Bangkok Serviced Apartment Market Report Q1/2013

Q1 2013 || SERVICED SERVICEDAPARTMENT APARTMENT

THAILAND

BANGKOK SERVICED APARTMENT MARKET

Bangkok Serviced Apartment Market EXECUTIVE SUMMARY Bangkok’s serviced apartment market has grown slowly in the last few years, due both to soaring land prices and the changing preferences of foreign tourists and expats, who make up the bulk of the market.

MARKET INDICATORS Q4 2012/ Q1 2013 NEW SUPPLY RENTALS OCCUPANCY

However, rents and occupancy are both up, and some developers are building serviced apartments, with a focus both on areas outside the central city, and on smaller sois further away from mass transit links.

As of Q1 2013, there were more than 18,150 serviced apartment units in Bangkok, with approximately 79 due to be built by the end of the year. Sukhumvit Road remains the most popular area for developers and clients, with higher occupancy and rental rates than other locations. Most of the future supply due to be finished in 2013 - 2014 is located along this road.

The increase in Foreign Direct Investment (FDI) in Bangkok, the political stability during the past two to three years, and the growth and opening up in other countries in ASEAN are all positive factors driving demand for serviced apartments.

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BANGKOK SERVICED APARTMENT MARKET REPORT | Q1 2013 HISTORICAL SUPPLY

Source: Colliers International Thailand Research

Bangkok had a total supply of approximately 18,150 serviced apartment units by the end of Q1 2013. There are approximately 79 units scheduled to be completed in 2013, so the total at the end of 2013 will be around 18,230 units. Not many serviced apartment projects are under

construction or expected to be completed in the near future, despite the average occupancy rate in all locations having increased overin the past two years, as the intense competition with condominiums and luxury apartments has affected the market.

ADDITIONAL SUPPLY BY QUARTER, Q1 2013

Source: Colliers International Thailand Research

Source: Colliers International Thailand Research

There was a total supply of approximately 18,150 serviced apartment units at the end of Q1 2013. This is an increase of around 44 units from

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the last quarter, due to the launch of the Solario Serviced Apartments on Ladprao 11 Road in Q1 2013.

BANGKOK SERVICED APARTMENT MARKET REPORT | Q1 2013 SUPPLY BY LOCATION, Q1 2013

Source: Colliers International Thailand Research

Approximately 72% of the total serviced apartment supply in Bangkok is located in the Inner CBD area, where the Lower Sukhumvit area has the lion’s share with around 40% of the total Bangkok supply. Most Grade A serviced apartments are located in the Inner CBD area, especially in the

Central Lumpini and Lower Sukhumvit areas, where approximately 3,900 units, around 65% of the total, are located.

CUMULATIVE FUTURE SUPPLY BY LOCATION, Q1 2013

Source: Colliers International Thailand Research

More than 290 units are scheduled to be completed in 2014. Most of the future supply is located along Sukhumvit Road, where approximately 210 units are under construction and expected to be completed in 2013 and 2104. Some developers are looking for land in other areas for their new serviced apartment development projects, due to the limited amount of

land for sale at reasonable prices in the city. Some foreigners are seeking residences outside the city, due to limited budgets and the expansion of the mass transit lines, in addition to lower rental rates.

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BANGKOK SERVICED APARTMENT MARKET REPORT | Q1 2013

HISTORICAL OCCUPANCY RATE BY QUARTER, Q1 2013

Source: Colliers International Thailand Research

The average occupancy rate of Grade B serviced apartments was around 10% higher than Grade A, because of lower rates for the same location and similar facilities. The average occupancy rate of Grade B was more

than 80%, and approximately 76% for Grade A serviced apartment projects.

OCCUPANCY RATES BY LOCATION, Q1 2013

Source: Colliers International Thailand Research

The average occupancy rate in all locations increased from the previous quarter by around 4 - 6%. Most continuous growth is in the Other area, where occupancy has grown in the last four quarters, and where the

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average occupancy rate was highest, compared to other locations. The average occupancy rates in the Central CBD and Upper Sukhumvit areas were over 85%, the highest figure for the past few years.

BANGKOK SERVICED APARTMENT MARKET REPORT | Q1 2013 DEMAND DRIVERS NUMBER OF EXPATRIATES WITH WORK PERMITS IN BANGKOK, Q1 2013

Source: Office of Foreign Workers Administration (Work Permit), Department of Employment of The Ministry of Labour and Colliers International Thailand Research Note: The above information does not include Lao, Burmese and Cambodian citizens.

The number of expatriates in Bangkok continues its upward trend following a nadir in Q1 2010. The total number of expatriates in Bangkok

in Q1 2013 showed a modest rise QoQ. There were more than 64,700 expatriates in Bangkok in Q1 2013.

RENTAL RATE RENTAL RATE FOR ONE-BEDROOM UNITS BY LOCATION, 2012 - Q1 2013 BY QUARTER

Source: Colliers International Thailand Research

Rental rates in all locations increased by around 3 - 10% since the previous quarter. They increased by nearly 10% in the Southern Fringe area, despite there being no mass transit lines in this area; there is, however, a connection to the CBD using the Bus Rapid Transit (BRT). It

also takes only a few minutes to travel to the CBD by personal transport from the Southern Fringe area. Moreover, the average rental rate in the Southern Fringe area is still lower than in the CBD area.

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BANGKOK SERVICED APARTMENT MARKET REPORT | Q1 2013 FORECAST Due to limited number of large lots of land and the increase in land prices in the city area, especially along Sukhumvit Road, some developers divert to developare developing small serviced apartment projects on small lots in the city area. The future supply of serviced apartments in the city area is no more than 80 units, because the target group for this market in Bangkok is are foreigners who prefer staying in the city area not far fromclose to the mass transit lines.

Some foreigners were have moved to stay in condominium units or highend apartments, due to the lower rental rate. All serviced apartments are trying to retain existing clients and attract new clients by maintaining their rates with only a little small increase for new clients.

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Many developers are also focusing more on the outer city area and the areas outer side the existing mass transit lines.

Although the serviced apartment market in Bangkok has shown only slight growth during the past few years, there are still many positive factors to drive the market in 2013 and the future. The increase in Foreign Direct Investment (FDI), the political stability during the past two to three years, and the opening of some countries in ASEAN are the main drivers of demand for serviced apartments.

BANGKOK SERVICED APARTMENT MARKET REPORT | Q1 2013 COLLIERS INTERNATIONAL THAILAND MANAGEMENT TEAM ADVISORY SERVICES | HOSPITALITY Jean Marc Garret | Director OFFICE SERVICES Nattawan Radomyos | Senior Manager PROJECT SALES & MARKETING Monchai Orawongpaisan | Associate Director RESIDENTIAL SALES & LEASING Napaswan Chotephard | Manager RETAIL SERVICES Asharawan Wachananont | Associate Director RESEARCH Surachet Kongcheep | Senior Manager INDUSTRIAL SERVICES Narumon Rodsiravoraphat | Associate Director ADVISORY SERVICES Napatr Tienchutima | Associate Director REAL ESTATE MANAGEMENT SERVICES Thanasit Tonsatcha | Associate Director INVESTMENT SERVICES Nukarn Suwatikul | Associate Director Wasan Rattanakijjanukul | Senior Manager

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