Changing expat profile presents challenges

Changing expat profile presents challenges

This Oct 7, 2013 file photo shows a billboard promoting the sale of a condominium on Ratchadaphisek Road in Bangkok. The street has since turned into Bangkok's 'new Chinatown' due to the increasing number of Chinese tenants. (Bangkok Post file photo)
This Oct 7, 2013 file photo shows a billboard promoting the sale of a condominium on Ratchadaphisek Road in Bangkok. The street has since turned into Bangkok's 'new Chinatown' due to the increasing number of Chinese tenants. (Bangkok Post file photo)

A shift in the profile of Bangkok's expatriate population is reshaping the downtown residential rental market, bringing challenges to a sector long enjoying stable occupancy and rental rates.

Chinese have taken a greater share of a community once dominated by North American, European and Japanese nationals. 

Over the past quarter-century, expatriates generally preferred to live in a few Bangkok districts, principally Sukhumvit, Lumpini and Sathon.

The Sukhumvit area remains the most popular, owing to its convenient access to the BTS Skytrain, complemented by the variety of restaurants, shops and international schools. Its appeal is visible from the continuing eastward expansion of the expatriate community beyond Ekamai to Phra Khanong and Onnut, along the existing BTS route. 

Residential rental demand comes from expatriates working in Thailand who rent, rather than purchase, and are normally here for only 2-3 years. There is only a very small downtown rental market for Thai nationals.

All expatriate employees in Thailand need work permits and while the overall number of work permits has remained broadly stable over the past year, Chinese citizens now account for 13.3% of the total number issued nationally, representing a year-on-year increase of 19.4%.

In the early 1990s, almost exclusively Western expatriates had housing allowances of more than 40,000 baht per month. One of the main changes over past 16 years has been more Japanese nationals coming to Thailand with families, requiring two- and three-bedroom apartments and condominiums and receiving housing allowances not dissimilar to their Western counterparts.

Japanese nationals used to account for over 25% of the expatriate working population in Thailand, which is now down to 22.8% as of the third quarter of this year.

The number of Japanese expatriates appears to have stopped growing in line with the slowdown in foreign direct investment. Meanwhile, the number of Chinese expatriate employees has doubled over the last five years, becoming the second-largest expatriate nationality.

Whilst Japanese expatriates’ choice of location, unit size and budget were not dissimilar to Western expatriates, the requirements of Chinese nationals are generally subject to more limited accommodation budgets, with price acting as the principal consideration and location preferences concentrated in areas outside of the traditional expatriate residential districts.

Some commentators have named Ratchadaphisek Bangkok’s new "Chinatown" due to the influx of Chinese expatriates in the area.

Bangkok rental demand for expatriate standard apartment and condominium rental units remains steady, with the overall occupancy rate standing at over 90% for apartments, and with well-managed condominium buildings continuing to perform well.

Although overall expatriate numbers may grow, there is likely to be limited growth in demand from Western and Japanese expatriates, the traditional tenants for Bangkok’s downtown apartments and condominiums.

Residential landlords in the downtown area of Bangkok should consider taking steps to enhance competitiveness by renovating ageing stock and improving property management.

The apartment sector, comprising multi-let residential buildings held under single ownership, will be better placed to respond in the short term, due to the simplicity of undertaking building improvements and in making timely management decisions, both of which will be key to sustaining rents and retaining tenants.

Condominium owners will both need to get committees to maintain and improve common areas and also focus on the interior decoration and furniture of their units. Condominium interiors, just like hotel rooms, need regular upgrades and improvements to attract tenants. 


James Pitchon is head of research and consulting at CBRE Thailand. Facebook: CBRE.Thailand Twitter: @CBREThailand LinkedIn: CBRE Thailand

Do you like the content of this article?
COMMENT (8)

+8,675 Covid cases

New cases are down from 9,351 last reported, as are daily coronavirus-related fatalities, from 56 to 44, with the focus shifting to raising the vaccination rate in the deep South.

14:55

Cambodia passes law barring dual citizenship for holders of top posts

PHNOM PENH: Cambodia's parliament on Monday passed constitutional amendments barring holders of the country's top posts, including prime minister, from being citizens of other countries.

14:13

Old monk's reappearance brings solace in coup-hit Myanmar

SAGAING, Myanmar: When dawn arrives in normal times, 80-year-old Buddhist monk Maha Bodhi Myaing Sayadaw emerges from his meditation on the plains of northern Myanmar to silently receive food offerings from a handful of followers.

13:45