The benefits

Market Outlook

The serviced apartment market in Bangkok remains strong. As of the second quarter of 2005, there were 7,835 serviced apartment units in downtown Bangkok and the total occupancy rate remained stable at 88%. Furthermore, the average occupancy rate of serviced apartments has risen 7% year-on-year, having increased from 81% in the second quarter of 2004 to 88% in the second quarter of 2005.

The continuing increase in supply has led to a more competitive market, which in turn has led to an increased number of projects targeting not only corporate but also tourist clients. The average achieved rental rates of Grade A serviced apartments in downtown Bangkok increased during the second quarter, particularly in the CBD area.

Between now and 2007, there are expected to be an additional 2,200 units located in 15 new serviced apartment projects. This will further increase competition in the coming year and could limit increases in rental rates.

The new regulations limiting serviced apartments' short-term rentals, which came into effect in May 2005, had little effect on serviced apartment operators because most have applied for and received hotel licenses. In order to be granted these licenses, they must attain prescribed hotel standards in regards to mechanical systems, hygiene, security, and the types of services provided.