Expatriates to Face Higher Rents in Bangkok Residential Leasing Market
According to CBRE Thailand, rents for expatriate-standard apartments and condominiums are likely to rise for the first time in more than 20 years, amid shortage of accomodations with 2-3 bedrooms.
“Since the early 1990s, there has been very little increase in total amounts of rent paid by expatriates for their residential accommodation, but this looks like it is about to change,” James Pitchon, executive director of the international property consultant said.
He has covered the Bangkok residential leasing market for more than 20 years.
While there are more expats, there has not been significant growth in the supply of two- and three-bedroom condos and apartments.
Many expats come with their families and generally want to stay in a limited number of locations – Sukhumvit Sois 1-63/2-42, Lumpini, and parts of Silom and Sathorn.
These tenants need two or three bedrooms.
Very few apartment buildings have come on the market and although the condo stock in the main expat areas has surged by almost 80% over the past five years, most have one bedroom.
The market has almost reached a shortage or at least a limited choice of expat-standard apartments and condos in the preferred locations, especially with two or three bedrooms, so expats are going to need larger housing allowances.
Occupancy in the most popular expat areas of apartments is over 90%, and 70% for condos.
About 22,000 condos are under construction in expat areas, but only about 30% have two or three bedrooms with the rest being studios and one-bedroom units.
Bangkok counted about 65,000 expats with work permits in the second quarter, according to the Employment Department. This was an increase of 10% year on year and does not include diplomats or those holding work permits for locations outside of Bangkok but living in the capital.
“In 2012, CBRE was responsible for more than 400 expatriate leasing transactions, 70% of which were for two- and three-bedroom units, and we think this is representative of overall demand in the mid- to upper end of the market,” said Theerathorn Prapunpong, head of residential leasing.
With the limited amount of good-quality two- and three-bedroom apartments and condos and, with almost no apartments and mainly one-bedroom condos under construction, there is likely to be a shortage of two- and three-bedroom expat-standard residential units.