Bangkok Rental Apartments Facing Change in Demand
As the number of Japanese expats in Thailand decreased to lower than 20% of the total expats for the first time in 2019 and dropped to 34,133 as of April 2019, a 4% decline Y-o-Y, CBRE is seeing a change in demand and its impact on the rental apartment sector in Bangkok, despite a healthy performance.
Typically, when expats move with their family members to work in Thailand, the companies will cover accommodation for the whole family, the children’s tuition fees and sometimes allowance for the housewives. This year, we are seeing more expats moving here individually rather than the whole family as companies look to lower their operating costs.
“In the projects which CBRE is managing like Jitimont Residence and Capital Residences, we are seeing more active demand for one-bedroom units which is different from what we have seen in the past. Two-bedroom units used to be more popular for expats moving to Thailand with their family. Now, many apartments are fully occupied for their one-bedroom units and the demand is still increasing”, said Theerathorn Prapunpong, Director of Advisory and Transaction Services – Residential Leasing, CBRE Thailand.
Another constraint on the rental apartment market is the accommodation allowance from corporates which has not increased in many years. This put pressure on landlords as they could not ask for higher monthly rental as that will risk giving away their tenants to landlords of other properties.
The decrease in the number of Japanese expats is being compensated by the rise in the second biggest feeder market, the Chinese expats. However, CBRE believes that this increase will not become a new wave of demand for Bangkok rental apartments as Chinese expats prefer to rent condominium units in the Huai Khwang and the Sutthisan areas where the costs are lower and the Chinese community is more prominent.
With increasing competition from condominium units for rent in the market, budget control for expats’ accommodation and the new land and building tax, the biggest hit will be felt by landlords of older apartment buildings who will be forced to up their game to compete in the market.
An article written by Rathawat Kuvijitrsuwan, Associate Director at Research and Consulting, CBRE Thailand for Bangkok Post dated 24 July 2019.