The single-ownership expatriate standard apartment market in Bangkok is performing well despite competition from rental units in condominiums, according to CBRE, a leading property consultancy company in Thailand.
The number of expatriates with work permits in Bangkok grew by 9.5% Y-o-Y to around 79,000, according to statistics from the Ministry of Labour.
Most expatriates only want to live in a limited number of areas which are Sukhumvit, Lumpini and Sathorn. They are only in Bangkok for two or three years and want to rent, not purchase their residence.
The most popular choice is to rent an apartment or condominium because there are few houses or townhouses to rent in most expatriate areas. There is limited competition with serviced apartments, but only for studio and one-bedroom units not larger units.
There are about 11,000 expatriate standard apartments in the most popular areas and the current occupancy is over 90%. There are around 92,800 condominiums in the same most popular expatriate areas and CBRE estimates that about 30-40% of these units are owned by people who rent their units out. The occupancy rate for condominiums is 80%.
Condominium or apartment ?
Tenants prefer to rent apartments rather than units from individual owners in a condominium because they know they can go directly to the building owner for repairs and requests.
In a condominium, the individual owner is responsible for the maintenance inside the unit and the buildings property manager is only responsible for the maintenance of the common areas and this means it can be difficult for tenants to get owners to repair items quickly.
Although many of the apartment buildings are more than 20 years old, generally both the common areas and unit decoration have been well maintained and renovated and are in much better condition than many condominium buildings of the same age.
CBRE’s research shows that there are only 415 apartment units in single-ownership buildings under construction in the most popular expatriate locations, but there are 27,000 condominium units under construction in these areas, 63% of which will be one-bedroom units.
The prospects for single-ownership apartments are good, especially for two and three-bedroom units, because tenants prefer single-ownership buildings to condominiums and because few new two, three and four-bedroom apartment and condominium units are being built.
CBRE is the sole leasing agent for a brand-new 32-unit apartment development called The Philo Residence on Sukhumvit Soi 24. The building was completed at the beginning of July this year and is already 90% leased.
“Location is not the only key to success, the unit layout, specification, furniture and facilities along with the unit size are critical to achieving the best rents and keeping an apartment fully occupied,” said Mr. Theerathorn Prapunpong, Director of CBRE’s Residential Leasing Services team.
Location does continue to be important and the Phrom Phong area with the recent completion of the EmQuartier Shopping Centre has strengthened this location’s popularity among expatriate tenants.
It is important that any apartment developer or individual condominium owner looking to rent unit understands expatriate tenant requirements which are changing.
CBRE advised the developer of The Philo Residence on all aspects of the design based on the feedback from tenant’s comment from over 400 expatriate residential leasing transactions CBRE closes each year.
CBRE expects that expatriate numbers will continue to grow. Most expatriates will want to live in the same areas and will continue to prefer apartments rather than condominiums, if given the choice of similar size, similar quality unit in the same areas.
There is a future for apartment development focusing on expatriate tenants, but developers need to match tenant’s requirements in order to achieve the highest rents and best occupancy.