Serviced apartments pick Sukhumvit

The research showed supply of serviced apartments increased from 12,197 units in the second half of last year to 12,565 units in the first half of this year. The increase in supply was because of the launch of two new servicedapartment projects such as Citadines on Sukhumvit 8 and Column Residence on Sukhumvit 16.

The new serviced apartments boosted supply in the 5star and 4star market to post a yearonyear growth of 38 per cent and 12 per cent, respectively, as of June this year.

Average monthly rental rate of 5star serviced apartments in the cen¬tral business district in the first half of this year stood at Bt1,407 per square metre, posting a yearonyear growth at 5.1 per cent.

In the Sukhumvit area, the monthly rental rate of 5star serviced apartments was about Bt1,425 per square metre, increasing 4.5 per cent form the first half of last year.

In the 4star market, average monthly rental rate of serviced apart¬ments in the central business district and Sukhumvit areas was about Bt1,035 per square metre and Bt1,042 per square metre , respectively.

Total rooms occupied in the first half of the year accounted for 10,256 units from a total 12,565 rooms avail¬able. Average occupancy rate in the market was 82 per cent, decreasing from 83 per cent in the second half of last year.

Demand grew in the first half of this year but slower than the growth in supply. The surge in supply and the slow investment in the country that led to a smaller rise in demand has caused occupancy rates to drop from the second half of last year.

It is believed that there would be about 1,970 room units of new serv¬iced apartments entering the market. This will raise total room supply of serviced apartments to 14,535 units at end of this year and will put the yearonyear growth in room supply at 19.2 per cent. Moreover, we will see about 1,341 units of new rooms added to the market next year.

Occupancy rate in the serviced apartments market this year is expected to decrease from last year since total rooms occupied will rise slower than the growth in total rooms available. The small increase in demand will be influenced by negative factors such as economic slowdown, political instability, and the slow investment which has resulted in lower occupancy rate this year.

Knight Frank expects some new serviced apartments to offer lower rates. However, the average rental rate is likely to continue to rise but at a slower pace from last year which will not be more than 5 per cent.

A huge amount of supply will be opened in the second half of this year and will increase market competition. Some existing serviced apart¬ment operators will have to focus more on a balance between shortstaying and longstaying guests as well as inventing loyalty programmes to maintain occupancy rates.