The Bangkok serviced apartment market remains stable even with these units facing greater competition for condo units. Several prominent Thai developers, including Sansiri and Ananda, have entered the Bangkok serviced apartment market in recent years as they look for ways to increase revenue and create sustainable passive income. However, the future of the segment is now cloudy.
According to Colliers International Thailand, demand for Bangkok serviced apartments is strongest in the Central CBD and Sukhumvit areas of the city, although there has been little movement in terms of both occupancy and rent. Increases may be possible in the future, but competition from the condo market will limit the potential of this.
The report from Colliers International Thailand noted that there were 23,733 serviced apartment units in Bangkok at the end of the fourth quarter with another 5,834 units expected to be finished between now and 2022. Most of the developments are low-rise serviced apartments located along Sukhumvit Road.
The Bangkok serviced apartment market continues to record a strong occupancy rate with this figure hitting 85.97 percent in the fourth quarter of 2019. However, this figure has seen little growth in the past few years.
“Although the number of expatriates in Bangkok grew continuously every quarter, the average occupancy rate of serviced apartments in Bangkok did not dramatically increase over the past few years. We expect the average occupancy rate of serviced apartments in Bangkok in the first quarter of 2020 to be stable and remaining similar to the previous quarter,” the Colliers International Thailand reported.
Meanwhile, the proliferation of condo projects throughout the Thai capital has limited the rental potential of the Bangkok serviced apartment market. Rents have been fairly stagnant since 2017 with some potential renters opting for low-priced condo units.
“Serviced apartments have been intensely competitive with condominiums and luxury apartments during the past few years. Many foreigners moved from serviced apartments to condominiums in the same location, due to lower rents and similar facilities. Thus, not many new serviced apartments were added to the market in the past few years or will be in the future,” the report explained.
Experts are still uncertain as to how the segment will be affected by the COVID-19 pandemic. The Bangkok rental market has benefited in the short term, but a decline is expected in the mid-term. The same trend is possible in the serviced apartment market.