Bangkok Serviced Apartment Market 2008 by Colliers International Thailand

MarketResearchBANGKOK SERVICED APARTMENT SECTOR OVERVIEW | MARCh | 2008

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

c 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 sector oVerVieW 2008 • After2yearsofuncertaintylinkedtopoliticalissues,thepropertymarketingeneral andtheservicedapartmentmarketinparticularisexpectedtoexperiencerenewed activity and growthin2008.

• Atthesametime,competition will intensifyfurtheras6,580newservicedapartment unitsin38projectsaresettoenterthemarketby2011.

• Totalnew investmentinthese38projectsisestimatedataroundTHB27billion.

• Manyinvestorsareattractedtothissectorbystrong income potential combinedwith lowerinvestmentandoperatingcostsandofferedhigheryieldsthanhotels.

• International operators,suchasOakwoodAsiaPacific,FrasersHospitalityandThe AscottGroup, are expanding aggressively throughoutAsia and allhavenew propertiesunderwayinBangkok.

• The advantage of a strong brand name,eitherlocalor international,willbecome moreapparentinamorecompetitiveenvironment.

• Asnew supply outpaces new demand,operatorshaveturnedincreasinglytoshort- staytouristsandbusinesstravelers, ratherthanthetraditionalservicedapartment long-staymarket(1-3months),competingwithhotels.

• Someservicedapartmentsarecurrentlytakingin30-35% long-stay and 65-70% short-staybusiness.

• Withnew supply of hotelsalsoincreasingsharply,themarketisexpectedtoentera verycompetitivephasein2008.

• Withincreasedsupplycoupledwithlicensingrequirementsforshort-stayoperators, a strategy for success could be a return to focus on the traditional longer-stay market. Offeringguestsstayingamonthorlongerawell-designedproductthatmeets theirneedswouldbepreferabletoengaginginaprice-cuttingwarwithhotels.

• Appreciationof theBaht isputtingsomeGradeApropertiesoutsidethebudget allocationofsomelong-stayexpatriates,whichcouldbenefit the Grade B marketin thenearterm.

MarKet indicators

2007 2008F

suPPly

deMand

occuPancy (%)

aVeraGe achieVed rent (thB / sq.M.)

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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 | M a r c h | 2 0 0 8

By 2011, the total amount of serviced apartment investment will be approximately thB 27 billion for the new supply of 6,580 units in 38 serviced apartment projects. this investment cost is exclusive of land prices.

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The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market

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Central Business DistrictArea covers - Silom Road - Sathorn Road - Other sois in between such as Soi Saladaeng, Soi Convent & Soi Pipat



neW suPPly in central Business district area (cBd)

Serviced Apartment Name Location No. of units Expected completion

For your residence silom soi 17 24 2008

sathorn Vista - Marriott soi suanplu 195 2008

sathorn Garden sathorn road 155 2009

istitmar residence sathorn road 77 2010

Metro sathorn tower soi saint louise na 2011

Source : Colliers International Thailand Research

neW suPPly in central luMPini


Bliss residence soi ruamrudee 78 2008

Baan rajprasong soi Mahadlekluang 3 70 2008

noble ambience ruamrudee soi ruamrudee 2 108 2008

siam Kempinski rama i 150 2009

st'regis rajdamri road 22 2010

Planned Project Ploenchit road 150 2011

Planned Project Ploenchit road na 2011


suPPly By locationCurrently,thereareapproximately10,685units in75servicedapartmentprojects locatedinBangkok.Aftermoreanalysis, theservicedapartmentareacanbedividedintofourareasorpocketsofconcentration:

•CentralBusinessDistrictArea(CBD)This is thearea thatencompassesSilomRoadandSathornRoadaswellasother sois inbetweensuchasSoiSaladaeng,SoiConvent&SoiPipat.Thereareapproximately1,687unitsinservicedapartmentlocatedinthisarea.Thebelowtableshowsfuturesupplyofservicedapartmentprojectsinthisarea.

•CentralLumpiniAreaTheCentralLumpiniareacoversareasalongRamaI,Rajdamri,Wireless,PloenchitandLangsuanRoads.Thisarea isconvenient forbothbusiness travelersandtourists,becauseof itsproximitytomanyof theofficebuildingsandlocalattractions.CapeHouse,CentrePoint–WirelessandNaturalVille,amongothers,arelocatedinthissectionofthecitywithapproximately1,984units.However,anadditional578unitswillbeaddedinthisareaby2011.

Central Lumpini Area covers - Rama I Road - Rajdamri Road - Wireless Road - Ploenchit Road - Langsuan Road


Sukhumvit Area covers - Sukhumvit Road between Soi 1 and Soi 69 to the north - Sukhumvit Road between Soi 2 and Soi 42 to the south. - Other sois in between



neW suPPly in suKhuMVit


sukhumvit Park View by Marriott sukhumvit soi 24 300 2008

compass sukhumvit soi 24 340 2008

na sukhumvit soi 19 42 2008

admiral suite ii sukhumvit soi 31 122 2008

citadines 8 sukhumvit soi 8 130 2008



column residence sukhumvit soi 16 238 2008

somerset amar Garden sukhumvit soi 3 122 2008

eight thonglor sukhumvit soi 55 148 2009

the royal suite serviced apartment sukhumvit soi 13 170 2009

somerset sukhumvit thonglor sukhumvit soi 55 268 2009

oakwood residence thonglor sukhumvit soi 55 na 2009

somerset Grand sukhumvit sukhumvit soi 23 265 2010

Jasmine resort & Park hotel sukhumvit soi 69 300 2010

Benchasiri Place by Marriott sukhumvit 92 2010

Fraser suites sukhumvit sukhumvit soi 6 250 2010

l&h sukhumvit 19 sukhumvit soi 19 600 2011


•SukhumvitAreaThisisthesectionofSukhumvitRoadbetweenSoi1andSoi69tothenorthandSoi2andSoi42tothesouthaswellasothersoisinbetween.ThispopularareawithexpatriatesandtouristsincludestheAsokeIntersectiononthewesttotheEmporiumMalltotheeast.TheareabetweenSukhumvitSoi1andSukhumvitSoi69ispopularasaresidentialareaforwesternexpatriates.JapanesenationalstendtopreferfromAsokeintersectionupwards,especiallySoiThonglor.ServicedapartmentsinthevicinityincludeEmporiumSuites,JasmineExecutiveSuites,PresidentPark,SofitelResidenceAsoke,SomersetLakePointandUnicoGrandSukhumvit,tonameafew.Theservicedapartmentsinthisvicinityare5,273units,withahugeamountofnewsupplyinthisvicinitybeingaddedofapproximately3,659units.


Outer Central Business District Area covers - Charoenkrung Road - Narathiwat Ratchanakarin Road - Rama III Road



neW suPPly in outer central Business district (outer cBd) area


riverside Garden Marina charoenkrung road 260 2008

radisson suite narathiwat road 300 2009


• Outer Central Business District (Outer CBD) AreaThisistheareathatstretchesalongthebankoftheChaoPhrayaRiveronCharoenkrungRoad.NarathiwatRatchanakarinandRamaIIIRoadsarelocatedinthisarea.Thisisanewareaforexpatriateservicedapartmentssincethisareais locatedontheborderoftheCBD,witheasyaccesstotheCBDarea.Thus,thereisascarcityofGradeAservicedapartmentprojectsinthearea.DespitethismanyservicedapartmentsintheareasuchasOakwoodCityResidence,CentrePointSilom(Bangrak),Shangri-LaHotelApartmentshaveexcellentreputationsinthisvicinity.Theservicedapartmentsinthisprecinctboastatotalsupplyof987units.AdditionalGradeAservicedapartmentsof560unitswillbeaddedinthisvicinity.

• Other AreasMostoftheremainingGradeB&CservicedapartmentsarescatteredacrossthecityincludingPhayathai,Petchaburi,Rama9Roads,Mitmaitri,etc.TherecentadditionoftheAmantainRatchadapisekaddedabout116unitstothetotalstockinthisarea.Thetotalstockofthisareais754units.Sincethenewinternationalairporthasbeenmoved,theareaaroundSuvarnabhumiInternationalAirport is in the investmentconsiderationarea for investors.Therewillbeapproximately468unitsaddedintheareaaroundthenewairport.

neW suPPly in other areas


Four Wing residence srinakarin 128 2008

McKenna serviced apartment Phayathai 169 2008

Fragrant real estate Makkasan 350 2009

somerset ratchatewi Phayathai 225 2009

chamchuree square rama iV 120 2008

oakwood Garden tower Bangna 340 2009-2010


The remaining areas scattering across the city - Phayathai Road - Petchaburi Road - Rama 9 Road - Bangna Road


Definition of Grade A serviced apartments - Good location - Easy accessible - Pratical layout for living - Reputative property management -/- operator - Adequate facilities.

Themarket share of serviced apartmentstargetingexpatriatescanbecategorized intotwogradeswhichareGradeAandGradeB.

Grade A serviced apartment projects are in good locations and easily accessible. The layout must be practical for living, with good design and nice interiors. The property must be managed by reputable management -/- operator. There must be adequate facilities for the residents.

TotalsupplyofGradeA-servicedapartmentsisapproximately3,978units,representing37%ofthetotalnumberofservicedapartments,whilethesupplyofGradeB-servicedapartments isapproximately6,707units,representing63%.

Recently, therewere22projectsofGradeAservicedapartments,whileGradeBserviced

apartmentshad53projects inBangkokasofendof2007.



suPPly By Grade


Figure 1 : Bangkok current supply of serviced apartments by grade (units)

Grade B6,707 63%

Grade a3,97837%

30

Figure 2 : number of serviced apartment projectsby grade, as of 2007

10

0

20

40

50

60

Grade a Grade B


Grade

53

22

no. of projects

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Central Lumpini area has the highest numbers of Grade A serviced apartments, with approximately 1,651 units, followed by sukhumvit area, with 1,501 units and the CBD area, with 826 units.

ThesupplyofGradeAservicedapartmentsismainly located in three areaswhicharetheCBD,Sukhumvit,andCentralLumpiniarea. Central Lumpini has the highestnumber ofGradeA serviced apartments,withapproximately1,651units, followedbySukhumvitareaandCBDarea.Earlier,GradeAservicedapartmentswereconcentrated intheSukhumvitarea,howevermanylandlordsdidn’t renovate their properties, thus thequalityof theirpropertieshavedropped toGradeB.Anotherfactoristhatanincreasingnumberofnewservicedapartmentbuildingsweredevelopedingoodlocations,nearBTSandMRT stations, and alsomanaged byinternationalchains.However,the

majorityofthesupplyofservicedapartmentsisconcentratedintheSukhumvitareaasthisareaispopularforexpatriatesandtourists.TheSukhumvitarea isalsopopular forJapanese,especiallySukhumvitSoi39andSukhumvitSoi 55 where the Japanese communityinBangkok is. There aremany Japanesesupermarkets such as Fuji Supermarket,located inSukhumvitSoi39andSoi33. InSukhumvitSoi55,thereisJ-Avenuewhichisaneighbourhoodmall-servingJapaneseandexpatriatesresidingaroundthearea.ThegraphbelowillustratesthenumberofGradeAandGradeBservicedapartmentsineacharea.

1500

3000

Figure 3 : number of units of Grade a & B serviced apartments current supply by location, as of 2007

500

0

1000

2000

3500

2500

4000

cBd sukhumvit centrallumpini

outer cBd others

Grade BGrade a


location

no. of units

826

1,501

3,772

861

1,651

333

0

987

0

754

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There are approximately 75 serviced apartment projects as of 2007, with 39 serviced apartment projects located in Sukhumvit.


Thereareapproximately75servicedapartmentprojectsasof2007,with39servicedapartmentprojectslocatedinSukhumvit.Itisnoticeablethat theprojects of serviced apartment inCentralLumpinihavemoreunits than theprojectsof servicedapartment in theCBD

sincethetotalprojectsofservicedapartmentintheCBDarehigherthanthetotalprojectsofservicedapartmentinCentralLumpini.

ThesupplyofGradeA&Bservicedapartmentsaddedin2007wasapproximately1,596unitsin15projects.In2007,theSukhumvitareahad

thehighestadditionalnumberofsupply,with892unitsin12projectsaddedinthisarea.

15

30

Figure 4 : number of projects of Grade a & B serviced apartments current supply by location, as of 2007

5

0

10

20

25


outer cBd others

Grade BGrade a


location

no. of projects

5

9

30

8 8

3

0

6

0

6


The highest additional supply in 2007 was in the Sukhumvit area, with 892 units in 12 projects.


neW serViced aPartMents added in the year 2007

Project Name Location Opened No. of units Room Type

adelphi suite sukhumvit soi 8 nov-07 93studio - 36 sq.m.

1Br - 48 sq.m.

citadines 16 sukhumvit soi 16 Jan-07 79studio - 30 sq.m.

1Br - 36 sq.m.

civic Park ii sukhumvit soi 55/13 dec-07 241 Br - 100 sq.m.

2 Br - 110 -120 sq.m.

chatra court exclusive

residencesukhumvit soi 19 2007 60

studio - 30 sq.m.

1Br - 60 sq.m.

2Br - 60 sq.m.

Fraser suites sukhumvit sukhumvit soi 11 oct-07 163

studio - 52 sq.m.

1 Br - 60,73,80 sq.m.

2 Br - 95, 100 sq.m.

3 Br - 130, 134, 140,

160 sq.m.

Fraser urbana sathorn south sathorn road Jan-07 142

1 Br - 65, 69 - 72 sq.m.

2 Br - 104, 119 -124,

136 -142, 157 sq.m.

3 Br - 180 sq.m.

Ph 3 Br - 271, 313,

335 sq.m.

Grand centre Point

rajdamrisoi Mahadlekluang 2 oct-07 526

studio - 44, 54 sq.m.

1 Br - 69, 72 sq.m.

2 Br - 111 sq.m.

3 Br - 148, 179 sq.m.

legacy suite sukhumvit soi 29 dec-07 108studio - 39, 48 sq.m.

1 Br - 46, 65 sq.m.

Malee suites serviced

apartmentnarathiwat soi 24 sep-07 36


1 Br - 60, 61, 66,

72 sq.m.

oakwood residence

sukhumvit 24sukhumvit soi 24 dec-07 112


1 Br - 53, 55, 58 sq.m.

2 Br - 80, 84 sq.m.

Premier thonglor sukhumvit soi 55/9 2007 60

1 Br - 55.5 sq.m.

2 Br - 69.37 sq.m.

2 Br - 83.25 sq.m.

Prommitr Place sukhumvit soi 39 Feb-07 16

studio - 44 sq.m.

2 Br - 88 sq.m.

3 Br - 132 sq.m.

Ph - 168 sq.m.

the tropical residence sukhumvit soi 49 Jun-07 59studio - 40, 45, 50 sq.m.

2 Br - 80 sq.m.

the alcove sukhumvit soi 55/23 Mar-07 201 Br - 60 sq.m.

2 Br - 110 sq.m.

unico Grand sukhumvit sukhumvit soi 1 nov-07 98studio - 35, 40, 45,

65 sq.m.

Total : 15 properties 1,596 units



By 2011, an additional 6,580 serviced apartment units in 38 projects will be added in all area.



Sukhumvitareaisconsideredaresidentialareaforexpatriates residing inBangkok, similartoSouthKensington inLondon.Thus,newsupply of serviced apartmentshas focusedonthisarearecently. By2011,therewillbeadditionalnewsupplyofservicedapartmentsinSukhumvitofapproximately3,659units,representinganincreaseof69%oftotalsupplyofservicedapartments inthisarea.Thenewsupply inCentralLumpiniareawillbe578units,andinCBDareaabout451units.It is

interesting that therewillbenewsupply inotherareas fortheamountof1,332units,ofwhich36%oftotalnewsupplywillbelocatednearbySuvarnabhumiInternationalAirportwhichwillbemanagedbyan internationalchain.Withinfouryears,anadditional6,580servicedapartmentunitsin38projectswillbeaddedinallareas.

The increasing number of new supply ofservicedapartmentsaswell as theexistingsupply will increase competition in theSukhumvit area.Notonly is there ahugeamountofnewsupplyofservicedapartments,butalsoalargenumberofnewhotelswillbeaddedinthisareaby2011.Thecompetitionwillnotexistonlybetweenservicedapartmentsthemselves,butbetweenservicedapartmentsandhotelsasmanyservicedapartmentshaveappliedforhotellicencesinordertocatertothetouristsandbusinesstravelerswhotravel

forshortstayperiods.Though,manyservicedapartmentshavenotyetappliedforthehotellicencessincethepropertiesareunabletopassthestandardqualitificationtoreceivethehotellicences, theseservicedapartmentsstillofferdailyratesinordertogetthebetteroccupancyrate aswell ashigher yields.The extremecompetitionwill start inSukhumvitarea intheverynearfuture.Thereasonwhyservicedapartmentsfocusmoreonshortstaycustomersisasfollows:

neW suPPly

•Thenumberofsupplyexceededthenumberofnewexpatriatesor •Thehigheryieldfromgettingadailyrate.

With a huge amount of new supply of serviced apartments and hotels will increase competition in this area.

1500

3000

Figure 5 : Future supply of serviced apartments in Bangkokby location between 2008 & 2011

500

0

1000

2000

3500

2500

4000


outer cBd others


location

no. of units

451578

560

1,332

3,659


The highest increase supply of serviced apartments will be in 2008 with 25.44% yeay-on-year in 2007.



The increasing new supply of servicedapartmentswasapproximately3-7%between2004&2006.The sharp increase started

in 2007& 2008with 17.56%&25.44%respectively as illustrated in the followingtable:

current & neW suPPly oF serViced aPartMent units BetWeen 2004 & 2011

Year Current supply New supply % change y-o-y

2004 7,708 247 3.2%

2005 7,955 537 6.8%

2006 8,492 597 7%

2007 9,089 1,596 17.56%

2008 10,685 2,718 25.44%

2009 13,403 2,106 15.71%

2010 15,509 1,006 6.49%

2011 16,515 750 4.54%


6,000

12,000

Figure 6 : number of current and new supply of serviced apartments between 2004 & 2008F

2,000

0

4,000

8,000

14,000

10,000

2004 2005 2006 2007 2008F

new supply added in the yearcurrent supply


year

no. of units

7,708

7,9558,492

9,089

10,685

2,718

1,596

537597

247

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By 2011, there will be approximately 6,580 units in 38 projects added the supply of serviced apartment.

suMMary oF neW suPPly oF serViced aPartMents in BanGKoK By 2011

No. Project Name Location No. of units Est. completion

1 admiral suites ii sukhumvit soi 31 122 2008

2 Baan rajchaprasong soi Mahadlekluang 3 70 2008

3 Benchasiri Place by Marriott sukhumvit 92 2010

4 Bliss residence soi ruamrudee 78 2008

5 chamchuree square rama iV 120 2008

6 citadines 8 sukhumvit soi 8 130 2008



9 column residence sukhumvit soi 16 238 2008

10 compass sukhumvit soi 24 340 2008

11 eight thonglor sukhumvit soi 55 148 2009

12 For your residence silom soi 17 24 2008

13 Four Wing residence srinakarin 128 2008

14 Fragrant real estate Makkasan 350 2009

15 Fraser suites sukhumvit sukhumvit soi 6 250 2010

16 istitmar residence sathorn 77 2010

17 Jasmine resort & Park hotel sukhumvit soi 69 300 2010

18 l&h sukhumvit 19 sukhumvit soi 19 600 2011

19 McKenna serviced apartment Phayathai 169 2008

20 Metro sathorn tower soi saint louise na 2011

21 na sukhumvit soi 19 42 2008

22 na Ploenchit road na 2011

23 noble ambience ruamrudee ruamrudee soi ii 108 2008

24 oakwood residence Garden tower Bangna 340 2009-2010

25 oakwood residence thonglor sukhumvit soi 55 na 2009

26 Planned Project Ploenchit road 150 2011

27 radisson suite narathiwat road 300 2009

28 riverside Garden Marina charoenkrung road 260 2008

29 sathorn Garden sathorn road 155 2009

30 sathorn Vista - Marriott soi suanplu 195 2008

31 siam Kempinski rama i road 150 2009

32 somerset amar Garden sukhumvit soi 3 122 2008

33 somerset Grand sukhumvit sukhumvit soi 23 265 2010

34 somerset ratchathewi Phayathai 225 2009

35 somerset sukhumvit thonglor sukhumvit soi 55 268 2009

36 st'regis rajdamri 22 2010

37 sukhumvit Park by Marriott sukhumvit soi 24 300 2008

38 the royal suite serviced apartment sukhumvit soi 13 170 2009

Total : 38 properties 6,580 units



The demand of serviced apartments market can be devided into two groups which are I. New expatriates II. International tourists -/- business travelers.



•NewexpatriatesmovingtoBangkokThe amount of demand from expatriatesfor servicedapartmentsmarketcomes fromthe increasingnumberof expatriates eachyear since the servicedapartments are thetemporary residences for expatriates oncetheyhavemovedtoBangkok.Theywillstayforalengthofone-threemonthsuntiltheycanselecttheirpermanentresidencessuchasApartmentsandSinglehouses.Though,thereare someexpatriates choosing to stayonayearlycontractatservicedapartments,after

wehaveundergoneour study, the averagelengthofstayofexpatriatesstayinginservicedapartment is threemonthsor90days.Thedata from theOffice of ForeignWorkersAdministration(WorkPermit),DepartmentofEmploymentofTheMinistryofLabourhasshownthetotalnumberofexpatriatesinBangkokbetween2004and2007.Thenewworkpermits issuedwasestimated fromtheproxyofgrowthindemandbetween2004&2007asshowninthebelowchart:

Fromtheassumptionthattheaveragelengthofexpatriatesstayinginservicedapartmentsis3monthsandanother2%ofthetotalnumberof existing expatriates staying in a yearlycontractatservicedapartment, thereforewe

haveestimated thenumberof roomnightsexpatriates residing in servicedapartmentsbetween2004&2007asfollows:

deMandCurrently,thedemandfortheservicedapartmentmarketcanbedividedintotwogroupswhichareshortstaytourists&businesstravelersandnewcomingexpatriatearrivalsinBangkokeachyear.

6,000

Figure 7 : new work permits issued, Bangkok 2004-2007

2,000

0

4,000

8,000

10,000

2004 2005 2006 2007

Source : Office of Foreign Workers Administration (Work Permit) Department of Employment, The Ministry of Labour & Colliers International Thailand Research

year

no. of new work permits

7,592

8,670

6,9287,574

600,000

Figure 8 : annual room nights for long stay inBangkok serviced apartments between 2004 & 2007

200,000

0

400,000

800,000

1,000,000

1,200,000

2004 2005 2006 2007

Source : Executive Serviced Apartment Alliance (EXSAM)

& Colliers International Thailand Research

year

no. of room nights

683,280780,300

372,942436,233

623,520 681,660

486,808

317,521

1 year length of stay3 months length of stay


Another demand of serviced apartments comes from short stay visitors which are tourists and business travelers for leisure and business purposes.



Ifwecomparetheroomnightsgrowthofnewsupplyof servicedapartmentwiththeroomnights growthof demand fromexpatriatesrelocating toBangkok. It is shownthat thegrowth rate of new supply increased in ahigher rate thanthegrowthrateofdemandfromnew expatriates.The growth rate ofroomnightsofnewsupplyincreasedby167%year-on-yearin2007whilethegrowthrateofroomnightsdemandincreasedby9.3%year-on-year.However,thenumberofexpatriatesareexclusiveofdiplomaticorUnitedNationexpatriatestaff.Therefore,thisfiguresarenotentirelyrepresentativeofexpatriatesbasedinBangkok.Webelievethatthereareanumber

of expatriates based inThailandwithoutworkingpermits.However, themajorityofthese donothaveaccommodationbudgetslarge enough to account for a significantamountofdemandintheservicedapartmentsector.Thereare,ofcourse,alsoanumberofexpatriatesrelocatingtoBangkokwhodonotstayinservicedapartments.Nevertheless,newworkpermits issuedcanserveasaproxy forservicedapartmentsupplyonarelativebasis.Thebelowgraph is the comparisonof thegrowthrateofsupplyandthegrowthrateofdemand.

Thecorebusinessofservicedapartmentistoserve thedemand residing inBangkok inaperiodofmorethanamonth.However, theslightly increase indemandwasunable to

catchupthehighincreaseinsupply,asaresult,the servicedapartmentshavemovedmoreintotheshort stay fromtourists -/-businesstravelers.

• Number of tourist arrivals at BangkokaccommodationAnotherdemandofservicedapartmentscomesfrom short stay visitorswhich are touristsandbusinesstravelersforleisureandbusinesspurposes.Official figures fromtheTourismAuthorityofThailand(TAT)has revealedthatthenumberoftourists-/-business

travelers arrivingBangkokaccommodationbetween2004&2007withtheaveragelengthofstaybetween2004&2007,wecangettheanuallynumberofroomnightsasshowninthefollowingchart:

600,000

Figure 9 : estimated growth in room nightsdemand & supply, 2004 & 2007

200,000

0

400,000

800,000

2004 2005 2006 2007

Growth in room nights supply

Growth in room nights demand

Source : Executive Serviced Apartment Alliance (EXSAM)

& Colliers International Thailand Research

year

no. of room nights

683,280780,300

623,520

217,905

681,660

582,540

90,155

196,005

yearno. of tourist arrivals at Bangkok

accommodationavg. length of stay total room nights

2004 9,907,832 2.01 19,914,742

2005 10,519,754 1.97 20,723,915

2006 10,673,145 1.83 19,531,855

2007 9,678,773 1.87 18,099,305

Source : Tourism Authority of Thailand (TAT), Thai Hotels Association (THA) & Colliers International Thailand Research



Though, the number of tourists at Bangkok accommodation increased annually between 2004 and 2006, with the decrease in average length of stay in 2006 caused the decrease of room nights at Bangkok accommodation in 2006.

Though,thenumberoftouristsatBangkokaccommodationincreasedannuallybetween2004and2006,thedecreaseinaveragelengthofstayin2006causedthedecreaseofroomnightsatBangkokaccommodationin2006.Wehaveassumedthateachtouristoccupiedasingleroom.Withthehighincreaseinsupplyofbothhotelsandservicedapartments,whilethedecreaseinannualroomnightsofdemandfromtourists-/-businesstravelers,theextremecompetitionwillexistinthenearfuture

oVerall aVeraGe occuPancy rate oF serViced aPartMentsBetWeen 2004 & 2007

yearaVG. occuPancy

ratetotal suPPly

unitstaKe uP units /

daytaKe uP units /

year

2004 86.33% 7,955 6,868 2,506,820

2005 89.81% 8,492 7,627 2,783,855

2006 85.06% 9,089 7,731 2,821,815

2007 83.33% 10,685 8,904 3,249,960

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

ProPortion oF deMand oF short terM and lonG terMWiththeaverageoccupancyrateofservicedapartmentmarketsbetween2004&2007,wecanestimatethetotalroomnightsinayearbetween2004&2007asshownonthefollowingtable:

Withtheaverageoccupancyrateofservicedapartmentbetween2004&2007,itisnoticeablethattheproportionofshorttermwasgreaterthantheproportionoflongtermandthetrendofshorttermincreasedannuallybetween2005&2007.Thefuturetrendofservicedapartmentsistoserveshortstaywhichisthecoremarketofhotel.Belowchartshowntheaverageproportionofcustomersstayinginservicedapartmentsforthelengthof 1.Between1-3monthsperiod. 2.Minimum1yearperiod. 3.Daily/weeklyperiod.

It is noticeable that proportion of short term was greater than the proportion of long term and the trend of short term increased annually between 2005 & 2007.

30%

Figure10 : Proportion of the length of stay at serviced apartmentbetween 2004 & 2007

10%

0%

20%

40%

50%

60%

70%

80%

90%

100%

2004 2005 2006 2007

Source : Executive Serviced Apartment Alliance (EXSAM) &

Colliers International Thailand Research

year

Percentage

27% 28%

13%15%

22% 21%

15%13%

60% 59% 62% 64%

lt (1-3 months) lt (1 year) st (daily)


The occupancy rate of Grade A serviced apartment decreased annually between 2005 & 2007, However, the average occupancy rate of Grade A in the CBD increased in 2007 which was different from Grade A in other areas due to little supply of serviced apartments in this area.



occuPancy rate:

Year

Grade A Grade B

overall cBd sukhumvit central

lumpinioverall cBd sukhumvit

central

lumpini

outer

cBd

2004 82.70% 69.57% 87.63% 80.44% 91.86% 82.80% 94.98% 85.16% 80.98%

2005 90.24% 85.75% 93.07% 89.20% 91.38% 77.42% 93.57% 90.02% 84.65%

2006 85.47% 78.53% 86.94% 86.35% 85.47% 77.83% 82.90% 81.69% 82.88%

2007 84.01% 81.45% 84.73% 84.31% 86.01% 79.18% 87.23% 88.94% 74.84%

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

TheoccupancyrateofGradeAservicedapartmentdecreasedannuallybetween2005&2007.Thereareseveralfactorsthatcausedthiswhichareasfollows:

• TherevaluationofThaibahtwhichmadeGradeAservicedapartmentrentgooverthe accommodationbudgetaftervisitorsconvertedtheircurrencyintoThaibaht,so thattheamounttheygotwasless.ThedemandoflongstayshiftedtoGradeBserviced apartment.

• ThetrendsoftheGradeAservicedapartmentfocusedonshortstay,thustheoccupancy ratevariedfromthenumberoftouristarrivalsatBangkokaccommodation,ratherthan thenumberofnewexpatriatescomingtoBangkok,sincetherewasanincreaseof numberofexpatriatesin2007butthedemandspouredtoGradeBservicedapartment.

• ThepoliticaluncertaintyinThailandin2006&2007hassloweddowntheforeign businessinterestsaswellastheinternationaltouristarrivalsatBangkokaccommodation.

However,theaverageoccupancyrateofGradeAintheCBDincreasedin2007whichwasdifferentfromGradeAinotherareasduetolittlesupplyofservicedapartmentsinthisarea.


The Knowledge Report | March | 2008 | Bangkok Serviced Apartment

The slight difference between Grade A & Grade B rent was found in 2006 which was just 2.7% difference.

Average achieved rent of Grade A - Central Lumpini = THB 1,222 / sq.m. - CBD = THB 1,210 / sq.m. - Sukhumvit = THB 1,093 / sq.m.

Fortheoverallmarket, thebigdifferenceoftheaverageachieved rentofGradeA&Bservicedapartmentwas14% in2004.TheslightdifferencebetweenGradeA&GradeBrentwasfoundin2006whichwasjust2.7%difference.In2007,theaveragerentofGradeBdecreasedby4%sincetherewasanadditional

of supplyof servicedapartmentaddedwithapproximately1,596units,with943unitsofGradeAand653unitsofGradeB.Duringtheopeningofnewproperties,thenewsupplyofferedspecialpriceswhichaffectedGradeBservicedapartments.

Thehighestachievedrentin2007wasfoundinCentralLumpini,withTHB1,222/sq.m.followedby theCBDandSukhumvitarea,withTHB1,210/sq.m.&THB1,093/sq.m.

respectively.Therewas a huge supply ofservicedapartments in theSukhumvitareawhichincreasedthecompetition.

achieVed rent

1,157

1,058



600

Figure 11 : average achieved rent of Grade a & B serviced apartmentsbetween 2004 and 2007

200

0

400

800

1,000

1,200

1,400

year

thB / sq.M.

2004 2005 2006 2007

975

853

1,045

962

1,132

1,102

Grade a Grade B



600

Figure 12 : average achieved rent of Grade a serviced apartments incBd, sukhumvit and central lumpini area between 2004 & 2007

200

0

400

800

1,000

1,200

1,400

year

thB / sq.M.

2004 2005 2006 2007

cBd sukhumvit central lumpini

• THE AVERAGE ACHIEVED RENT OF GRADE A SERVICED APARTMENTS



The highest achieved rent of serviced apartments in 2007 was found in Central Lumpini, with THB 1,100 / sq.m., followed by Sukhumvit and the CBD, with THB 1,057 / sq.m. & THB 738 / sq.m. respectively.

ThehighestachievedrentofGradeBservicedapartmentswasfoundinCentralLumpini,withTHB1,100/sq.m.,followedbySukhumvitandtheCBD,withTHB1,057 / sq.m.&THB738/sq.m.respectivelysincetherewereonlyafewGradeBservicedapartmentinCentralLumpini.ThemajorityofGradeB serviced

apartmentunits inSukhumvithavecompactsizewhich gives ahigher rateper sq.-m.-,therefore the achieved rateofGradeB inSukhumvitwas in thesecondrankbetween2004&2007

• THE AVERAGE ACHIEVED RENT OF GRADE B SERVICED APARTMENTS



600

Figure 13 : average achieved rent of Grade B serviced apartments incBd, sukhumvit, central lumpini area between 2004 & 2007

200

0

400

800

1,000

1,200

1,400

year

thB / sq.M.

2004 2005 2006 2007

cBd sukhumvit central lumpini



267 oFFices in 57 countries on 6 continents

usa 95 canada 17latin aMerica 17 asia PaciFic 53 eMea 85

us$1.6 Billion in annual reVenue 673 Million square Feet under ManaGeMent 10,171 ProFessionals

contact inForMation

thailand: BangkokPatima Jeerapaet Managing DirectorColliers International17/F Ploenchit CenterKlongtoeyBangkok 10110Tel: 662 656 7000Fax: 662 656 7111

researcher: Risinee Sarikaputra Manager | Research

this report and other research materials may be found on our website at www.colliers.com/thailand. 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.

www.colliers.com/thailand


NotesTheservicedapartmentratingusedinourresearchissolelybasedonpropertyratingandachievedratesobtainedfrommarketresearch.TheratingsystemusedinourreportisnotbyColliersInternational.

www.co l l i e r s . co. th

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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Bangkok Serviced Apartment Market 2008 by Colliers International Thailand

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