Colliers Bangkok Serviced Apartment Market Q2 2011
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Colliers Bangkok Serviced Apartment Market Q2 2011

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Colliers International Thailand Research Department are proud to present the Serviced Apartment Market Report for Bangkok.

Colliers International Thailand Research Department are proud to present the Serviced Apartment Market Report for Bangkok.

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Colliers Bangkok Serviced Apartment Market Q2 2011 Colliers Bangkok Serviced Apartment Market Q2 2011 Document Transcript

  • Q2 2011 (half year) | SerVICeD aParTMeNTThAilAndBangkok Serviced apartmentmarket Bangkok Serviced Apartment Market execuTive SummARy no stand alone projects opened in H2 2011. a serviced apartment component of a mixed used development is becoming more popular. total supply estimated to be around 17,800 units at the end of 2011. occupancy down around 1.8% from Q1 2011. mARkeT indicATORS rental rates remain stable in softened market conditions. Q1 2011 / Q2 2011 Japanese investment could increase further following tsunami and this will lead to more expats new Supply thus fueling the corporate stay market. RenTAlS OccupAncywww.colliers.co.th
  • BaNgkok SerVICeD aParTMeNT MarkeT rePorT | Q2 2011 (half year)hiSTORicAl Supply hiSTORicAl Supply, AS Of Q2 2011 Source: colliers international thailand researchno new stand-alone serviced apartment project opened in the first half in march and 50% of this project, or around 122 units are for servicedof the year although a number of units were added to two new hotels in apartments. all units will be available upon the grand opening of thethe centre. around 890 units are scheduled to be completed in the project in Q3 2011. total supply of serviced apartment units as of the endsecond half of 2011. Jasmine resort Hotel opened a section of its project of 2011 is expected to be approximately 17,800 units. Supply by lOcATiOn And yeAR, AS Of Q2 2011 Source: colliers international thailand researchearly Sukhumvit is significantly higher than any other area with the current supply of other areas is still not over 3,200 units in eachapproximately 3,500 – 5,700 units. Since 1992 onwards until the first location.half of 2011, early Sukhumvit area has shown the highest share, whileCOLLIERS INTERNATIONAL | P. 2
  • BaNgkok SerVICeD aParTMeNT MarkeT rePorT | Q2 2011 (half year) cumulATive fuTuRe Supply by lOcATiOn And yeAR, AS Of Q2 2011 Source: colliers international thailand researchmore than 1,000 units are scheduled to be completed in the second half as phetchaburi road, rama 9 road, Srinakarin road and Bangna road.of 2011 and approximately 150 units in 2012. the total number ofserviced apartment units in Bangkok by the end of 2011 will be more a lot of hotel and condominium developers also convert some units inthan 17,800. over 300 units or 50% of future supply in 2011 will be their own project and change to serviced apartments; therefore manylocated in the early Sukhumvit area. in the past, serviced apartments luxury hotels, upper scale hotels and some condominium projects infocused on foreigners with most of them located in the city area along Bangkok have monthly rental packages similar to stand-alone servicedBtS lines. However increasing land prices have meant that in the past apartments. this seems to be becoming a trend as developers seek tofew years developers are focusing more on outside of the city area, offer more options due to the softening hotel market.especially new BtS extension lines and some locations to the east, suchhiSTORicAl OccupAncy RATe OccupAncy fOR bAngkOk SeRviced ApARTmenTS On bOTh exTended STAy And cORpORATe hOuSing Sub-SeTS Source: colliers international thailand researchaverage occupancy rate in Q2 dropped approximately 1.8% in both they still remain slightly lower than the numbers recorded in Q2 2009grades q/q. compared to the previous Q2 in 2010 rates have rebound which was in the midst of the global Financial crisis.strongly but that period was during the events in april and may. However COLLIERS INTERNATIONAL | P. 3
  • BaNgkok SerVICeD aParTMeNT MarkeT rePorT | Q2 2011 (half year) OccupAncy RATeS by lOcATiOn Source: colliers international thailand researchthe occupancy rate fell in four locations, while in the Southern Fringe negative affect, due to some cancelling their reservations or corporationsand “others” areas there was a small rise. these two areas, while often decreasing budgets. With Japan expected to bounce back strongly fromfar from mass transit lines, serve the needs of business travelers and this event the effect is seen as temporary and in fact it is expected thatexpats visiting or working in those particular locations as well as being more Japanese will invest in the future to diversify their production basemore affordable. and this will be an added spur for the corporate long term stay market.the main customers for serviced apartments in the prime locations inBangkok are Japanese, so the tsunami in Japan in march had someCOLLIERS INTERNATIONAL | P. 4
  • BaNgkok SerVICeD aParTMeNT MarkeT rePorT | Q2 2011 (half year)demAnd dRiveRS numbeR Of expATRiATeS in bAngkOk, AS Of Q2 2011 Source: office of Foreign Workers administration (Work permit), department of employment of the ministry of Labor and colliers international thailand research remark: above information does not include Lao, Burmese and cambodian citizensthe number of expatriates in Bangkok still remains similar to the first prior to the global Financial crisis. the total number of expatriates inquarter. However the number is still similar to 2009 but still below 2008, Bangkok in Q2 2011 is approximately 54,100. pROpORTiOn Of expATRiATeS in bAngkOk, AS Of Q2 2011 Source: office of Foreign Workers administration (Work permit), department of employment of the ministry of Labour and colliers international thailand researchthe Japanese still represent the largest group of expatriates in Bangkok apartments would be beyond reach. there has been a steady rise in theand are also the main target group for serviced apartments, with most number of Japanese expats in thailand with just over 21,000 beingstaying along Sukhumvit road and its numerous sois. other nationalities recorded in 2005 to a little over 24,000 as of Q2 2011.are often in the lower pay bracket and the rental rates of serviced COLLIERS INTERNATIONAL | P. 5
  • BaNgkok SerVICeD aParTMeNT MarkeT rePorT | Q2 2011 (half year)RenTAl RATe AveRAge RenTAl RATe fOR One bedROOm uniTS by lOcATiOn And gRAde, AS Of Q2 2011 Source: colliers international thailand researchrental rates of grade a serviced apartments in central cBd area are the rental rates of grade B serviced apartments in early Sukhumvit area arehighest due to the location, but not much different from the central higher due to it being popular for expats who work in Bangkok with easyLumpini area which is also considered a prime location. early Sukhumvit access to the BtS and lively entertainment scene.area is similar to Late Sukhumvit as many high end apartments arelocated in thong Lor. many branded serviced apartments are located inthese four locations. AveRAge RenTAl RATe Of 1 bedROOm uniT duRing Q1 2010 – Q2 2011 by gRAde Source: colliers international thailand research rental rates remained stable for Q2 2011 with only a very slight fall being aftermath of a severe downturn many companies seek to reduce their recorded in the grade B category. in a similar but lesser extend as hotels, costs to maximize profits and rentals for expatriate staff is one area that serviced apartment rentals remain soft due to challenging conditions is susceptible to cutbacks. that remain as a result of continued economic uncertainty. in theCOLLIERS INTERNATIONAL | P. 6
  • BaNgkok SerVICeD aParTMeNT MarkeT rePorT | Q2 2011 (half year) AveRAge RenTAl RATe Of SeRviced ApARTmenT by bRAnded And nOn-bRAnded, AS Of Q2 2011 Source: colliers international thailand researchthe average rental rate of international branded serviced apartments is living in various countries where that brand exists which can ensurehigher than non-branded by approximately 154%. although branded continuity and confidence. as a result many developers seek both well-serviced apartments tend to be of a higher grade, there is likely to be a known thai and foreign serviced apartment brands.‘brand effect’ that enables apartments to target expats travelling andfORecASTWith developers seeking to hedge their bets more when it comes toproperty in Bangkok, especially in the hospitality sector, a servicedapartment component rather than a stand alone building is becomingmore prevalent today and this is a trend that looks set to grow. developersof high-end condominiums throughout the country are seeking wellknown brands to add prestige but also a greater potential for revenuegeneration for units that can attract more buyers and increase sellingprices. Hotels are now beginning to embrace a serviced apartmentcomponent that can bring a more solid if less lucrative income stream, inwhat are increasingly turbulent times for the upper-scale and luxuryhotel industry.Serviced apartments are the most ambiguous form of real estate in thatthey can imitate hotels in the form of offering short term stays, theapartment for lease sector is in direct competition for corporate longterm accommodation and now condominiums are offering a servicecomponent as part of a branded residence concept within a strata titlebuilding, even some units take on the function of offices in some cases.this amorphous nature of the serviced apartment represents arguablymore of strength rather than a weakness as the future dynamic changesoccurring throughout asia require greater flexibility to respond and thechameleon like nature of the serviced apartment sector seems mostappropriate to prosper from such changes. COLLIERS INTERNATIONAL | P. 7
  • BaNgkok SerVICeD aParTMeNT MarkeT rePorT | Q2 2011 (half year) AppendixCOLLIERS INTERNATIONAL | P. 8
  • BaNgkok SerVICeD aParTMeNT MarkeT rePorT | Q2 2011 (half year)gRAdingno recognized standard for rating serviced apartments exists in thailand gRAde band therefore colliers international thailand has classified them based Usually located in the centre but also in less prime locations. Furnishedon various criteria, of which a summary is given below. to a high standard but usually offers recreational facilities and a variety of services similar to an Upper or mid Scale hotel. managed by a lower-gRAde A end international or domestic operator.Located in prime locations and luxury residential areas. Furnished to anexceptionally high standard. offering recreational facilities and amenities gRAde csimilar to a Luxury or Upper Scale hotel. managed by a top international Located in secondary location and furnished to a comfortable, but notbranded operator or comparable local brand. luxurious, standard. Fewer provisions of facilities and amenities, similar to that of a mid-scale or economy hotel.ZOning • Late Sukhumvit Area this is the section of Sukhumvit road between Soi 37 and Soi 77 to thethe serviced apartment area can be divided into five areas or pockets of north and Soi 24 and Soi 50 to the south.concentration: • Southern Fringe Area• Central CBD this is the area that stretches along the bank of the chao phraya riverthis is the area that encompasses Silom, Sathorn, Surawong, Si phraya on charoenkrung road. narathiwas ratchanakarin road and rama iiiand rama 4 road, as well as other sois in between, such as Soi road are located in this area.Saladaeng, Soi convent, Soi pipat. • Other Areas• Central Lumpini Area most of the remaining grade B & c serviced apartments are scatteredthe central Lumpini covers the areas along rama i, rajadamri, Wireless, across the city, including phayathai, phetchaburi, ratchadapisek,ploenchit, Langsuan, phayathai and phetchaburi roads, as well as other mitmaitri, Srinakarin Bangna and ramkhamhaeng road.sois in between, such as Soi Langsuan and Soi ruamrudee.• Early Sukhumvit Areathis is the section of Sukhumvit road between Soi 1 and Soi 35 to thenorth and Soi 2 and Soi 24 to the south. COLLIERS INTERNATIONAL | P. 9
  • BaNgkok SerVICeD aParTMeNT MarkeT rePorT | Q2 2011 (half year)cOllieRS inTeRnATiOnAl ThAilAndmAnAgemenT TeAm 512 offices in 61 countries on 6 continentsadviSorY ServiceS | HoSpitaLitY • a leader in real estate consultancy worldwideJean marc garret | director • 2nd most recognized commercial real estate brand globallyproJect SaLeS & marketing • 2nd largest property managermonchai orawongpaisan | Senior manager • 979 million square feet under management • over 12,500 professionalsreSidentiaL SaLeS & LeaSingSunate Lawskul | Senior managerretaiL ServiceSasharawan Wachananont | Senior manageroFFice & indUStriaL ServiceSnarumon rodsiravoraphat | Senior manageradviSorY ServiceS CollIerS INTerNaTIoNal ThaIlaND:napatr tienchutima | associate director Bangkok office 17/F ploenchit center,reaL eState management ServiceS 2 Sukhumvit road, klongtoey,Bandid chayintu | associate director Bangkok 10110 thailand Tel +662 656 7000inveStment ServiceS fAx +662 656 7111nukarn Suwatikul | associate director emAil info.th@colliers.comWasan rattanakijjanukul | Senior manager Pattaya office 519/4-5, pattaya Second road (opposite central FestivalreSearcH pattaya Beach), nongprue, Banglamung, chonburi 20150antony picon | associate director Tel +6638 427 771Surachet kongcheep | Senior manager fAx +6638 427 772 emAil info.pattaya@colliers.comvaLUation & adviSorY ServiceSnicholas Brown | associate directorphachsanun phormthananunta | associate directorSantipong kreemaha | Senior managerWanida Suksuwan | managerpattaYa oFFicemark Bowling | Senior Sales managerSupannee Starojitski | Senior Business development ReSeARcheR: ReSeARcheR:manager / office manager thailand thailand antony picon Surachet kongcheep associate director | research Senior manager | research emAil antony.picon@colliers.com emAil surachet.kongcheep@colliers.com this report and other research materials may be found on our website at www.colliers.co.th. Questions related to information herein should be directed to the research department at the number indicated above. this document has been prepared by colliers international for advertising and general information only. colliers international makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. any interested party should undertake their own inquiries as to the accuracy of the information. colliers international excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. colliers international is a worldwide affiliation of independently owned and operated companies. accelerating success. www.colliers.co.th