Condo rental prices: small rise seen

condo rental prices
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Despite an increasing number of expatriates working in Bangkok, new research has shown there has been only small rises in condo rental prices in the Thai capital.

Real estate agency CBRE, in its Bangkok Residential Market view report, also estimated that a surprising 35 percent to 40 percent of units in most new downtown condos have been sold to buy-to-rent investors.

The number of expatriates holding work permits in Bangkok increased to 84,837 during Q2 2017, equal to a 2.5 percent year-on-year increase.

Japanese nationals are still the largest expatriate group working in Thailand, accounting for 22 percent of the total issued work permits, followed by Chinese nationals at 13 percent.
The number of Chinese nationals has doubled since 2011 but th

ey typically have much lower housing budgets, according to CBRE, and do not form a significant level of demand in the traditional expatriate areas.

Most expatriates who work in Thailand prefer to rent rather than purchase property. This is because they are usually only here for a few years, and it is very difficult for them to borrow and finance a property purchase.

Typically, expats prefer to live in a limited number of areas. The majority choose to live in Sukhumvit between sois 1-63 and 2-42, Silom/Sathorn and Central Lumpini/Siam. Sukhumvit remained the most popular location for expatriates because of its easy access to the BTS Skytrain and the large number of shops and restaurants, the report noted.

The supply of standard expatriate apartments (single ownership buildings) has only slightly grown over the past ten years because of low yields, which makes it less attractive for developers to build new apartments.

There are approximately 500 apartment units under construction or being planned, compared with 12,000 future condominium units in the downtown area.

Condo units (multi-ownership), whose individual owners are buy-to-rent investors, are direct competitors for apartments in the Bangkok expatriate residential leasing market.

Some 60 percent of condo units under construction in the downtown areas of Bangkok are one-bedroom or smaller units, however there is strong rental demand for two- and three-bedroom units. About 60 percent of CBRE’s leasing deals were for two-bedroom or larger units, indicating investors should look to buy the largest possible unit if their goal is to obtain rental returns.

The overall occupancy of downtown apartments has continued to be more than 90 percent.

“We saw apartment owners start renovations of their units to compete with the upcoming supply of condominiums for rent,” CBRE said in the report.

Although total expatriate numbers have grown, housing allowances have not. Consequently, there has only been little change in condo rental prices, the real estate firm concluded.

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