Q3 2011 | SERVICED APARTMENT
thailand
Bangkok Serviced Apartment Market
Bangkok Serviced Apartment Market Executive Summary Limited new supply added in Q3 but a surge expected for next quarter. Small drop in overall rental rates but occupancy up. Difficulties expected for sector over next quarter.
market indicators Q2 2011 / Q3 2011 new Supply RENTALS
Historical SUPPLY
Occupancy
Historical Supply by year
Source: Colliers International Thailand Research
Approximately 200 units have been completed and are in operation already out of the nearly 1,000 units that are scheduled to be completed in 2011. Sukhumvit road still is the most popular location for serviced apartments, due to more than 70% of total units that are scheduled to be completed in Q4 2011 will be located along this road. Total supply of serviced apartment units as of the end of 2011 is expected to be approximately 17,860.
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Bangkok serviced apartment Market REPORT | Q3 2011 Supply by location, Q3 2011
Source: Colliers International Thailand Research
The distribution of serviced apartments differs according to location, based on the particular profile of each area. Central Lumpini contains many large embassies and is therefore seen as being the most prestigious location to live in and as such contains more grade A units. Late Sukhumvit also contains more grade A units, due to the existence of a number of luxury branded apartments in Thong Lor Road, catering to the
large Japanese community there. Early Sukhumvit is the king of grade B apartments, as it is a more unpretentious, relaxed location, which also explains the location of more Upper Scale rather than Luxury hotels. The ‘Other’ areas contain more grade C products, due to their distance from the centre.
Cumulative future supply in q4 2011- 2012, by location
Source: Colliers International Thailand Research
More than 800 units are scheduled to be completed in Q4 2011. Sukhumvit road will host the vast majority of new supply this year. More than 75% of the new units that are scheduled to be completed in 2011 are located on Sukhumvit road and nearly 80 units are also scheduled to be completed in 2012 in Sukhumvit. The main driver is not only the
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popularity of this road as a residential destination but also that the relative price of land is lower than the more central locations and it is also convenient for the BTS line. The addition of new retail centres such as Terminal 21 will add to the appeal of this road to tourists and expatriates alike.
Bangkok serviced apartment Market REPORT | Q3 2011 Historical occupancy rate by grade, 2009 – 1011 by quarter Occupancy rate for Bangkok serviced apartments on both extended stay and corporate housing sub-sets
Source: Colliers International Thailand Research
An average occupancy rates in Q32011 increased from the previous quarter and compares favourably with the same quarter last year.
However last year was a troubled one for the sector due to the political upheavals.
Occupancy rates by location, 2010 – 2011 by quarter
Source: Colliers International Thailand Research
The occupancy rate in every location increased from the previous quarter, especially in Central CBD and Central Lumpini which increased
approximately 9 – 11% which was due to a reduction in rental rates.
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Bangkok serviced apartment Market REPORT | Q3 2011 Demand drivers Number of expatriates in Bangkok, Q3 2011
Source: Office of Foreign Workers Administration (Work Permit), Department of Employment of The Ministry of Labor and Colliers International Thailand Research Remark: Above information does not include Lao, Burmese and Cambodian citizens
The number of expatriates in Bangkok still continues its upward trend following the nadir in Q2 2010. However the number is still similar to 2009 and below 2008 prior to the Global Financial Crisis (GFC). The
total number of expatriates in Bangkok in Q3 2011 shows a modest rise q/q.
Rental rate Rental rate for one Bedroom units by location, 2010–2011 by quarter
Source: Colliers International Thailand Research
Rental rates in Q3 2011 are still similar to the previous quarter, only Central CBD and Early Sukhumvit area decreased with a rate of around
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5% although Central CBD still commands the highest rental rates.
Bangkok serviced apartment Market REPORT | Q3 2011
Average rental rate 2010–2011 by grade and quarter
Source: Colliers International Thailand Research
Average rental rate of Grade A serviced apartment dropped around 2.24%, due to a decrease of the rental rate of serviced apartments in
Central CBD and Early Sukhumvit area. Rental rates of grade A serviced apartment is still higher than Grade B by more than 35%.
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Bangkok serviced apartment Market REPORT | Q3 2011 Forecast The growth in occupancy was partially fuelled by a small fall in rental rates overall and the addition of significant new supply in Q4 2011 are likely to lead to a weakening of the sector after bouncing back strongly after Q2 2011. Although the political situation has stabilized in the short
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and medium term, growing concerns regarding the global financial situation as well as the short term impact of flooding throughout Thailand could lead to a difficult period for the serviced apartment sector.
Bangkok serviced apartment Market REPORT | Q3 2011
APPENDIX
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Bangkok serviced apartment Market REPORT | Q3 2011 Grading No recognized 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 A
Located in prime locations and luxury residential areas. Furnished to an exceptionally high standard. Offering recreational facilities and amenities similar to a Luxury or Upper Scale hotel. Managed by a top international branded operator or comparable local brand.
Zoning The 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 Area The Central 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 Langsuan and Soi Ruamrudee. • Early Sukhumvit Area This is the section of Sukhumvit Road between Soi 1 and Soi 35 to the north and Soi 2 and Soi 24 to the south.
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Grade B
Usually located in the centre but also in less prime locations. Furnished to a high standard but usually offers recreational facilities and a variety of services similar to an Upper or Mid Scale hotel. Managed by a lowerend international or domestic operator.
Grade C
Located in secondary location and furnished to a comfortable, but not luxurious, standard. Fewer provisions of facilities and amenities, similar to that of a Mid-scale or Economy hotel.
• Late Sukhumvit Area This is the section of Sukhumvit Road between Soi 37 and Soi 77 to the north and Soi 24 and Soi 50 to the south. • 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. • Other Areas Most of the remaining Grade B & C serviced apartments are scattered across the city, including Phayathai, Phetchaburi, Ratchadapisek, Mitmaitri, Srinakarin Bangna and Ramkhamhaeng Road.
Bangkok serviced apartment Market REPORT | Q3 2011 COLLIERS INTERNATIONAL THAILAND MANAGEMENT TEAM
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