OPPORTUNITIES IN DOWNTOWN BANGKOK RESIDENTIAL RENTAL MARKET

Real Estate Press Releases Wednesday October 3, 2018 10:14
Bangkok--3 Oct--CBRE Thailand

The downtown residential rental market in Bangkok is driven by expatriate tenants working in Thailand who want to rent in a limited number of areas and mainly choose either apartments, rental units in a condominium or a serviced apartment, according to CBRE, an international property consultancy company.

Expatriate numbers are only growing at a slow rate and there has been no increase for many years in the average monthly budgets that these tenants are willing to spend on rent.
There are only a few new apartments under construction, but many new condominiums, according to CBRE Research.

The increase in supply and limited growth in demand means that the market is competitive, but there are still opportunities for both apartment developers and buy-to-rent condominium investors. The key factor is to understand tenant requirements so that investors can maximise their occupancy and rent per square metre.

There is a constant turnover of expatriate tenants as the average length of stay in Thailand is about three years so each new incoming tenant makes a fresh decision about where they want to live

The latest survey by CBRE Research in Q2 2018 shows that there are about 10,000 single-ownership muti-family apartment units in the most popular expatriate rental locations of Sukhumvit, Lumpini and Sathorn. There are around 76,000 condominiums in the same areas and CBRE Research estimates that about 25,000 - 30,000 of these are owned by investors who are renting out their units.

There is still a preference, especially from Japanese tenants, for single-ownership apartments rather than multi-ownership condominiums because they like the ability to talk to the owners' representative about all aspects of maintenance. In a condominium, the property manager is only responsible for maintenance of the common areas and it is the individual owners' responsibility to maintain the interior of the unit. It is more challenging for tenants to get things fixed inside a condominium unit.

In Bangkok, few condominium owners use a managing agent to look after their unit and deal with all tenant issues. A condominium tenant must directly contact the owner about all issues relating to the inside of the unit and the ability of an individual owner to quickly arrange maintenance or repairs is mixed depending on their experience and is especially challenging for overseas owners. Only in some cases where the condominium managed by hotel and provide concierge services, the owner will have to pay the premium common area management fee, the property management will assist to do maintenance issue in the unit.

Apartment developers who build in preferred locations and understand tenant requirements continue to be successful, achieving high occupancy and good rental rates.

Mr. Theerathorn Prapunpong, Head of Advisory & Transaction Services - Residential Leasing at CBRE Thailand, has advised developers of two recent apartment projects on the design and specification of their developments and acted as sole leasing agent.

Piya Residence on Sukhumvit Soi 28 and 30 was completed in Q1 2018. The developer optimized the units' layout and size to maximise the functionality and the rental per square metre. More than 60% of the units have been leased.

Chani Residence on Sukhumvit Thonglor Soi 13 was completed in 2017 and has been designed to match Japanese tenants' requirements and is now more than 70% leased.
Both these buildings have a mixture of mainly two and three-bedroom units for which there is still a high level of demand because many of the rental units in new condominiums are one-bedroom units.

Mr. Theerathorn has advised on another development, Jittimon Residence on Sukhumvit Thonglor Soi 16 which will be ready for occupation in early 2019. The eight-storey building will have a range of units from one to three bedrooms and its unique selling points are the low density and large garden, which are unique features in a market where most developers maximise the plot ratio.

One of the most important factors in determining the success of a rental apartment project is to match tenants' requirements on size, layout, specification, location and facilities.

"CBRE's ability to provide apartment developers with practical advice is due to our real market data based on over 1,000 expatriate tenant lettings over the last three years. Knowing what tenants want and how much they will spend," added Mr. Theerathorn.

The Central Business District residential rental market is going to continue to remain competitive and owners of existing apartment buildings and individual owners of condominiums need to maintain and renovate interiors and common areas to ensure their properties remain attractive to tenants.


Latest Press Release

NOON Capital and Asia Capital Real Estate (ACRE) launches first project in Thailand as part of a US$150m property development partnership

- U.S. and Singapore-based ACRE - a private real estate investment platform - has invested over US$750 million in multi-family projects in the U.S. through three funds - US$25 million has been committed for phase one of the multi-family platform project...

Singha Estate unveils its commercial business expansion plan to invest 15 billion baht to develop new projects with additional 170,000 square meters, targeting the premium lifestyle market

"Singha Estate" emphasizes on its leadership as a premier lifestyle developer and envisions the growth prospect of commercial business in high potential location, especially those where have convenient transportation and planned mass-transit hubs in the...

IKEA is giving customers holiday gifts with the IKEA YEAR-END SALE. IKEA FAMILY members get an additional 15% off on all sale items from 26 December 2018 6 January 2019

IKEA is kicking-off its "IKEA YEAR-END SALE" for home lovers. A huge number of quality home furnishing items will be sold at prices that are easy on the wallet. Customers will find everything they need in one go. And to make things even more special,...

Habitat Group To Grow International Buyers With China and Hong Kong Roadshows

Thailand's leading property-for-investment developer, Habitat Group, is ramping up its expansion into international markets promoting two of their premium condominium developments – Walden Sukhumvit 39 and Walden Sukhumvit 31 – at roadshows...

Dusit International retains its crown as the hotel of choice for Miss Universe contestants in Thailand

Dusit International, one of Thailand's foremost hotel and property development companies, is ending the year in style after being selected as the official hotel partner of the MISS UNIVERSE(R) pageant in Thailand for the third time. Now in its 67th year,...

Related Topics