Q4 2012 | SERVICED APARTMENT

thailand

Bangkok serviced apartment

Market REPORT

Bangkok Serviced Apartment Market

Executive Summary
Serviced apartments in Bangkok are facing ever greater competition from condominiums, but
large numbers of foreign businesses setting up offices in Thailand means there is still some hope
for the market.

Expatriates, who are the main customers for serviced apartments, increasingly prefer to live in
condominiums that offer similar services in the same locations for a fraction of the cost.

Just 580 serviced apartment units were completed in 2012, the lowest figure for four years,
bringing the total number of units in Bangkok to 18,260. Occupancy rates and average rental price
market indicators both increased compared to the previous year.
2011 / 2012
The serviced apartment industry is also threatened by a long-running complaint from the Thailand
new Supply Hotel Association, which is trying to persuade the Ministry of Interior to clamp down on serviced
apartments offering short-term and per-day rentals, which officially require a hotel licence to be
RENTALS legal. As a result, there is a trend for serviced apartments to apply for hotel licences.
Occupancy
Because a large number of foreign companies are setting up offices in Bangkok ahead of the
ASEAN Economic Community forming in 2015, and are therefore bringing more expatriates to the
city, there is still some life left in the market, but operators have to fight hard to keep afloat. Many
are offering discount deals to corporate clients, and are renewing existing leases at the same or
even lower prices before they expire, in the hopes of keeping their tenants for the long term.

Historical Supply, Q4 2012

Source: Colliers International Thailand Research

Approximately 580 units were completed in number of new, serviced apartment units
2012, and the total supply of serviced apartment completed in 2012 was lowest in the past four
units at the end of 2012 is nearly 18,260. The years.

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Bangkok serviced apartment REPORT | Q4 2012

Supply by location, Q4 2012

Source : Colliers International Thailand Research

More than 50% of the serviced apartment supply in Bangkok is located than in other locations for the past 20 years with more than 7,300
along Sukhumvit Road, in the areas of Early Sukhumvit and Late units.
Sukhumvit. The total supply in the Early Sukhumvit area has been greater

Cumulative future supply from 2013 to 2014, by location and year

Source: Colliers International Thailand Research

More than 150 units are scheduled for completion in2013, approximately
80 of which are in the Late Sukhumvit Area, with the rest in Other Areas.
In addition, another 80 units are under construction and expected to be
completed in 2014 in the Early Sukhumvit Area. Only a few serviced
apartment projects are under construction, due to serviced apartments
having declined in popularity for expatriates during recent years. Many
condominium projects and high-end apartment projects have become
preferable for foreigners who work in Bangkok because of their lower
prices, similar facilities, and their locations being in the same areas as
serviced apartment projects.

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 Bangkok serviced apartment REPORT | Q4 2012

Occupancy rate

Historical occupancy rate by grade, 2010 to 2012 by quarter

Source: Colliers International Thailand Research

The average occupancy rates in Q4 2012 for Grade A and B serviced average occupancy rates in the second and third quarters were lower
apartments increased slightly from the previous quarter. However, the than in the first quarter of 2012.

Occupancy rates by location, 2010 to Q4 2012 by quarter

Source: Colliers International Thailand Research

The average occupancy rate in the last quarter of 2012 in all locations trying to retain their current clients for long periods by renewing
was up from the previous quarter. Serviced apartment projects are contracts at the current rate before the expiration dates.

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Bangkok serviced apartment REPORT | Q4 2012

Demand Drivers

Number of expatriates in Bangkok, Q4 2012

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

The number of expatriates in Bangkok continues to rise. The EU debt
crisis is still a major concern for investors and affects the entire global
economy. However, Asia has shown it has potential for investment,
especially in the ASEAN region. Bangkok is highly attractive for investors
who wish to take a first investment step into ASEAN, especially in to the
sub-region of Myanmar, Laos and Cambodia. As a result, several
international companies are looking for regional office space in Bangkok,
and there is also good potential for serviced apartments. The total
number of expatriates in Bangkok in the last quarter of 2012 was
approximately 63,400.

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 Bangkok serviced apartment REPORT | Q4 2012

Rental Rate

Rental rate for one-bedroom units by location, 2011 to 2012 by quarter

Source : Colliers International Thailand Research

Rental rates in Q4 2012 were similar to the previous quarter. Only the previous quarter, but the Central CBD still commands the highest rental
Central CBD and Southern Fringe areas significantly increased from the rates and Other Areas have the lowest rates in Bangkok.

Average rental rate by grade, 2011 to2012 by quarter

Source: Colliers International Thailand Research

The average rental rate of Grade A and B serviced apartments in Q4 Grade B. Most Grade A serviced apartments are located in prime
2012 increased slightly from the previous quarter, and the rental rates locations of Bangkok, such as the Central CBD, Central Lumpini and
for Grade A serviced apartments are still more than 45% higher than for Early Sukhumvit areas.

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Bangkok serviced apartment REPORT | Q4 2012

Summary 2012 and Forecast 2013

The serviced apartment market in Bangkok has been intensely competitive
during the past three years, with all projects trying to retain existing
clients by renewing contracts at the same rates or slightly less. In
addition, they directly contact foreign and Thai firms employing
expatriates to offer special rates. The serviced apartment market in 2013
will be another difficult year for investors and owners, as condominium
and high-end apartments are becoming the preferred choices for
expatriates.
Although the serviced apartment market in Bangkok has shown 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 main drivers of demand
for serviced apartments.
the City area, but in 2013 there is the possibility of a small increase from
2012, of around 5 - 10%, depending on location and project concept.
The average occupancy rate of all locations in Q4 2012 is approximately
75%, an increase of around 10% from the same quarter in 2011. Although
many factors affected the market in 2012, the occupancy rate has still
shown positive signs.
The Thailand Hotel Association continues to try to force the Ministry of
the Interior to provide control measures on serviced apartments without
a hotel license, which are not permitted to allow “per day” or short-term
clients. Should the government take more serious action, this will have
an effect on serviced apartments without licences to operate as hotels.

The average rental rate for most serviced apartments in Bangkok did not
change much from the previous year. This is due to intense competition,
as there are lots of high-end apartments and condominiums for lease in

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 Bangkok serviced apartment REPORT | Q4 2012

APPENDIX

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Bangkok serviced apartment REPORT | Q4 2012
Grading
No recognised 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, and offering recreational facilities and
amenities similar to a luxury or upscale hotel. Managed by a top
international branded operators or a comparable local brand.
Grade B
Usually located in the city centre but in less sought-after locations.
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
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 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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Furnished to a high standard and usually offering recreational facilities
and a variety of services similar to an upscale or mid-range hotel.
Managed by a lower-end international or domestic operator.
Grade C
Located in secondary areas. Furnished to a comfortable, but not
luxurious, standard. Fewer provisions of facilities and amenities, similar
to that of a mid-range or economy hotel.
• Late Sukhumvit Area
This is the section of Sukhumvit Road between Soi 37 and Soi 77 to the
north, and Soi 26 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 and C serviced apartments are scattered
across the city, including Phayathai, Phetchaburi, Ratchadapisek,
Mitmaitri, Srinakarin, Bangna and Ramkhamhaeng Road.

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