Rental apartment demand changing
Smaller units being sought as more single expats arriving in Thailand to work. By Rathawat Kuvijitrsuwan
The decline in the number of Japanese expatriates in Thailand is bringing about a change in the nature of demand for rental apartments in Bangkok, although the performance of the sector overall remains healthy.
The number of Japanese in Thailand decreased last year to less than 20% of all expats for the first time. As of April their number was 34,133, a 4% decline year-on-year.
Typically, when expats move with their family members to work in Thailand, their companies will cover accommodation for the whole family, the children’s tuition fees, and sometimes an allowance for spouses. This year, we are seeing more expats moving here individually rather than with the whole family as companies look to lower their operating costs.
“In the projects which CBRE is managing, such as 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,” said Theerathorn Prapunpong, director of advisory and transaction services (residential leasing) with CBRE Thailand.
“Two-bedroom units used to be more popular for expats moving to Thailand with their family. Now many apartments’ one-bedroom units are fully occupied and the demand is still increasing.”
Another constraint on the rental apartment market is accommodation allowances from corporate employers, which have not increased in many years. This puts pressure on landlords as they cannot ask for higher monthly rental rates as they would risk losing tenants to landlords of other properties.
‘‘ Chinese expats prefer to rent condominium units rather than apartments, and stick to neighbourhoods with large Chinese communities.
The decrease in the number of Japanese expats is being offset by the rise in the second biggest feeder market, Chinese expats. However, CBRE believes this increase will not become a new wave of demand for rental apartments as Chinese expats prefer to rent condominium units in the Huai Khwang and Sutthisan areas where the costs are lower and the Chinese community is large.
With increasing competition from condominium units for rent, budget controls 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 in order to compete in the market.
Rathawat Kuvijitrsuwan is an associate director with Research and Consulting, CBRE Thailand. He can be reached at bangkok@cbre.co.th