Bangkok Rental Market Thrives
Below is a MRR and PLR article in category Finance -> subcategory Real Estate.
Bangkok Rental Market Thrives
Thailand Property Report by Dawn Ferguson
With monthly housing allowances ranging from Bt70,000 to Bt100,000, Bangkok's well-paid expatriates seek homes with the Western amenities they are accustomed to.
For condominium and apartment owners, this market segment is a lucrative opportunity, especially since many expats are on short-term assignments. However, the growing competition makes it challenging to enter.
James Pitchon, Executive Director of CB Richard Ellis Thailand, reported that demand for high-end rentals increased in 2006. The number of expatriates with work permits in Bangkok rose to 67,412 in 2006, a 12.5% increase from the previous year, according to the Alien Occupational Control division of the Department of Employment. The largest group of expatriates is Japanese, making up 22% of this market due to Japan being the largest foreign direct investor in Thailand.
Pitchon noted that actual rental demand is even higher, as these figures exclude diplomats, United Nations agencies, and retirees who typically purchase properties.
Fortunately, demand has surged. Last year, there was limited new supply in apartments, with only about 330 units completed, while condominium units increased by over 4,000. This trend is expected to continue over the next two to three years. However, serviced apartments, which operate more like hotels, are excluded from these figures.
Concerning supply, the key question is how many apartments meet expat quality standards and how many condo owners are willing to lease them out. Recently, new developments have focused more on small units aimed at the Thai market, meaning not all new condos appeal to expatriates.
Pitchon explained that the ratio of owner-occupied units to those purchased for renting varies. In new developments nearing completion, 30-50% of units may be available for rent. Although demand has risen, ample condo supply is expected.
This influx of units means fierce competition ahead. Expatriates usually prefer single-ownership apartments where owners can address all their needs. In a condo, the owner might not even reside in Thailand, leaving tenants' requests unmet. The challenge for condo owners leasing units is effective management, as tenants will have questions and needs.
For instance, when an air conditioner breaks, it’s essential to know who will handle repairs. Staff responsible for common areas won’t handle private property issues, so clear management plans for maintenance and upkeep are crucial. This includes pest control, regular A/C maintenance, and clear agreements on responsibilities between owners and tenants.
Sukhumvit remains the most popular expat area, followed by Central Lumpini and Sathorn. Smaller expat communities are also found around the International School of Bangkok and Bangkok Pattana School. Although the riverside area shows potential, access issues limit its demand. Some expats are moving to Thonglor for its lower density and proximity to the skytrain.
The expat rental market is largely driven by housing allowances given by employers, often covering full rent costs. A significant market change is seen as Japanese families now receive higher allowances, sometimes up to Bt75,000 for a three-bedroom apartment. While Japanese are at the lower end of the market, they represent significant demand.
Much of the existing rental stock is over a decade old. Few new apartments have been built since the financial crisis, with most new constructions being condos. Smaller, modern-designed units often command higher rents due to their updated aesthetics.
Regarding housing rentals, the market remains small with limited home supply in central areas like Sukhumvit. Although Sansiri on 67 rented well, few companies provide housing allowances over Bt100,000.
There is no distinct Thai rental market above Bt15,000 per month, as high-earning Thais prefer buying over renting, unlike their foreign counterparts.
The rental market remains efficient and transparent, ensuring standards are maintained, or new expats will look elsewhere.
You can find the original non-AI version of this article here: Bangkok Rental Market Thrives.
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