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Bangkok apartment market strong despite more intense competition from condos.

With more units being completed, new condominiums bought for investment purposes are now being put up for rent. Though targeting primarily the same group of expats working in Bangkok, the apartment market has yet to experience any significant impact from increased condominium for rent competition, according to the latest study by Jones Lang LaSalle.

“The apartment market in central Bangkok has continued to perform well with the average occupancy rate standing at over 90%, driven by strong demand from expats,” Dan Tantisunthorn, Head of Research at Jones Lang LaSalle.

“An increasing number of expats has continued to sustain healthy performance in the apartment sector despite higher competition with condominiums for rent. However, competition is likely to further intensify as more condominium projects are scheduled for completion over the next few years.”

According to a Jones Lang LaSalle’s study, 2006 will see a total of 34 new condominium projects with over 7,600 units completed in central Bangkok. “While the ratio of owner-occupied units to for-rent units across the market is difficult to estimate, we anticipate 25% of the units completed condominium buildings being offered for rent,” said Tantisunthorn. “However, we do not believe the apartment market will be significantly affected by competition from condominiums due to the distinct natures of the two types of developments,” noted Mr. Dan. “Apartments are purpose built for rent and thus offer features that are tailored to tenant requirements, including specific conceptual and architectural designs, unit sizes, and furnishing as well as tenant management,” he added.

Three developments were completed in the first half of 2006, comprising of a total of 82 units. Two of these, Baan Pipat (28 units) and The Convento Boutique (21 units), are in the CBD, and one, The Pentacles (33 units), is in the Sukhumvit area.

While many projects scheduled for completion in the first half of the year were delayed to the second half, six projects of around 170 units were withdrawn from the market for renovation in order o stay competitive. As a result, the total stock of apartments in Bangkok decreased from 10,980 at the end of 2005 to 10,900 in July, 2006.

By the end of 2H06, 470 additional units are expected to be completed, mostly in the Sukhumvit area, which remains the most sought after location for expatriates. Its accessibility to the new international airport and the anticipated extension of the Mass Rapid Transit System to the eastern part of Bangkok are further boosting the area’s popularity.

Despite strong demand for luxury apartments in the CBD and Sukhumvit areas in the first half of 2006, only around 50 units were taken up. This is manly the result of limited availability of supply in the market. The average occupancy rate for apartments increased from 92.9% at the end of 2005 to 93.8% in July 2006.

Although new supply is expected to rise further during the second half of the year, more apartments are expected to be withdrawn from the stock for renovation, according to Jones Lang LaSalle. Due to the limited supply, rents are likely experience additional increases. Demand for apartments in Bangkok will likely remain strong over the second half of 2006 as the number of expatriates, particularly those from Japan, is expected to continue growing.

The study also noted there will be more pressure on owners of older projects to renovate their units, from not only the new supply of apartments, but also the growing number of service apartments and condominium units for rent.


Thailand Property Report