Rental apartments facing demand shift
published : 24 Jul 2019 at 12:58
As the number of Japanese expatriates in Thailand decreased to lower than 20% of total expats for the first time in 2019 and dropped 4% year-on-year to 34,133 as of April 2019, a change in demand is seen and its impact on the rental apartment sector in Bangkok is felt, despite a healthy performance.
Typically, when expats move with their families to work in Thailand, their companies cover accommodation costs, children's tuition fees and sometimes allowances for the wives. This year, we are seeing more expats moving here without their families 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 saw in the past. Two-bedroom units used to be more popular for expats moving to Thailand with their families. Now, many apartments see their one-bedroom units fully occupied and the demand is still increasing", said Theerathorn Prapunpong, director of advisory and transaction services for residential leasing at CBRE Thailand.
Another constraint on the rental apartment market is the accommodation allowances provided by companies which have not increased in many years. This put pressure on landlords as they could not ask for higher monthly rentals. If they do so, they risk losing tenants to competitors.
The decrease in the number of Japanese expatriates is being compensated by the rise in the second biggest feeder market, Chinese expats. However, CBRE believes that this increase will not trigger a new wave of demand for Bangkok rental apartments as Chinese expats prefer to rent condominium units in the Huai Khwang and Sutthisan areas where costs are lower and there is already a Chinese community.
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 step up their game to compete in the market.
Rathawat Kuvijitrsuwan is an associate director at Research and Consulting, CBRE Thailand
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