“Little chance” of rental price growth

FIRST WITH THE NEWS: Rising numbers of Chinese expatriates in Bangkok with low housing allowances will result in little chance of growth in Bangkok rental property prices.

Chinese nationals are now the second highest nationality holding work permits in Bangkok, representing 14 percent of all work permits. Japanese, at 21 percent, remain the largest nationality.

This data comes from real estate firm CBRE in its Q4 Bangkok Residential research report, published yesterday.

The number of work permits in Bangkok during Q4 was reported at 86,918 – a 3.1 percent yar-on-year increase.

CBRE noted that the number of Chinese expatriates has increased from 9,000 in 2011 to 26,000 at the end of 2017.

However, it said that Chinese expatriates still do not form a significant level of demand in the traditional expatriate rental areas because they usually have much lower housing budgets.

CBRE said that the Sukhumvit area of Bangkok has remained the most popular location for expatriates because of its easy access to the BTS Skytrain and the large number of shops and restaurants.

Apartment units (single ownership) in the Sukhumvit area accounted for almost 80 percent of the total downtown apartment supply, it said.

The total supply of condominium units in the popular expatriate tenant areas continued to increase, providing more competition for individual apartment units owned by buy-to-rent investors.

CBRE said there are more than 400 apartment units under construction, and the real estate firm estimated that between 35 percent and 40 percent of the 22,000 future condominium units will be available for rent.

More than 60 percent of condominium units that are under construction in the downtown areas of Bangkok are one-bedroom or smaller units. CBRE noted how there will be higher competition to rent one-bedroom units compared with two-bedroom and three-bedroom units.

The overall occupancy of downtown apartments has continued to be more than 97 percent.

Some apartment owners have started renovation of their buildings in order to compete with upcoming supply of condominiums for rent.

“Total expatriate numbers are not growing much. and the composition of the expatriate population has changed with more Chinese with low housing allowances,” CBRE said.

“The number of Thai tenants paying rental of more than THB 10,000 per month is minimal, and the downtown residential rental market relies on expatriate tenant demand.

“This lack of growth in demand combined with the increase in supply of condominiums means there will be little chance of rental growth,” the agency concluded.