Just 460 serviced apartment units are scheduled to be completed in Bangkok between now and the end of 2016, as the sector faces intense competition from condominiums and luxury apartments.
New research from Colliers International Thailand noted that land prices in the inner city area of Bangkok are not suitable for the development of serviced apartment projects.
The real estate firm noted that average occupancy and rental rates in all locations have remained similar to the previous quarter.
Serviced apartments are still the most popular with foreigners, especially Japanese. It noted how the number of expatriates in Bangkok has increased every quarter with the area along Sukhumvit being the main location for serviced apartments in Bangkok – a location that accounts for more than half of Bangkok serviced apartments.
Colliers reported that unlike other cities in Southeast Asia, there are a very limited number of international serviced apartment brands in Bangkok, and no new international serviced apartment brands have entered Thailand during the past few years.
It did add, however, that some international brands are looking for an opportunity to invest or manage serviced apartments in Bangkok.
Serviced apartments are viewed as a less interesting business after many condominium units were completed in the area along the mass-transit system, and some condominium unit owners are renting out their units at rents lower than those for serviced apartments.
It said the many foreigners moved from serviced apartments to condominiums in the same location, due to lower rents and similar facilities.
In its forecast for the sector, Colliers said that land prices and a lot of competing condominium units in Bangkok are the major factors affecting serviced apartment development, due to lower profits and extreme competition.
It said that average rents and occupancy rates during 2015 will continue to increase however the increase may be only a few percentage points, as most clients for serviced apartment projects are on long contracts.
Some new serviced apartment projects expected to open in future years but they will be located outside the existing central business district and will likely be far from a BTS station due to the lower land prices.
