The Bangkok rental market has remained relatively unscathed during the ongoing COVID-19 pandemic with CBRE Thailand finding there have even been some short-term benefits for landlords. Challenges are on the horizon, however.
According to the consultancy, the impact on the Bangkok rental market has been delayed due to the structure of leasing contracts which tend to be yearly agreements. In some cases, expats have retained apartments and kept paying rent even though they returned to their home countries. Those that have stayed and were on expiring contracts are looking at short-term rental solutions that have been good news for landlords.
“Interestingly, there are also short-term upsides during COVID-19 as current leases are extended to avoid moving and entailing pandemic exposure. This is beneficial to apartment landlords as occupancy continues even after original leases expire without needing to find a new tenant and the associated marketing, repair or cleaning costs,” Khun Supawit Mahaguna, Research and Consulting Analyst at CBRE Thailand, wrote in a recent article.
Looking ahead, the Bangkok rental market faces challenges as housing budgets shrink, layoffs happen and other events soften demand. According to CBRE, some landlords are offering discounts as well as trying to get tenants to sign two-year leases at a reduced rate. This is a start, but landlords will need to adopt new strategies in the coming months.
“Landlords will need to adapt to changing market conditions by including more widespread offerings of shorter (six-month or monthly) lease terms and lower rents. For project-by-project expats and long-stay tourists, monthly leases would provide a spacious and more affordable alternative to serviced apartments and hotels,” Khun Supawit explained. “Meanwhile, current tenants can be retained by offering extensions, flexible due-date schedules and the conversion of security deposits into rental payments if needed.”
CBRE Thailand concluded that landlords and apartment building operators need to be more flexible than in the past in order to attract broader audiences and ensure Bangkok rental properties don’t sit empty. It will also be necessary to provide assistance to tenants since budgets are likely to change moving forward.