Although the number of expatriates in Bangkok increased during the final three months of last year this was not reflected in the serviced apartment sector in the city.
In its latest research report on the serviced apartment sector, Colliers International (Thailand) reported that approximately 200 serviced apartment units are scheduled to be completed this year. It said that the number of new serviced apartment projects each year has continued to remain low during the past few years because many expats are moving to high-end apartments or condominiums due to the lower rents available.
The average occupancy and rental rates of serviced apartments in all locations in Bangkok have remained similar to those in the previous quarter, Colliers noted.
Serviced apartment projects have tried to retain their current customers by maintaining rental rates, or increasing prices by only a few percent, Colliers said.
It also reported that the number of expatriates in Bangkok has increased every quarter, especially Japanese.
Right now, because of the competition, The Thailand Hotel Association (THA) is trying to push all serviced apartments to apply for hotel licenses. That intense competition with condominiums and luxury or high-end apartments is the other main factor affecting the serviced apartment business in Bangkok.
Colliers said that land prices in the inner city area of Bangkok are not suitable for the development of serviced apartment projects. Other areas outside Bangkok’s central business districts have become more popular for serviced apartment development, and the creation of many new mass-transit extension lines is the main factor driving new serviced apartment development in other areas. The real estate firm said that lower rental rates is another factor for serviced apartments in areas outside the CBD.
Serviced apartments in the Central Lumpini area still showed the highest rents because of the many luxury projects with international and Thai brands in the area. The rental rate in the central CBD area is also higher than THB 1,000 per sqm per month as there are many high-end and luxury projects in the area.
Thailand is becoming the investment centre of the ASEAN, especially for foreign investors looking to invest in Cambodia, Myanmar and Laos. Many government agencies forecast that a lot of foreign investors will enter Thailand after all countries in ASEAN become one community however, not all foreigners who come to work in Bangkok or Thailand will stay in serviced apartments because condominiums, high-end or luxury apartments and houses are other choices for them.
In summary, Colliers said that it expects average rents and occupancy rates during 2016 will continue to increase, but may will increase by only a few percentage points because most clients of serviced apartment projects are on long-term contracts.
The Thailand Hotel Association (THA) will continue to try to force the Ministry of Interior to control serviced apartments and apartments that apply for hotel licenses.
Some developers that own leasehold plots of land in the city area are planning to develop mixed-use projects that include serviced apartments, but these will probably only begin later in 2016.
