Thailand: CBRE Thailand says overall demand for serviced apartments remained unchanged in most areas of Bangkok last year despite political turmoil in the city.
CBRE's research reveals the average occupancy rate for the 2013
was 81 per cent, a slight drop from 2012, as a result of lower
occupancy rates in specific locations close to the areas where
there were demonstrations.
CBRE's report says serviced apartments in Bangkok are usually targeted at two types of customers: "long-term tenants who are usually single expatriates working in the city, where serviced apartments compete with non-serviced apartments and condominiums for rent; and short-term-rate tenants who are usually tourists or business travellers, where serviced apartments compete with hotels. Most serviced apartments have one-bedroom or studio units".
Although demand is still high, CBRE says serviced apartment rental rates did not increase because of competition from the many one-bedroom condominium units available for rent in the long-term market. In Q4 2013, the average rent of Grade A serviced apartments in Bangkok was just above Bt1,000 per square metre per month, and the Sukhumvit area achieved the highest average rents of almost Bt1,200 per square metre per month.
Demand for serviced apartments is mainly concentrated in the Sukhumvit, Lumpini and Sathorn neighbourhoods, areas favoured by expats living in Bangkok and by tourists. The company says there will be limited potential to develop serviced apartments outside these core locations as rental rates for such properties decline considerably.
CBRE adds that although there are 20,000 condo units and 5,000 hotel rooms being built in Bangkok, there are very few serviced apartments under construction. Despite this competition CBRE believes the limited new supply of serviced apartments means that there is a possibility that owners will be able to raise rental rates.