Bangkok Serviced Apartment Market Report Q3 2012

Q2 2012 / Q3 2012

new Supply

RenTAlS

OccupAncy

ThAilAnd

www.colliers.co.th

Bangkok Serviced Apartment MarketexecuTive SummARyServiced apartments are still popular with foreign companies in Bangkok, although the market is changing due to global economic conditions.

Fewer new serviced apartments came on to the market in Q3 2012 than in the previous quarter. Around 420 units have opened so far this year, and another 156 are due to open by the end of 2012.

Occupancy rates are stable at around 78%, although that is lower than at the start of the year. Serviced apartment projects are trying to keep their clients by renewing contracts early at the current rate, and offering special corporate discounts. However, the rental rates for top quality serviced apartments rose slightly in Q3 compared to the previous quarter.

Foreign companies have had their budgets for staff accommodation cut due to the global financial situation. However, political and economic stability in Thailand is prompting many foreign companies to set up offices here, particularly those looking for a base from which to conduct business in ASEAN. Foreign direct investment and the number of expatriates in Bangkok continue to rise, and that will continue to drive demand for serviced apartments.

Approximately 420 units were completed in the first three quarters of 2012, and nearly 156 units are scheduled to complete by the end of the year. The total supply of serviced apartment units at the end of 2012 is expected to be

around 18,259 units. GM Serviced Apartment, on Sukhumvit Soi 20, was completed in September 2012, with a total of 89 units ready to rent.

Q3 2012 | SERVICED APARTMENT

mARkeT indicATORS

hiSTORicAl Supply, Q3 2012

Source: Colliers International Thailand ResearchNote: F = Forecast

Bangkok SeRvICed apaRTmenT maRkeT RepoRT

More than 50% of the serviced apartment supply in Bangkok is located along Sukhumvit Road in the early and late Sukhumvit areas. The total

supply in the early Sukhumvit area has been more than in other locations for the past 20 years.

Nearly 80 units in early Sukhumvit area are scheduled for completion in Q4 2012, and nearly 70% of the new units scheduled to complete in

2014 are located on Sukhumvit Road.

Source : Colliers International Thailand Research

Source: Colliers International Thailand Research

Supply by lOcATiOn, Q3 2012

cumulATive fuTuRe Supply fROm Q4 2012 TO 2014, by lOcATiOn

COLLIERS INTERNATIONAL | P. 2

BANgkok SERVICED APARTMENT REPoRT | Q3 2012

hiSTORicAl OccupAncy RATe by gRAde, 2010 TO Q3 2012 by QuARTeR



The average occupancy rates in Q3 2012 for grade a and B serviced apartments increased slightly from the previous quarter. However, the

average occupancy rates in the second and third quarters were still lower than in the first quarter of this year.


The average occupancy rate in the third quarter in all locations was up slightly from the previous quarter, except in late Sukhumvit and other areas which decreased slightly. Serviced apartment projects are trying

to retain their current clients for long periods by renewing contracts before the expiration dates at the current rate.


OccupAncy RATeS by lOcATiOn, 2011 TO Q3 2012 by QuARTeR


demAnd dRiveRS

The number of expatriates in Bangkok continues to rise. The eU debt crisis is still a major concern for investors and affects the entire global economy. However, asia has shown it has potential for investment, especially in the ASEAN region. Bangkok is highly attractive for investors who wish to take a first investment step into aSean, especially the sub-

region of Myanmar, Laos and Cambodia. As a result, several international companies are looking for regional office space in Bangkok. There is also good potential for serviced apartments. The total number of expatriates in Bangkok in Q3 2012 was approximately 61,190.

Source: office of Foreign Workers administration (Work permit), department of employment of The ministry of Labour and Colliers International Thailand Research

Note: Above information does not include Lao, Burmese and Cambodian citizens.

numbeR Of expATRiATeS in bAngkOk, Q3 2012


RenTAl RATe fOR One-bedROOm uniTS by lOcATiOn, 2011 TO Q3 2012 by QuARTeR

AveRAge RenTAl RATe by gRAde, 2011 TO 3Q 2012 by QuARTeR

Source : Colliers International Thailand Research


Rental rates in Q3 2012 were similar to the previous quarter. only the Central CBd and early Sukhumvit areas saw rates fall by around 5%

compared to Q2, although the Central CBd still commands the highest rental rates.

The average rental rate of grade a and B serviced apartments increased slightly from the previous quarter, and the rental rates for Grade A

serviced apartments are still higher than for Grade B by more than 45%.


RenTAl RATe




The increase in Foreign direct Investment (FdI) and the political stability during the past two to three years are main drivers of demand for serviced apartments. Many foreign investors may be new to investing in Thailand and are in the development stage of their businesses, but it is a good sign for the future of the serviced apartment business in Bangkok.

The global economic slowdown has directly affected company budgets for staff accommodation and is driving people towards lower-cost residences, such as condominiums for lease and apartments for foreigners in the City Area.

Serviced apartments in Bangkok are trying to retain existing clients by renewing contracts at the same rate or slightly less. In addition, they directly contact foreign and Thai firms employing expatriates to offer special rates.

The average rental rate for most serviced apartments in Bangkok did not change much from the previous year due to intense competition, as there are lots of apartments for foreigners as well as condominiums for lease in the City area.

fORecAST



Appendix

no recognised standard for rating serviced apartments exists in Thailand and therefore Colliers International Thailand has classified them based on various criteria, of which a summary is given below.

gRAde ALocated in prime locations and luxury residential areas. Furnished to an exceptionally high standard, and offering recreational facilities and amenities similar to a luxury or upscale hotel. Managed by a top international branded operators or a comparable local brand.

gRAde bUsually located in the city centre but in less sought-after locations.

Furnished to a high standard and usually offering recreational facilities and a variety of services similar to an upscale or mid-range hotel. managed by a lower-end international or domestic operator.

gRAde cLocated in secondary areas. Furnished to a comfortable, but not luxurious, standard. Fewer provisions of facilities and amenities, similar to that of a mid-range or economy hotel.

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

• Central CBD This is the area that encompasses Silom, Sathorn, Surawong, Si phraya and Rama 4 Road, as well as other sois in between, such as Soi Saladaeng, Soi Convent, Soi pipat.

• Central lumpini areaCentral Lumpini covers the areas along Rama I, Rajadamri, Wireless, ploenchit, Langsuan, phayathai and phetchaburi Roads, as well as other sois in between, such as Soi Ruamrudee.

• early Sukhumvit areaThis is the section of Sukhumvit Road between Soi 1 and Soi 35 to the north, and Soi 2 and Soi 24 to the south.

• late Sukhumvit areaThis is the section of Sukhumvit Road between Soi 37 and Soi 77 to the north, and Soi 26 and Soi 50 to the south.

• Southern Fringe areaThis 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.

• other areaSMost of the remaining Grade B and C serviced apartments are scattered across the city, including phayathai, phetchaburi, Ratchadapisek, mitmaitri, Srinakarin, Bangna and Ramkhamhaeng Road.

gRAding



www.colliers.co.th


cOllieRS inTeRnATiOnAl ThAilAnd mAnAgemenT TeAm advISoRY SeRvICeS | HoSpITaLITY Jean marc garret | director ReSIdenTIaL SaLeS & LeaSIngNapaswan Chotephard | Manager pRoJeCT SaLeS & maRkeTIngmonchai orawongpaisan | associate director ReTaIL SeRvICeSasharawan Wachananont | associate director ReSeaRCHTony picon | associate director Surachet Kongcheep | Senior Manager

oFFICe SeRvICeSnattawan Radomyos | Senior manager

IndUSTRIaL SeRvICeSnarumon Rodsiravoraphat | associate director advISoRY SeRvICeSnapatr Tienchutima | associate director

ReaL eSTaTe managemenT SeRvICeSprasert Saiphrawan | Senior manager

InveSTmenT SeRvICeSnukarn Suwatikul | associate director Wasan Rattanakijjanukul | Senior manager

vaLUaTIon & advISoRY SeRvICeSphachsanun phormthananunta | director Wanida Suksuwan | associate director paTTaYa oFFICeMark Bowling | Senior Sales ManagerSupannee Starojitski | Senior Business development manager / office manager

HUa HIn oFFICeSunchai Kooakachai | Senior Manager

ReSeARcheR:

ThailandSurachet KongcheepSenior manager | ResearchemAil [email protected]

522 offices in 62 countries on 6 continents

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 reli-ability. 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 aris-ing out of this document and excludes all liability for loss and damages arising there from. Colliers Inter-national is a worldwide affiliation of independently owned and operated companies.

• A leader in real estate consultancy worldwide• 2nd most recognized commercial real estate brand globally • 2nd largest property manager• 1.25 billion square feet under management• Over 12,300 professionals

CoLLIERS INTERNATIoNAL ThAILAND:

Bangkok Office 17/F ploenchit Center, 2 Sukhumvit Road, klongtoey,Bangkok 10110 ThailandTel +662 656 7000fAx +662 656 7111 emAil [email protected]

Hua Hin Office 27/7, petchakasem Road, Hua Hin, prachuap khiri khan 77110 ThailandTel +6632 530 177fAx +6632 530 677 emAil [email protected]

Thailand’s Leading Property ConsultancyWinner : Best property Consultancy, Best Residential agent (eastern Seaboard),Best Residential agent (Hua Hin)Highly Commended : Best Residential agent (Bangkok), Best Commercial agent,Best property management Company

Pattaya Office 519/4-5, pattaya Second Road (opposite Central Festival pattaya Beach), Nongprue, Banglamung, Chonburi 20150Tel +6638 427 771fAx +6638 427 772 emAil [email protected]

Accelerating success.

Bangkok Serviced Apartment Market Report Q3 2012

Documents

Transcript of Bangkok Serviced Apartment Market Report Q3 2012