DESPITE INCREASED competition for rental units in condominiums, the prospects for the single-ownership apartment market in the prime areas of Bangkok are still positive, according to CBRE, an international property consultant company.
Most expatriates working in Bangkok rent rather than buy a property.
The expatriate rental market is competitive because the number of expatriates working in Bangkok is not growing. The only nationality where numbers are growing is the Chinese, and most Chinese expatriates have much lower housing budgets than do the Japanese, American and European expatriate tenants who have been the traditional source of demand for central Bangkok residential rental property.
A review of over 3,000 residential rental transactions over the last 10 years completed by CBRE has found that rental budgets have not grown, with median monthly rental now at around Bt90,000 for a three-bedroom unit and Bt80,000 for a two-bedroom unit.
CBRE focuses on the upper end of the market, so these numbers are higher than the average achieved rents for the whole of the expatriate rental market.
Most expatriates want to live in only a limited number of locations, with the preferred locations being between Asoke and Thonglor on Sukhumvit Road, as well as Lumpini and parts of Sathorn.
The choice for most expatriates is to rent in an apartment where one entity owns the whole building or from an individual buy-to-rent investor in a multi-ownership condominium building. Based on the latest survey by CBRE Research, there are only around 10,000 units in expatriate standard single-ownership apartment buildings in downtown Bangkok.
By comparison, there were 80,000 condominiums in the same preferred expatriate rental locations, and CBRE estimates that 35-40 per cent of these units are owned by buy-to-rent investors. There is limited new apartment supply, but continued growth in condominium supply.
Many tenants, particularly Japanese expatriates, prefer to rent in apartment buildings where they have a single point of contact with the owners’ representative for all management and maintenance issues.
In a condominium, the building’s property manager is only responsible for the management of the common areas and not the maintenance inside each unit.
“Although expatriate tenant numbers and their rental budgets are not growing, there are still profitable opportunities for apartment developers despite increased competition from rental units in condominiums,” said Theerathorn Prapunpong, who has been the head of advisory and transaction services for residential leasing for more than 20 years at CBRE Thailand.
The keys to success for renting out residential properties is not limited to only the location, but also in providing the optimum unit size that maximises the utility of the space and provides a high standard of finishing, furnishing, facilities and appliances, said Theerathorn.
CBRE is the sole leasing agent and property manager for Jitimont Residence on Soi Thonglor 16, opposite J Avenue, which was recently completed.
The development is a good example of how single-ownership rental apartments can still compete with condominiums, with a range of units from one to three bedrooms together with a design and specification that appeals to expatriate tenants.
Looking forward to 2019, Theerathorn does not expect a big increase in the number of expatriate tenants or an increase in their housing budgets, and notes the best quality apartment developments will still achieve high rentals and occupancy.