Leading property consultancy company CBRE Thailand recently announced it had fully let a new 32-unit apartment building, the Philo Residence, on Sukhumvit Soi 24 within three months of the building’s completion. The eight-storey development has achieved an average rent of over THB 800 per square metre per month, which is one of the top rental rates achieved for apartments (single-ownership) or condominiums (multi-ownership) in that area where rents are on average only THB 500 per square metre per month.
The reason for the high rentals and speed of leasing is that the apartments matched expatriate tenant requirements in terms of size, layout, specification and furniture, according to Theerathorn Prapunpong, Director of Residential Leasing Services at CBRE, who were the development consultants and sole leasing agents for the project.
The Philo Residence, on Sukhumvit Soi 24 in Bangkok, has achieved average rental returns of over THB 800 per square metre per month.
“CBRE closes about 400 leases on average for expatriates every year and by studying requirements and transaction data in our comprehensive database, we are able to analyze the market and have a good understanding of where expatriates want to live, what they want, and, most importantly, what they can afford to pay,” said Mr. Prapunpong.
According to CBRE’ s research, many expatriates still receive a housing allowance and are willing to spend all of it – but not more. They are not willing to top up the allowance with their own funds. It is important for any apartment developer to know what budget the majority of expatriates have for a one-, two- or three-bedroom unit.
Developers want to maximize the rent per square metre, but there is a limit on how small a unit tenants are willing to accept, so the developers cannot simply shrink the unit size to increase the per-square-metre rent. The attractiveness and efficiency of the layout are critical; therefore, the right design can produce an optimum size for each type of unit that will lease quickly and maximize per-square-metre rents.
Over 60% of the tenants in The Philo Residence are Japanese, while the remaining 40% are from other Asian countries as well as Europe and North America. In order to lease an apartment building quickly and get top rents, the units must appeal to a wide range of tastes and be able to make the tenants feel like they are living in their own homes, says CBRE.
There are now over 80,000 expatriates with work permits in Bangkok, an increase of 8.55% from last year. Generally, expatriates want to live in a limited number of areas – primarily, Sukhumvit, Lumpini and Sathorn.
The main options for residential accommodation for expatriates are apartments or condominiums for rent. The demand for apartments still remains strong with 90% occupancy overall due to the fact that tenants still prefer a building that is managed by a single owner. Most apartments have been well maintained and regularly refurbished and redecorated. Apartment rents range from THB 250 to over THB 800 per square metre per month.
Condominium occupancy in the main expatriate residential areas, including owner occupation and leased units, is over 80%.
There are only about 11,000 apartment units in the popular expatriate areas with about 300 new units that will be completed by the end of 2016. With such limited supply and the continuing renovation and refurbishment of older apartments, CBRE believes that the rental price per square metre will continue to increase.
(Source: CBRE Thailand)