In Bangkok more than 90 percent of tenants who rent residential properties with prices of more than THB 20,000 per month are expatriates.
CBRE’s latest Q3 Residential Report noted the majority of expatriates who come to work in Thailand prefer to rent rather than purchase because they are usually stationed in the city for a short period of time, and it still remains difficult for them to fund an outright property purchase through local finance options. This factor alone makes buying an unattractive proposition for them.
The number of expatriates holding work permits in Bangkok has been steadily rising and had increased to 80,994 at the end of September 2015, an increase of 8.6 percent from the figures for the same period last year. This excludes diplomats and expats with work permits from other provinces who choose to live in Bangkok.
Bangkok expats typically prefer to live within a limited number of areas in Bangkok, according to CBRE. The majority opt to live on Sukhumvit between Sois 1 and 63, and between Sois 2 and 42 due to convenient travel connections. Sathorn and Central Lumpini also remain popular choices, according to the real estate firm.
The supply of standard expatriate apartments (single ownership buildings) has grown only slightly over the past ten years, and this is because of the lower yields that make building new apartments less attractive for developers. Condominiums (multi-ownership buildings) where individual owners are buy-to-rent investors, are direct competition for apartments in the Bangkok expat leasing sector
CBRE noted that 70 percent of condominiums under construction in downtown Bangkok either offer one-bedroom or less, yet there is strong rental demand for two-and three-bedroom units. The firm said that some 75 percent of its own leasing deals are for two-bedroom units or larger.
The number of new condominium developments in Bangkok has grown much faster than the supply of new apartments, and CBRE said it expects that between 30 percent and 40 percent of new units in downtown condominium developments have been sold to buy-to-rent investors.
To complete with the rising supply of condominiums for rent, CBRE has seen apartments being renovated, but due to the weak economy and little in the way of an increase in expatriate housing allowances, the average rent per sqm price dropped during Q3.
CBRE also noted that most of the apartments were taking longer to fill than vacant units, and have been offering promotions in an attempt to attract additional tenants.
To read the full CBRE Residential Report for Q3 click here.
