Thailand’s new property rental law, which came into effect on May 1, will have “little impact” on the expatriate rental market.
Real estate firm CBRE made the statement in its latest market research report, released this week.
It added that the new rental law: “… will make managing apartments more difficult.”
CBRE revealed that the number of expatriates holding work permits in Bangkok was 87,000 in Q1 2018, increasing by 0.2 percent from the previous quarter and 2.8 percent year-on-year.
This small quarterly increase needs monitoring by real estate agencies and landlords because any future decline may result in additional rental units flooding the Bangkok rental market.
Japanese nationals still form the largest expat group working in Thailand, accounting for 21 percent of the total number of issued work permits. They were followed by Chinese nationals at 14 percent.
CBRE said the number of Chinese expats increased from 9,000 in 2011 to 24,000 in Q1 2018 however, Chinese do not form a significant demand in the traditional expat rental areas because they usually have much lower housing budgets.
The Sukhumvit area of Bangkok has remained the most popular location for expatriates because of easy access to mass-transit 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.
There are around 650 apartment units under construction.
The total supply of condominium units in the popular expatriate tenant areas continued to increase.
CBRE estimated that between 35 percent and 40 percent of the 25,000 future condominium units will be available for rent, increasing competition with apartment units.
More than 60 percent of condominium units under construction in the downtown areas are one-bedroom, or smaller, units. There will be higher competition for one-bedroom units compared with two-bedroom and three-bedroom units.
The number of Thais paying rental of more than THB 10,000 per month is minimal, according to CBRE, 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, according to the real estate agency.