Bangkok Serviced Apartment Market - 1st half 2009

MarketResearchBANGKOK SERVICED APARTMENT MARKET | 1 ST hAlf | 2009

B A N G KO K S E RV I C E D A PA RT M E N T M A R K E T

The Knowledge Reportc o l l i e R s i n T e R n aT i o n a l | T H a i l a n D

BanGKoK seRViceD aPaRTMenT MaRKeT HiGHliGHTs• Low demand of serviced apartment caused by the economic recession. The key measures implemented so far have included staff retrenchment and the reduction of housing budgets, which generally led to the change in the demand structure in the serviced apartment market.

• As at the end of the first half of 2009, there were approximately 14,043 units in 108 serviced apartment projects located in Bangkok.

• There were approximately 1,456 units from 13 serviced apartment projects added to the total supply during the first half of 2009.

• During the first half of 2009, there were approximately 3,566 new expatriates arriving in Bangkok. It is predicted that the number of new work permits will decline in 2009. • The average occupancy rate of serviced apartment is estimated to decrease by 13.75%, from 71.94% in 2008 to 62.05% in 2009.

• The slowing demand had pushed down the average rental rate per square metre of Grade A serviced apartment is estimated to decrease by 10% in 2009, to THB 1,130 per square metre per month in 2009. However, the ARR of Grade B is estimated to decrease by 5% in 2009 from just 881 in 2008 to 837 in 2009.

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1H 2009 2H 2009F

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serviced apartments do not suffer in a downturn as severely as hotels, which are more dependent on tourism. The long run demand from expatriates and tourists coming to Thailand will increase. The existing serviced apartment operators will have to focus on achieveing a balance of short-stay and long-stay guests as well as developing loyalty programmes to maintain occupancy rates.

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The Knowledge Report | 1st Half | 2009 | Bangkok Serviced Apartment Market

BanGKoK seRViceD aPaRTMenT MaRKeT oVeRVieWDue to the onset of the global financial turmoil and its knock-on effect on the global economy coupled with our local political issues, many business sectors, ranging from financial institutions, exports and manufacturing industry, have been affected by the crisis. The export of automobiles in March fell by 38.5 per cent from the same period last year. The Japanese industry’s was the biggest sales drop in 35 years due to the recession. There were nine industries showing lower confidence: cement, wood, food, sugar, herbs, power plants, rubber, aluminium and handicrafts. Automobile manufacturers became increasingly concerned

about the situation, as their exports to the Middle East had slumped more than 20 per cent in March. Thailand’s major export markets are the Middle East, Australia and Asia. Low demand for serviced apartment was caused by the economic recession. The key measures implemented so far have included staff retrenchment and the reduction of housing budgets, which generally led to a change in the demand structure in the serviced apartment market.

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sUPPlY TRenDs

Serviced Apartment Locations

As at the end of the first half of 2009, there were approximately 14,043 units in 108 serviced apartment projects located in Bangkok.

• Central Business District Area (CBD)

There are approximately 1,991 units of serviced apartment located in this area. In the first half of 2009, there were two new serviced apartment projects added in this area.

• Central Lumpini Area

There were two serviced apartment projects added in this area in the first half of 2009.

• Sukhumvit Area

There were six serviced apartment projects added to the supply in this area in the first half of 2009.


TaBle 1 : sUPPlY aDDeD in THe cenTRe BUsiness DisTRicT aRea in 1H 2009

PRojecT nAMe LocATion no. of uniTS

Marriott executive sathorn Vista soi suanplu 184

212 serviced apartment chan Road 18

ToTAL 202

TaBle 2 : sUPPlY aDDeD in THe cenTRal lUMPini aRea in 1H 2009


Rongratana executive Residence soi langsuan 22

anantara Baan Rajprasong serviced suites Rajdamri Road 97

ToTAL 119

TaBle 3 : sUPPlY aDDeD in THe sUKHUMViT aRea in 1H 2009


Montara sukhumvit soi 55 41

Viscaya Residence sukhumvit soi 31 14

oakwood Residence Thonglor sukhumvit soi 55 67

adelphi Grande sukhumvit soi 41 169

ambassador Royal suite serviced apartment sukhumvit soi 13 170

Marco Polo serviced apartment sukhumvit soi 2 50

ToTAL 511

Source : Colliers International Thailand Research




• Southern Fringe Area

In the first half of 2009, there was only one serviced apartment project added in this area.

• Other Areas

Most of the remaining Grade B & C serviced apartments are scattered across the city, including Phayathai, Petchaburi, Rama 9 Roads, Mitmaitri, etc. There were two serviced apartment project added to the supply here in the first half of 2009.

Historical Supply

Total supply of serviced apartments is approximately 14,043 units, representing an increase of 11.57% on the total supply in 2008. The sharp increase was found in the year 2007, representing an

increase of 17.76% on the total supply in 2006. The average growth of supply was 13.04% from 2004 to 1H 2009.


FiGURe 1 : sUPPlY oF seRViceD aPaRTMenT UniTs, 2004 & 1H 2009

TaBle 4 : sUPPlY aDDeD in THe soUTHeRn FRinGe aRea in 1H 2009


Radisson suites narathiwas Road 300

ToTAL 300

TaBle 5 : sUPPlY aDDeD in THe oTHeR aReas in 1H 2009


arasia luecha Park Phaholyothin soi 3 93

Hope land executive Residence sukhumvit 46/1 sukhumvit soi 46/1 231

ToTAL 324





Supply by location

The highest amount of supply is in the Sukhumvit area, with approximately 6,792 units, followed by Central Lumpini area

and the Central Business District area, with 2,182 units and 1,991 units, respectively.

Grade A serviced apartment projects are defined as projects in good locations and easily accessible. Grade A projects also provide spacious rooms, with amenities that combine comfort and quality, to encourage their customers to stay for long durations. The unit comes with luxury facilities, such as bathrooms equipped with a separate shower area and a bath tub, independently controlled air conditioning system, parquet

flooring and a safety deposit box in each room. The layout must be practical for living, with good design and attractive interior. The property must be managed by a reputable manager/operator. There must be adequate facilities for the residents.

Total supply of Grade A serviced apartments is approximately 5,135 units, representing 37% of the total number of serviced

apartments, while the supply of Grade B serviced apartments is approximately 8,908 units, representing 63%.

The market share of serviced apartments targeting expatriates can be categorized into Grade A and Grade B.



FiGURe 2 : sUPPlY oF seRViceD aPaRTMenT UniTs BY locaTion, 1H 2009

FiGURe 3 : sUPPlY oF seRViceD aPaRTMenT UniTs BY GRaDe, 1H 2009




FiGURe 5 : FUTURe neW sUPPlY oF seRViceD aPaRTMenT UniTs BY YeaR, 2H 2009-2011 & BeYonD(F)


Sukhumvit has the highest number of Grade A serviced apartments, with approximately 1,810 units, followed by Central Lumpini, with 1,770 units and CBD, with 995 units. Most Grade

B serviced apartments are concentrated in Sukhumvit, with 4,982 units, followed by the Southern Fringe and the Other areas, with approximately 1,313 units and 1,205 units, respectively.

Future Supply

There were approximately 1,456 units, from 13 serviced apartment projects, added to the total supply during the first half of 2009.

Of these, six projects were Grade A and seven projects were Grade B. It is interesting to see Grade A serviced Apartment in the Southern Fringe area.

Due to the extension of the mass transit line, we can see that the future supply of serviced apartments will expand in many areas. Thailand is growing and developing in the same direction as Hong Kong and Japan. Most people choose to stay in serviced apartment units close to facilities in order to save travelling time,

which is very important to the city lifestyle in the future. Thus, we will see the new development of serviced apartments spread to many areas.

Based on current building schedules, the new supply of serviced apartments is projected to be approximately 3,885 units by 2012. The majority of this new supply will be added in 2009, with approximately 1,097 units to be added in the second half of 2009, whilst 1,456 units are already added in the first half of 2009. Thus, by the end of 2009, the supply of serviced apartment is estimated to be 15,140 units.

FiGURe 4 : sUPPlY oF seRViceD aPaRTMenT UniTs BY locaTion anD GRaDe, 1H 2009



TaBle 6 : sUPPlY oF seRViceD aPaRTMenT UniTs, 2004-2011F

YeARuniT SuPPLY AT THe Beginning of

THe YeAR (uniTS)

AddiTionAL SuPPLY duRing

THe YeAR (uniTS)% cHAnge Y-o-Y

2004 7,730 362 4.68%

2005 8,092 385 4.76%

2006 8,477 679 8.01%

2007 9,156 1,626 17.76%

2008 10,782 1,805 16.74%

2009f 12,587 2,553 20.28%

2010f 15,140 1,150 7.6%

2011f & beyond 16,290 1,638 10.06%


The growth in supply of serviced apartments in 2006 was high, at approximately 17.76%.



TaBle 7 : seRViceD aPaRTMenTs scHeDUleD FoR coMPleTion, 2H 2009-2011F

no. PRojecT nAMe no. of uniTS LocATion eSTiMATed coMPLeTion

1 amari Residence 128 soi soonvijai 2009

2 Baan angsana na sukhumvit soi 3 2009

3 Fragrant Real estate 350 Makkasan Road 2009

4 Jasmine city by The River na Rama iV Road 2009

5 oakwood Residence Garden Tower 170 Bangna Trad Road 2009

6 Paradiso 31 46 sukhumvit soi 31 2009

7 Pan Pacific 142 sukhumvit soi 55 2009

8 siam Kempinski 97 Rama i Road 2009

9 somerset sukhumvit Thonglor 262 sukhumvit soi 55 2009

10 sukhumvit Park Bangkok- Marriott executive apartment 300 sukhumvit soi 24 2009

11 The aetas 78 soi Ruamrudee 2009

12 The silq 42 sukhumvit soi 19 2009

13 Twin Residence 79 sukhumvit soi 63 2009

14 Grass suites na Thonglor soi 12 2009

15 The alcove Thonglor 5 53 sukhumvit soi 55 end of 2009

16 sivatel 79 Wireless Road 2010

17 Fraser suite sukhumvit 250 sukhumvit soi 6 2010

18 Jasmine Resort & Park Hotel 300 sukhumvit soi 69 2010

19 istimar Residence 77 sathon Road 2010

20 somerset amar Garden 122 sukhumvit soi 2 2010

21 st Regis 22 Rajdamri Road 2010

22 oakwood Trilliant Park 133 sukhumvit soi 18 2011

23 Benchasiri Place Bangkok- Marriott executive apartment 92 sukhumvit Road 2011

24 l&H sukhumvit 19 600 sukhumvit soi 19 2011

25 oriental Residence 145 Wireless Road 2011

26 Planned Project 78 sukhumvit soi 107 2011

27 oakwood serviced apartment 112 sukhumvit soi 24 2011

28 Four Wing Residence 128 srinakarin Road na

29 Planned Project (onnut ladkrabang) na onnut ladkrabang na

30 Project of Mahanakorn na narathiwas Road na

31 Planned Project na narathiwas soi 7 na

Total 3,885




DeManD TRenDs

Demand for serviced apartments traditionally came from expatriates in their early months of moving to Thailand or the last months of their posting. Typical length of stay would range from one to three months, as the expatriate would require that time to select a permanent residence such as an apartment, single house or town house, or to cover the period following the expiry of an annual lease before moving on.

More recently, demand for the serviced apartments market has developed into two major groups: short-stay tourists and business

travellers (the short-stay market), and new expatriate arrivals to Bangkok (the long-stay market). Some guests who would have formerly stayed in hotels have shifted to serviced apartments because they offer full facilities at more reasonable prices, especially when compared with five-star hotels. The current economic circumstances should benefit some of the serviced apartment projects because some guests are seeking lower-priced accommodation.

Number of Expatriates in Bangkok

Official figures from the Office of Foreign Workers Administration (Work Permit), Department of Employment of the Ministry of Labour reveal that the number of new expatriate arrivals in Bangkok was lowest in 2005, with only 1,872 persons. The economic slump will affect the demand of the serviced apartment

market, many companies having implemented more stringent cost controls, cash flow management, financial restructuring and even retrenchment. The new expatriates moving to Bangkok is forecasted to decrease to 6,419 persons in 2009.


Source : Office of Foreign Workers Administration (Work Permit) Department of Employment, The Ministry of Labour

FiGURe 6 : neW WoRK PeRMiTs issUeD in BanGKoK, 2004 – 2009F


Number of tourist arrivals at Suvarnabhumi International Airport

Short-stay demand for serviced apartments comes from both leisure tourists and business travellers. Offical figures from Office of Tourism Development reveal that the number of international tourist arrivals at Suvarnabhumi International Airport during the first half of 2009 was 4,434,518 persons, down by 26.8% from 5,623,119 persons in the first half of 2008.

From the breakdown of international travellers at Suvarnabhumi International Airport, visitors from East Asia (Japan, China),

South Asia (India), Asean (Malaysia, Singapore), Europe (Germany, UK, France), USA, Australia and the Middle East make up the majority of inbound travellers to Thailand. Approximately half of the total came from the Asian region in the first half of 2009.

occUPancY anD RenTal RaTes

Both Grades Occupancy

The average occupancy rate for the overall serviced apartments in Bangkok increased between 2004 and 2005 by 5.9% (from 83.92% to 88.87%), but declined each year from 2006 to 2008.

As a result of global recession and global economic crisis, the occupancy rate of serviced apartment would fall to 62.05% in 2009.


Source : Office of Tourism & Colliers International Thailand Research

FiGURe 7 : inTeRnaTional ToURisT aRRiVals aT sUVaRnaBHUMi inTeRnaTional aiRPoRT

BY ReGion, 1H 2009



Source : Executive Serviced Apartment Alliance Meeting (EXSAAM) & Colliers International Thailand Research


FiGURe 8 : aVeRaGe occUPancY RaTe oF oVeRall seRViceD aPaRTMenTs, 2004 –2009F

FiGURe 9 : aVeRaGe occUPancY RaTe oF GRaDe a & B seRViceD aPaRTMenTs, 2004 –2009F

Grade A & B Occupancy

The average occupancy rate for Grade A serviced apartments in Bangkok increased between 2004 and 2005 by 7.37% (from 81.87% to 87.90%), but declined each year from 2006 to 2008.

The occupancy rate of Grade A is forecasted to decrease to 69.5% in 2009 and Grade B would decrease to 68% due to the majority of Grade B supply.


RenTal TRenD

In order to combat the threat of global economic depression, many serviced apartments have implemented the price war policy by price reduction as well as additional complimentaries, such as

free electricity charge, daily American Breakfast and much more, in order to attract many customers from various companies.

Grade A Rents

The average achieved rental rate (ARR) of Grade A serviced apartments increased annually between 2004 and 2008. The highest ARR growth rate was in 2006, increasing some 12% from 2005. In 2008, the ARR remained stable at THB 1,256 per square metre per month. The slowing demand would push down the average rental rate per square metre of Grade A serviced apartment by 10%, to THB1,130 per square metre per month in 2009.

Grade B Rents

The ARR of Grade B serviced apartments also showed a general upward trend between 2004 and 2008. The ARR of Grade B serviced apartments decreased in 2008 only 1.8%, as occupancy caught up with new supply and the possible delayed effects of the global economic downturn hitting Thailand in the last quarter. However, the ARR in 2009 is estimated to drop by 5% from THB 881 per square metre in 2008 to THB 837 per square metre per month in 2009.

Outlook :

Amid the global economic crisis, serviced apartments do not suffer in a downturn as severely as hotels, which are more dependent on tourism. We believe that in the long run demand from expatriates and tourists coming to Thailand will increase. Some property developers who are constructing service apartments are opting to delay their projects and waiting to see how the market performs by the end of this year.

We would expect the serviced apartment market to take at least one to two years to recover. Thus, the existing serviced apartment operators will have to focus on achieving a balance of short-stay

and long-stay guests as well as developing loyalty programmes to maintain occupancy rates. A huge amount of supply will be opened in the second half of this year and will increase market competition. The rental rates are expected to decrease, and this will provide an opportunity for serviced apartments to attract more residents.



FiGURe 10 : aVeRaGe acHieVeD MonTHlY RenTal RaTe oF GRaDe a & B seRViceD aPaRTMenTs, 2004 – 2009F



APPENDIX

Serviced Apartment Locations

The serviced apartment area can be divided into five areas or pockets of concentration:

• Central Business District Area (CBD) This is the area that encompasses Silom Road and Sathorn Road as well as other sois in between, such as Soi Saladaeng, Soi Convent & Soi Pipat.

• Central Lumpini Area

The Central Lumpini covers the areas along Rama I, Rajdamri, Wireless, Ploenchit and Langsuan Roads. This area is convenient for both business travellers and tourists, because of its proximity to many of the office buildings and local attractions. Cape House, Centre Point – Wireless and Natural Ville, among others, are located in this section of the city.

• Sukhumvit Area

This is the section of Sukhumvit Road between Soi 1 and Soi 69 to the north and Soi 2 and Soi 42 to the south. This popular area with expatriates and tourists spans the Asoke Intersection in the west to the Emporium Mall in the east. The area between Sukhumvit Soi 1 and Sukhumvit Soi 69 is popular as a residential area for western expatriates. Japanese nationals tend to prefer the area from Asoke intersection eastwards, especially Soi Thong Lo. Serviced apartments in the vicinity include Emporium Suites, Jasmine Executive Suites, President Park, Grand Mercure Residence Asoke, Somerset Lake Point and Furama Xclusive Sukhumvit, to name a few.

• Southern Fringe Area

This is the area that stretches along the bank of the Chao Phraya River on Charoenkrung Road. Narathiwas Ratchanakarin Road and Rama III Road are located in this area. This is a new area for expatriate serviced apartments; thus, there is a scarcity of Grade A serviced apartment projects in the area. Despite this, many serviced apartments in the area, such as Oakwood City Residence, Centre Point Silom (Bangrak) and Shangri-La Hotel Apartments, have excellent reputations in this vicinity.

• Other Areas

Most of the remaining Grade B & C serviced apartments are scattered across the city, including Phayathai, Petchaburi, Rama 9 Roads, Mitmaitri, etc. The total stock in these areas is 1,272 units. There were three serviced apartment project added to the supply here in the first half of 2009.

conTacT inFoRMaTion

THailanD: Patima Jeerapaet Managing Director Colliers International17/F Ploenchit CenterKlongtoeyBangkok 10110Tel: 662 656 7000Fax: 662 656 7111

Risinee Sarikaputra Director | Research

This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by colliers international for advertising and general information only. colliers international makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. any interested party should undertake their own inquiries as to the accuracy of the information. colliers international excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. colliers international is a worldwide affiliation of independently owned and operated companies.

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This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.

Bangkok Serviced Apartment Market - 1st half 2009

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