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After 2 years of uncertainty linked to political issues, the property market in general and the serviced apartment market in particular is expected to experience renewed activity and growth in 2008.
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MarketResearchBANGKOK SERVICED APARTMENT SECTOR OVERVIEW | MARCh | 2008
B A N G KO K S E RV I C E D A PA RT M E N T M A R K E T
c o l l i e r s i n t e r n at i o n a l | t h a i l a n d
BanGKoK serViced aPartMent sector oVerVieW 2008 • After2yearsofuncertaintylinkedtopoliticalissues,thepropertymarketingeneral andtheservicedapartmentmarketinparticularisexpectedtoexperiencerenewed activity and growthin2008.
• Atthesametime,competition will intensifyfurtheras6,580newservicedapartment unitsin38projectsaresettoenterthemarketby2011.
• Totalnew investmentinthese38projectsisestimatedataroundTHB27billion.
• Manyinvestorsareattractedtothissectorbystrong income potential combinedwith lowerinvestmentandoperatingcostsandofferedhigheryieldsthanhotels.
• International operators,suchasOakwoodAsiaPacific,FrasersHospitalityandThe AscottGroup, are expanding aggressively throughoutAsia and allhavenew propertiesunderwayinBangkok.
• The advantage of a strong brand name,eitherlocalor international,willbecome moreapparentinamorecompetitiveenvironment.
• Asnew supply outpaces new demand,operatorshaveturnedincreasinglytoshort- staytouristsandbusinesstravelers, ratherthanthetraditionalservicedapartment long-staymarket(1-3months),competingwithhotels.
• Someservicedapartmentsarecurrentlytakingin30-35% long-stay and 65-70% short-staybusiness.
• Withnew supply of hotelsalsoincreasingsharply,themarketisexpectedtoentera verycompetitivephasein2008.
• Withincreasedsupplycoupledwithlicensingrequirementsforshort-stayoperators, a strategy for success could be a return to focus on the traditional longer-stay market. Offeringguestsstayingamonthorlongerawell-designedproductthatmeets theirneedswouldbepreferabletoengaginginaprice-cuttingwarwithhotels.
• Appreciationof theBaht isputtingsomeGradeApropertiesoutsidethebudget allocationofsomelong-stayexpatriates,whichcouldbenefit the Grade B marketin thenearterm.
MarKet indicators
2007 2008F
suPPly
deMand
occuPancy (%)
aVeraGe achieVed rent (thB / sq.M.)
www.colliers.com/thailand
B a n G Ko K s e rV i c e d a Pa rt M e n t M a r K e t | M a r c h | 2 0 0 8
By 2011, the total amount of serviced apartment investment will be approximately thB 27 billion for the new supply of 6,580 units in 38 serviced apartment projects. this investment cost is exclusive of land prices.
colliers international2
The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market
colliers international 3colliers international 2
colliers international 3
Central Business DistrictArea covers - Silom Road - Sathorn Road - Other sois in between such as Soi Saladaeng, Soi Convent & Soi Pipat
The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market
colliers international 3colliers international 2
neW suPPly in central Business district area (cBd)
Serviced Apartment Name Location No. of units Expected completion
For your residence silom soi 17 24 2008
sathorn Vista - Marriott soi suanplu 195 2008
sathorn Garden sathorn road 155 2009
istitmar residence sathorn road 77 2010
Metro sathorn tower soi saint louise na 2011
Source : Colliers International Thailand Research
neW suPPly in central luMPini
Serviced Apartment Name Location No. of units Expected completion
Bliss residence soi ruamrudee 78 2008
Baan rajprasong soi Mahadlekluang 3 70 2008
noble ambience ruamrudee soi ruamrudee 2 108 2008
siam Kempinski rama i 150 2009
st'regis rajdamri road 22 2010
Planned Project Ploenchit road 150 2011
Planned Project Ploenchit road na 2011
Source : Colliers International Thailand Research
suPPly By locationCurrently,thereareapproximately10,685units in75servicedapartmentprojects locatedinBangkok.Aftermoreanalysis, theservicedapartmentareacanbedividedintofourareasorpocketsofconcentration:
•CentralBusinessDistrictArea(CBD)This is thearea thatencompassesSilomRoadandSathornRoadaswellasother sois inbetweensuchasSoiSaladaeng,SoiConvent&SoiPipat.Thereareapproximately1,687unitsinservicedapartmentlocatedinthisarea.Thebelowtableshowsfuturesupplyofservicedapartmentprojectsinthisarea.
•CentralLumpiniAreaTheCentralLumpiniareacoversareasalongRamaI,Rajdamri,Wireless,PloenchitandLangsuanRoads.Thisarea isconvenient forbothbusiness travelersandtourists,becauseof itsproximitytomanyof theofficebuildingsandlocalattractions.CapeHouse,CentrePoint–WirelessandNaturalVille,amongothers,arelocatedinthissectionofthecitywithapproximately1,984units.However,anadditional578unitswillbeaddedinthisareaby2011.
Central Lumpini Area covers - Rama I Road - Rajdamri Road - Wireless Road - Ploenchit Road - Langsuan Road
colliers international4
Sukhumvit Area covers - Sukhumvit Road between Soi 1 and Soi 69 to the north - Sukhumvit Road between Soi 2 and Soi 42 to the south. - Other sois in between
colliers international 5colliers international 4
The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market
neW suPPly in suKhuMVit
Serviced Apartment Name Location No. of units Expected completion
sukhumvit Park View by Marriott sukhumvit soi 24 300 2008
compass sukhumvit soi 24 340 2008
na sukhumvit soi 19 42 2008
admiral suite ii sukhumvit soi 31 122 2008
citadines 8 sukhumvit soi 8 130 2008
citadines 11 sukhumvit soi 11 134 2008
citadines 23 sukhumvit soi 23 138 2008
column residence sukhumvit soi 16 238 2008
somerset amar Garden sukhumvit soi 3 122 2008
eight thonglor sukhumvit soi 55 148 2009
the royal suite serviced apartment sukhumvit soi 13 170 2009
somerset sukhumvit thonglor sukhumvit soi 55 268 2009
oakwood residence thonglor sukhumvit soi 55 na 2009
somerset Grand sukhumvit sukhumvit soi 23 265 2010
Jasmine resort & Park hotel sukhumvit soi 69 300 2010
Benchasiri Place by Marriott sukhumvit 92 2010
Fraser suites sukhumvit sukhumvit soi 6 250 2010
l&h sukhumvit 19 sukhumvit soi 19 600 2011
Source : Colliers International Thailand Research
•SukhumvitAreaThisisthesectionofSukhumvitRoadbetweenSoi1andSoi69tothenorthandSoi2andSoi42tothesouthaswellasothersoisinbetween.ThispopularareawithexpatriatesandtouristsincludestheAsokeIntersectiononthewesttotheEmporiumMalltotheeast.TheareabetweenSukhumvitSoi1andSukhumvitSoi69ispopularasaresidentialareaforwesternexpatriates.JapanesenationalstendtopreferfromAsokeintersectionupwards,especiallySoiThonglor.ServicedapartmentsinthevicinityincludeEmporiumSuites,JasmineExecutiveSuites,PresidentPark,SofitelResidenceAsoke,SomersetLakePointandUnicoGrandSukhumvit,tonameafew.Theservicedapartmentsinthisvicinityare5,273units,withahugeamountofnewsupplyinthisvicinitybeingaddedofapproximately3,659units.
colliers international 5
Outer Central Business District Area covers - Charoenkrung Road - Narathiwat Ratchanakarin Road - Rama III Road
colliers international 5colliers international 4
The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market
neW suPPly in outer central Business district (outer cBd) area
Serviced Apartment Name Location No. of units Expected completion
riverside Garden Marina charoenkrung road 260 2008
radisson suite narathiwat road 300 2009
Source : Colliers International Thailand Research
• Outer Central Business District (Outer CBD) AreaThisistheareathatstretchesalongthebankoftheChaoPhrayaRiveronCharoenkrungRoad.NarathiwatRatchanakarinandRamaIIIRoadsarelocatedinthisarea.Thisisanewareaforexpatriateservicedapartmentssincethisareais locatedontheborderoftheCBD,witheasyaccesstotheCBDarea.Thus,thereisascarcityofGradeAservicedapartmentprojectsinthearea.DespitethismanyservicedapartmentsintheareasuchasOakwoodCityResidence,CentrePointSilom(Bangrak),Shangri-LaHotelApartmentshaveexcellentreputationsinthisvicinity.Theservicedapartmentsinthisprecinctboastatotalsupplyof987units.AdditionalGradeAservicedapartmentsof560unitswillbeaddedinthisvicinity.
• Other AreasMostoftheremainingGradeB&CservicedapartmentsarescatteredacrossthecityincludingPhayathai,Petchaburi,Rama9Roads,Mitmaitri,etc.TherecentadditionoftheAmantainRatchadapisekaddedabout116unitstothetotalstockinthisarea.Thetotalstockofthisareais754units.Sincethenewinternationalairporthasbeenmoved,theareaaroundSuvarnabhumiInternationalAirport is in the investmentconsiderationarea for investors.Therewillbeapproximately468unitsaddedintheareaaroundthenewairport.
neW suPPly in other areas
Serviced Apartment Name Location No. of units Expected completion
Four Wing residence srinakarin 128 2008
McKenna serviced apartment Phayathai 169 2008
Fragrant real estate Makkasan 350 2009
somerset ratchatewi Phayathai 225 2009
chamchuree square rama iV 120 2008
oakwood Garden tower Bangna 340 2009-2010
Source : Colliers International Thailand Research
The remaining areas scattering across the city - Phayathai Road - Petchaburi Road - Rama 9 Road - Bangna Road
colliers international6
Definition of Grade A serviced apartments - Good location - Easy accessible - Pratical layout for living - Reputative property management -/- operator - Adequate facilities.
Themarket share of serviced apartmentstargetingexpatriatescanbecategorized intotwogradeswhichareGradeAandGradeB.
Grade A serviced apartment projects are in good locations and easily accessible. The layout must be practical for living, with good design and nice interiors. The property must be managed by reputable management -/- operator. There must be adequate facilities for the residents.
TotalsupplyofGradeA-servicedapartmentsisapproximately3,978units,representing37%ofthetotalnumberofservicedapartments,whilethesupplyofGradeB-servicedapartments isapproximately6,707units,representing63%.
Recently, therewere22projectsofGradeAservicedapartments,whileGradeBserviced
apartmentshad53projects inBangkokasofendof2007.
colliers international 7colliers international 6
The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market
suPPly By Grade
Source : Colliers International Thailand Research
Figure 1 : Bangkok current supply of serviced apartments by grade (units)
Grade B6,707 63%
Grade a3,97837%
30
Figure 2 : number of serviced apartment projectsby grade, as of 2007
10
0
20
40
50
60
Grade a Grade B
Source : Colliers International Thailand Research
Grade
53
22
no. of projects
colliers international 7colliers international 7colliers international 6
The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market
Central Lumpini area has the highest numbers of Grade A serviced apartments, with approximately 1,651 units, followed by sukhumvit area, with 1,501 units and the CBD area, with 826 units.
ThesupplyofGradeAservicedapartmentsismainly located in three areaswhicharetheCBD,Sukhumvit,andCentralLumpiniarea. Central Lumpini has the highestnumber ofGradeA serviced apartments,withapproximately1,651units, followedbySukhumvitareaandCBDarea.Earlier,GradeAservicedapartmentswereconcentrated intheSukhumvitarea,howevermanylandlordsdidn’t renovate their properties, thus thequalityof theirpropertieshavedropped toGradeB.Anotherfactoristhatanincreasingnumberofnewservicedapartmentbuildingsweredevelopedingoodlocations,nearBTSandMRT stations, and alsomanaged byinternationalchains.However,the
majorityofthesupplyofservicedapartmentsisconcentratedintheSukhumvitareaasthisareaispopularforexpatriatesandtourists.TheSukhumvitarea isalsopopular forJapanese,especiallySukhumvitSoi39andSukhumvitSoi 55 where the Japanese communityinBangkok is. There aremany Japanesesupermarkets such as Fuji Supermarket,located inSukhumvitSoi39andSoi33. InSukhumvitSoi55,thereisJ-Avenuewhichisaneighbourhoodmall-servingJapaneseandexpatriatesresidingaroundthearea.ThegraphbelowillustratesthenumberofGradeAandGradeBservicedapartmentsineacharea.
1500
3000
Figure 3 : number of units of Grade a & B serviced apartments current supply by location, as of 2007
500
0
1000
2000
3500
2500
4000
cBd sukhumvit centrallumpini
outer cBd others
Grade BGrade a
Source : Colliers International Thailand Research
location
no. of units
826
1,501
3,772
861
1,651
333
0
987
0
754
colliers international8 colliers international 9colliers international 8
There are approximately 75 serviced apartment projects as of 2007, with 39 serviced apartment projects located in Sukhumvit.
The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market
Thereareapproximately75servicedapartmentprojectsasof2007,with39servicedapartmentprojectslocatedinSukhumvit.Itisnoticeablethat theprojects of serviced apartment inCentralLumpinihavemoreunits than theprojectsof servicedapartment in theCBD
sincethetotalprojectsofservicedapartmentintheCBDarehigherthanthetotalprojectsofservicedapartmentinCentralLumpini.
ThesupplyofGradeA&Bservicedapartmentsaddedin2007wasapproximately1,596unitsin15projects.In2007,theSukhumvitareahad
thehighestadditionalnumberofsupply,with892unitsin12projectsaddedinthisarea.
15
30
Figure 4 : number of projects of Grade a & B serviced apartments current supply by location, as of 2007
5
0
10
20
25
cBd sukhumvit centrallumpini
outer cBd others
Grade BGrade a
Source : Colliers International Thailand Research
location
no. of projects
5
9
30
8 8
3
0
6
0
6
colliers international 9colliers international 9colliers international 8
The highest additional supply in 2007 was in the Sukhumvit area, with 892 units in 12 projects.
The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market
neW serViced aPartMents added in the year 2007
Project Name Location Opened No. of units Room Type
adelphi suite sukhumvit soi 8 nov-07 93studio - 36 sq.m.
1Br - 48 sq.m.
citadines 16 sukhumvit soi 16 Jan-07 79studio - 30 sq.m.
1Br - 36 sq.m.
civic Park ii sukhumvit soi 55/13 dec-07 241 Br - 100 sq.m.
2 Br - 110 -120 sq.m.
chatra court exclusive
residencesukhumvit soi 19 2007 60
studio - 30 sq.m.
1Br - 60 sq.m.
2Br - 60 sq.m.
Fraser suites sukhumvit sukhumvit soi 11 oct-07 163
studio - 52 sq.m.
1 Br - 60,73,80 sq.m.
2 Br - 95, 100 sq.m.
3 Br - 130, 134, 140,
160 sq.m.
Fraser urbana sathorn south sathorn road Jan-07 142
1 Br - 65, 69 - 72 sq.m.
2 Br - 104, 119 -124,
136 -142, 157 sq.m.
3 Br - 180 sq.m.
Ph 3 Br - 271, 313,
335 sq.m.
Grand centre Point
rajdamrisoi Mahadlekluang 2 oct-07 526
studio - 44, 54 sq.m.
1 Br - 69, 72 sq.m.
2 Br - 111 sq.m.
3 Br - 148, 179 sq.m.
legacy suite sukhumvit soi 29 dec-07 108studio - 39, 48 sq.m.
1 Br - 46, 65 sq.m.
Malee suites serviced
apartmentnarathiwat soi 24 sep-07 36
studio - 38, 44 sq.m.
1 Br - 60, 61, 66,
72 sq.m.
oakwood residence
sukhumvit 24sukhumvit soi 24 dec-07 112
studio - 29, 42 sq.m.
1 Br - 53, 55, 58 sq.m.
2 Br - 80, 84 sq.m.
Premier thonglor sukhumvit soi 55/9 2007 60
1 Br - 55.5 sq.m.
2 Br - 69.37 sq.m.
2 Br - 83.25 sq.m.
Prommitr Place sukhumvit soi 39 Feb-07 16
studio - 44 sq.m.
2 Br - 88 sq.m.
3 Br - 132 sq.m.
Ph - 168 sq.m.
the tropical residence sukhumvit soi 49 Jun-07 59studio - 40, 45, 50 sq.m.
2 Br - 80 sq.m.
the alcove sukhumvit soi 55/23 Mar-07 201 Br - 60 sq.m.
2 Br - 110 sq.m.
unico Grand sukhumvit sukhumvit soi 1 nov-07 98studio - 35, 40, 45,
65 sq.m.
Total : 15 properties 1,596 units
Source : Colliers International Thailand Research
colliers international10
By 2011, an additional 6,580 serviced apartment units in 38 projects will be added in all area.
colliers international 11colliers international 10
The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market
Sukhumvitareaisconsideredaresidentialareaforexpatriates residing inBangkok, similartoSouthKensington inLondon.Thus,newsupply of serviced apartmentshas focusedonthisarearecently. By2011,therewillbeadditionalnewsupplyofservicedapartmentsinSukhumvitofapproximately3,659units,representinganincreaseof69%oftotalsupplyofservicedapartments inthisarea.Thenewsupply inCentralLumpiniareawillbe578units,andinCBDareaabout451units.It is
interesting that therewillbenewsupply inotherareas fortheamountof1,332units,ofwhich36%oftotalnewsupplywillbelocatednearbySuvarnabhumiInternationalAirportwhichwillbemanagedbyan internationalchain.Withinfouryears,anadditional6,580servicedapartmentunitsin38projectswillbeaddedinallareas.
The increasing number of new supply ofservicedapartmentsaswell as theexistingsupply will increase competition in theSukhumvit area.Notonly is there ahugeamountofnewsupplyofservicedapartments,butalsoalargenumberofnewhotelswillbeaddedinthisareaby2011.Thecompetitionwillnotexistonlybetweenservicedapartmentsthemselves,butbetweenservicedapartmentsandhotelsasmanyservicedapartmentshaveappliedforhotellicencesinordertocatertothetouristsandbusinesstravelerswhotravel
forshortstayperiods.Though,manyservicedapartmentshavenotyetappliedforthehotellicencessincethepropertiesareunabletopassthestandardqualitificationtoreceivethehotellicences, theseservicedapartmentsstillofferdailyratesinordertogetthebetteroccupancyrate aswell ashigher yields.The extremecompetitionwill start inSukhumvitarea intheverynearfuture.Thereasonwhyservicedapartmentsfocusmoreonshortstaycustomersisasfollows:
neW suPPly
•Thenumberofsupplyexceededthenumberofnewexpatriatesor •Thehigheryieldfromgettingadailyrate.
With a huge amount of new supply of serviced apartments and hotels will increase competition in this area.
1500
3000
Figure 5 : Future supply of serviced apartments in Bangkokby location between 2008 & 2011
500
0
1000
2000
3500
2500
4000
cBd sukhumvit centrallumpini
outer cBd others
Source : Colliers International Thailand Research
location
no. of units
451578
560
1,332
3,659
colliers international 11
The highest increase supply of serviced apartments will be in 2008 with 25.44% yeay-on-year in 2007.
colliers international 11colliers international 10
The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market
The increasing new supply of servicedapartmentswasapproximately3-7%between2004&2006.The sharp increase started
in 2007& 2008with 17.56%&25.44%respectively as illustrated in the followingtable:
current & neW suPPly oF serViced aPartMent units BetWeen 2004 & 2011
Year Current supply New supply % change y-o-y
2004 7,708 247 3.2%
2005 7,955 537 6.8%
2006 8,492 597 7%
2007 9,089 1,596 17.56%
2008 10,685 2,718 25.44%
2009 13,403 2,106 15.71%
2010 15,509 1,006 6.49%
2011 16,515 750 4.54%
Source : Colliers International Thailand Research
6,000
12,000
Figure 6 : number of current and new supply of serviced apartments between 2004 & 2008F
2,000
0
4,000
8,000
14,000
10,000
2004 2005 2006 2007 2008F
new supply added in the yearcurrent supply
Source : Colliers International Thailand Research
year
no. of units
7,708
7,9558,492
9,089
10,685
2,718
1,596
537597
247
colliers international12 colliers international 13colliers international 12
The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market
By 2011, there will be approximately 6,580 units in 38 projects added the supply of serviced apartment.
suMMary oF neW suPPly oF serViced aPartMents in BanGKoK By 2011
No. Project Name Location No. of units Est. completion
1 admiral suites ii sukhumvit soi 31 122 2008
2 Baan rajchaprasong soi Mahadlekluang 3 70 2008
3 Benchasiri Place by Marriott sukhumvit 92 2010
4 Bliss residence soi ruamrudee 78 2008
5 chamchuree square rama iV 120 2008
6 citadines 8 sukhumvit soi 8 130 2008
7 citadines 11 sukhumvit soi 11 134 2008
8 citadines 23 sukhumvit soi 23 138 2008
9 column residence sukhumvit soi 16 238 2008
10 compass sukhumvit soi 24 340 2008
11 eight thonglor sukhumvit soi 55 148 2009
12 For your residence silom soi 17 24 2008
13 Four Wing residence srinakarin 128 2008
14 Fragrant real estate Makkasan 350 2009
15 Fraser suites sukhumvit sukhumvit soi 6 250 2010
16 istitmar residence sathorn 77 2010
17 Jasmine resort & Park hotel sukhumvit soi 69 300 2010
18 l&h sukhumvit 19 sukhumvit soi 19 600 2011
19 McKenna serviced apartment Phayathai 169 2008
20 Metro sathorn tower soi saint louise na 2011
21 na sukhumvit soi 19 42 2008
22 na Ploenchit road na 2011
23 noble ambience ruamrudee ruamrudee soi ii 108 2008
24 oakwood residence Garden tower Bangna 340 2009-2010
25 oakwood residence thonglor sukhumvit soi 55 na 2009
26 Planned Project Ploenchit road 150 2011
27 radisson suite narathiwat road 300 2009
28 riverside Garden Marina charoenkrung road 260 2008
29 sathorn Garden sathorn road 155 2009
30 sathorn Vista - Marriott soi suanplu 195 2008
31 siam Kempinski rama i road 150 2009
32 somerset amar Garden sukhumvit soi 3 122 2008
33 somerset Grand sukhumvit sukhumvit soi 23 265 2010
34 somerset ratchathewi Phayathai 225 2009
35 somerset sukhumvit thonglor sukhumvit soi 55 268 2009
36 st'regis rajdamri 22 2010
37 sukhumvit Park by Marriott sukhumvit soi 24 300 2008
38 the royal suite serviced apartment sukhumvit soi 13 170 2009
Total : 38 properties 6,580 units
Source : Colliers International Thailand Research
colliers international 13
The demand of serviced apartments market can be devided into two groups which are I. New expatriates II. International tourists -/- business travelers.
colliers international 13colliers international 12
The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market
•NewexpatriatesmovingtoBangkokThe amount of demand from expatriatesfor servicedapartmentsmarketcomes fromthe increasingnumberof expatriates eachyear since the servicedapartments are thetemporary residences for expatriates oncetheyhavemovedtoBangkok.Theywillstayforalengthofone-threemonthsuntiltheycanselecttheirpermanentresidencessuchasApartmentsandSinglehouses.Though,thereare someexpatriates choosing to stayonayearlycontractatservicedapartments,after
wehaveundergoneour study, the averagelengthofstayofexpatriatesstayinginservicedapartment is threemonthsor90days.Thedata from theOffice of ForeignWorkersAdministration(WorkPermit),DepartmentofEmploymentofTheMinistryofLabourhasshownthetotalnumberofexpatriatesinBangkokbetween2004and2007.Thenewworkpermits issuedwasestimated fromtheproxyofgrowthindemandbetween2004&2007asshowninthebelowchart:
Fromtheassumptionthattheaveragelengthofexpatriatesstayinginservicedapartmentsis3monthsandanother2%ofthetotalnumberof existing expatriates staying in a yearlycontractatservicedapartment, thereforewe
haveestimated thenumberof roomnightsexpatriates residing in servicedapartmentsbetween2004&2007asfollows:
deMandCurrently,thedemandfortheservicedapartmentmarketcanbedividedintotwogroupswhichareshortstaytourists&businesstravelersandnewcomingexpatriatearrivalsinBangkokeachyear.
6,000
Figure 7 : new work permits issued, Bangkok 2004-2007
2,000
0
4,000
8,000
10,000
2004 2005 2006 2007
Source : Office of Foreign Workers Administration (Work Permit) Department of Employment, The Ministry of Labour & Colliers International Thailand Research
year
no. of new work permits
7,592
8,670
6,9287,574
600,000
Figure 8 : annual room nights for long stay inBangkok serviced apartments between 2004 & 2007
200,000
0
400,000
800,000
1,000,000
1,200,000
2004 2005 2006 2007
Source : Executive Serviced Apartment Alliance (EXSAM)
& Colliers International Thailand Research
year
no. of room nights
683,280780,300
372,942436,233
623,520 681,660
486,808
317,521
1 year length of stay3 months length of stay
colliers international14
Another demand of serviced apartments comes from short stay visitors which are tourists and business travelers for leisure and business purposes.
The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market
colliers international 15colliers international 14
Ifwecomparetheroomnightsgrowthofnewsupplyof servicedapartmentwiththeroomnights growthof demand fromexpatriatesrelocating toBangkok. It is shownthat thegrowth rate of new supply increased in ahigher rate thanthegrowthrateofdemandfromnew expatriates.The growth rate ofroomnightsofnewsupplyincreasedby167%year-on-yearin2007whilethegrowthrateofroomnightsdemandincreasedby9.3%year-on-year.However,thenumberofexpatriatesareexclusiveofdiplomaticorUnitedNationexpatriatestaff.Therefore,thisfiguresarenotentirelyrepresentativeofexpatriatesbasedinBangkok.Webelievethatthereareanumber
of expatriates based inThailandwithoutworkingpermits.However, themajorityofthese donothaveaccommodationbudgetslarge enough to account for a significantamountofdemandintheservicedapartmentsector.Thereare,ofcourse,alsoanumberofexpatriatesrelocatingtoBangkokwhodonotstayinservicedapartments.Nevertheless,newworkpermits issuedcanserveasaproxy forservicedapartmentsupplyonarelativebasis.Thebelowgraph is the comparisonof thegrowthrateofsupplyandthegrowthrateofdemand.
Thecorebusinessofservicedapartmentistoserve thedemand residing inBangkok inaperiodofmorethanamonth.However, theslightly increase indemandwasunable to
catchupthehighincreaseinsupply,asaresult,the servicedapartmentshavemovedmoreintotheshort stay fromtourists -/-businesstravelers.
• Number of tourist arrivals at BangkokaccommodationAnotherdemandofservicedapartmentscomesfrom short stay visitorswhich are touristsandbusinesstravelersforleisureandbusinesspurposes.Official figures fromtheTourismAuthorityofThailand(TAT)has revealedthatthenumberoftourists-/-business
travelers arrivingBangkokaccommodationbetween2004&2007withtheaveragelengthofstaybetween2004&2007,wecangettheanuallynumberofroomnightsasshowninthefollowingchart:
600,000
Figure 9 : estimated growth in room nightsdemand & supply, 2004 & 2007
200,000
0
400,000
800,000
2004 2005 2006 2007
Growth in room nights supply
Growth in room nights demand
Source : Executive Serviced Apartment Alliance (EXSAM)
& Colliers International Thailand Research
year
no. of room nights
683,280780,300
623,520
217,905
681,660
582,540
90,155
196,005
yearno. of tourist arrivals at Bangkok
accommodationavg. length of stay total room nights
2004 9,907,832 2.01 19,914,742
2005 10,519,754 1.97 20,723,915
2006 10,673,145 1.83 19,531,855
2007 9,678,773 1.87 18,099,305
Source : Tourism Authority of Thailand (TAT), Thai Hotels Association (THA) & Colliers International Thailand Research
colliers international 15colliers international 15colliers international 14
The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market
Though, the number of tourists at Bangkok accommodation increased annually between 2004 and 2006, with the decrease in average length of stay in 2006 caused the decrease of room nights at Bangkok accommodation in 2006.
Though,thenumberoftouristsatBangkokaccommodationincreasedannuallybetween2004and2006,thedecreaseinaveragelengthofstayin2006causedthedecreaseofroomnightsatBangkokaccommodationin2006.Wehaveassumedthateachtouristoccupiedasingleroom.Withthehighincreaseinsupplyofbothhotelsandservicedapartments,whilethedecreaseinannualroomnightsofdemandfromtourists-/-businesstravelers,theextremecompetitionwillexistinthenearfuture
oVerall aVeraGe occuPancy rate oF serViced aPartMentsBetWeen 2004 & 2007
yearaVG. occuPancy
ratetotal suPPly
unitstaKe uP units /
daytaKe uP units /
year
2004 86.33% 7,955 6,868 2,506,820
2005 89.81% 8,492 7,627 2,783,855
2006 85.06% 9,089 7,731 2,821,815
2007 83.33% 10,685 8,904 3,249,960
Source : Executive Serviced Apartment Alliance (EXSAM) & Colliers International Thailand Research
ProPortion oF deMand oF short terM and lonG terMWiththeaverageoccupancyrateofservicedapartmentmarketsbetween2004&2007,wecanestimatethetotalroomnightsinayearbetween2004&2007asshownonthefollowingtable:
Withtheaverageoccupancyrateofservicedapartmentbetween2004&2007,itisnoticeablethattheproportionofshorttermwasgreaterthantheproportionoflongtermandthetrendofshorttermincreasedannuallybetween2005&2007.Thefuturetrendofservicedapartmentsistoserveshortstaywhichisthecoremarketofhotel.Belowchartshowntheaverageproportionofcustomersstayinginservicedapartmentsforthelengthof 1.Between1-3monthsperiod. 2.Minimum1yearperiod. 3.Daily/weeklyperiod.
It is noticeable that proportion of short term was greater than the proportion of long term and the trend of short term increased annually between 2005 & 2007.
30%
Figure10 : Proportion of the length of stay at serviced apartmentbetween 2004 & 2007
10%
0%
20%
40%
50%
60%
70%
80%
90%
100%
2004 2005 2006 2007
Source : Executive Serviced Apartment Alliance (EXSAM) &
Colliers International Thailand Research
year
Percentage
27% 28%
13%15%
22% 21%
15%13%
60% 59% 62% 64%
lt (1-3 months) lt (1 year) st (daily)
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The occupancy rate of Grade A serviced apartment decreased annually between 2005 & 2007, However, the average occupancy rate of Grade A in the CBD increased in 2007 which was different from Grade A in other areas due to little supply of serviced apartments in this area.
The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market
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occuPancy rate:
Year
Grade A Grade B
overall cBd sukhumvit central
lumpinioverall cBd sukhumvit
central
lumpini
outer
cBd
2004 82.70% 69.57% 87.63% 80.44% 91.86% 82.80% 94.98% 85.16% 80.98%
2005 90.24% 85.75% 93.07% 89.20% 91.38% 77.42% 93.57% 90.02% 84.65%
2006 85.47% 78.53% 86.94% 86.35% 85.47% 77.83% 82.90% 81.69% 82.88%
2007 84.01% 81.45% 84.73% 84.31% 86.01% 79.18% 87.23% 88.94% 74.84%
Source : Executive Serviced Apartment Alliance (EXSAM) & Colliers International Thailand Research
TheoccupancyrateofGradeAservicedapartmentdecreasedannuallybetween2005&2007.Thereareseveralfactorsthatcausedthiswhichareasfollows:
• TherevaluationofThaibahtwhichmadeGradeAservicedapartmentrentgooverthe accommodationbudgetaftervisitorsconvertedtheircurrencyintoThaibaht,so thattheamounttheygotwasless.ThedemandoflongstayshiftedtoGradeBserviced apartment.
• ThetrendsoftheGradeAservicedapartmentfocusedonshortstay,thustheoccupancy ratevariedfromthenumberoftouristarrivalsatBangkokaccommodation,ratherthan thenumberofnewexpatriatescomingtoBangkok,sincetherewasanincreaseof numberofexpatriatesin2007butthedemandspouredtoGradeBservicedapartment.
• ThepoliticaluncertaintyinThailandin2006&2007hassloweddowntheforeign businessinterestsaswellastheinternationaltouristarrivalsatBangkokaccommodation.
However,theaverageoccupancyrateofGradeAintheCBDincreasedin2007whichwasdifferentfromGradeAinotherareasduetolittlesupplyofservicedapartmentsinthisarea.
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The Knowledge Report | March | 2008 | Bangkok Serviced Apartment
The slight difference between Grade A & Grade B rent was found in 2006 which was just 2.7% difference.
Average achieved rent of Grade A - Central Lumpini = THB 1,222 / sq.m. - CBD = THB 1,210 / sq.m. - Sukhumvit = THB 1,093 / sq.m.
Fortheoverallmarket, thebigdifferenceoftheaverageachieved rentofGradeA&Bservicedapartmentwas14% in2004.TheslightdifferencebetweenGradeA&GradeBrentwasfoundin2006whichwasjust2.7%difference.In2007,theaveragerentofGradeBdecreasedby4%sincetherewasanadditional
of supplyof servicedapartmentaddedwithapproximately1,596units,with943unitsofGradeAand653unitsofGradeB.Duringtheopeningofnewproperties,thenewsupplyofferedspecialpriceswhichaffectedGradeBservicedapartments.
Thehighestachievedrentin2007wasfoundinCentralLumpini,withTHB1,222/sq.m.followedby theCBDandSukhumvitarea,withTHB1,210/sq.m.&THB1,093/sq.m.
respectively.Therewas a huge supply ofservicedapartments in theSukhumvitareawhichincreasedthecompetition.
achieVed rent
1,157
1,058
Source : Executive Serviced Apartment Alliance (EXSAM) &
Colliers International Thailand Research
600
Figure 11 : average achieved rent of Grade a & B serviced apartmentsbetween 2004 and 2007
200
0
400
800
1,000
1,200
1,400
year
thB / sq.M.
2004 2005 2006 2007
975
853
1,045
962
1,132
1,102
Grade a Grade B
Source : Executive Serviced Apartment Alliance (EXSAM) &
Colliers International Thailand Research
600
Figure 12 : average achieved rent of Grade a serviced apartments incBd, sukhumvit and central lumpini area between 2004 & 2007
200
0
400
800
1,000
1,200
1,400
year
thB / sq.M.
2004 2005 2006 2007
cBd sukhumvit central lumpini
• THE AVERAGE ACHIEVED RENT OF GRADE A SERVICED APARTMENTS
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The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market
The highest achieved rent of serviced apartments in 2007 was found in Central Lumpini, with THB 1,100 / sq.m., followed by Sukhumvit and the CBD, with THB 1,057 / sq.m. & THB 738 / sq.m. respectively.
ThehighestachievedrentofGradeBservicedapartmentswasfoundinCentralLumpini,withTHB1,100/sq.m.,followedbySukhumvitandtheCBD,withTHB1,057 / sq.m.&THB738/sq.m.respectivelysincetherewereonlyafewGradeBservicedapartmentinCentralLumpini.ThemajorityofGradeB serviced
apartmentunits inSukhumvithavecompactsizewhich gives ahigher rateper sq.-m.-,therefore the achieved rateofGradeB inSukhumvitwas in thesecondrankbetween2004&2007
• THE AVERAGE ACHIEVED RENT OF GRADE B SERVICED APARTMENTS
Source : Executive Serviced Apartment Alliance (EXSAM) &
Colliers International Thailand Research
600
Figure 13 : average achieved rent of Grade B serviced apartments incBd, sukhumvit, central lumpini area between 2004 & 2007
200
0
400
800
1,000
1,200
1,400
year
thB / sq.M.
2004 2005 2006 2007
cBd sukhumvit central lumpini
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researcher: Risinee Sarikaputra Manager | Research
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The Knowledge Report | March | 2008 | Bangkok Serviced Apartment Market
NotesTheservicedapartmentratingusedinourresearchissolelybasedonpropertyratingandachievedratesobtainedfrommarketresearch.TheratingsystemusedinourreportisnotbyColliersInternational.
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This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.
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