year. Vacancy increased in older buildings which had not been renovated.
At the same time, the total condominium stock in the downtown area grew to 46,548 units, an 8.6% increase on the previous year. Overall occupancy in the downtown condominium market was 84.8%.
Mr. Theerathorn Prapunpong, Director of Residential Leasing Services at CB Richard Ellis estimates that up to 40% of the existing condominium stock is held by owners as investment properties to be leased out.
The number of expatriates with work permits in Bangkok grew to 67,412 in 2006, a 12.5% increase year-on-year, according to the Alien Occupational Control Division of the Department of Employment. Twenty-two percent of the expatriate population with work permits is Japanese.
CB Richard Ellis forecasts that 615 apartments and 6,618 condominiums will be completed in central Bangkok in 2007.
A clear trend is emerging where new well located, well designed buildings are capturing market share and achieving higher per square metre rentals than older developments even though the unit sizes are smaller.
“Many of these new developments have a much more efficient design which means they are attractive to tenants even though they are smaller than apartments in older developments,” said Mr. Theerathorn.
“Tenants want modern, well equipped kitchens with natural light, hotel-standard bathrooms with features such as separate shower cubicles. Today, tenants also expect such consumer goods as a dishwasher and LCD television, and are willing to pay top rents for the best designs.”
Seventy percent of the leased apartments are situated in the Sukhumvit area. The most popular locations are from Asoke to Phrom Phong, close to the BTS stations.
Older apartments and individual condominium units in buildings that are more than ten years old have started to suffer, unless the interiors and common areas have been renovated.
There is a constant turnover of tenants in the rental market. New expatriate arrivals do not usually take over the residence of their predecessor but make a fresh choice, and currently many are choosing new developments.
In order to compete, owners of existing apartments will have to renovate and redecorate otherwise they will see lower occupancy and rentals.
The growth in expatriate numbers could slow, in line with the slow growth in the economy and restrictions on foreigners owning companies in the service sectors. CB Richard Ellis does not expect there to be a contraction in the number of expatriates but, rather, a slower growth in the market with more supply. This will make the expatriate rental market more competitive.
Mr. Theerathorn still believes that new well designed apartment developments and attractive condominium units will still be able to secure tenants because much of the existing supply is now more than ten years old and has not been renovated.
For more information please contact:
Ms. Ngamjai Jearrajarat
Corporate Communications Manager
662 654 1111 Ext. 522
Mr. Theerathorn Prapunpong
Director — Residential Leasing Services
662 654 1111 Ext. 421
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