Bangkok Rental Market Prospers

 

Thailand Property Report by Dawn Ferguson– With housing allowances in the variety of Bt70,000 to Bt100,000 a month, Bangkok’s high-paid expatriates have money to burn – and they desire homes with all the Western-amenities they’re accustomed too.

For condominium and apartment owners, this sector of the market is a prospective gold mine, particularly provided most of these anticipates are here on a short-term basis. The stats certainly are appealing, but as competition grows, it’s not an easy market to get in.

CB Richard Ellis Thailand executive director James Pitchon informed Property Report Thailand that demand for high-end leasings increased in 2006 and the number of expatriates in Bangkok with work licenses grew to 67,412 in 2006, a 12.5% boost year on year according to statistics by the Alien Occupational Control division of the Department of Employment. The biggest sector of this market is Japanese – 22% – as the so-called “land of the increasing sun” is the largest foreign direct investor in Thailand.

Pitchon kept in mind that the rental market remains in truth even higher, as those numbers exclude diplomats and agencies such as the United Nations. They likewise omit foreigners without work permits, but Pitchon says they consider most of these to be part of the senior citizen market, who generally buy their units.

Last year there was just a minimal quantity of brand-new supply in homes, and there were just about 330 systems finished last year. That will continue to be the case in the next 2 to three years,” he stated, but included this figure excluded serviced apartment or condos, which are considered an extremely various product– somewhere in between a hotel and an apartment.

” From a supply point of view, the huge concern is, how many of these houses are expat quality, and the number of owners of these brand-new condominiums will want to rent them out?” asks Pitchon. “Recently a brand-new supply has actually appeared in the downtown location, and there’s been a higher concentrate on little sized systems, a lot of them targeted at the Thai market, so not all the brand-new condo supply will be of a standard that attract expats, but there are a great deal of condo units.”

Pitchon says the percentage of owner profession and systems bought by individuals on a buy-to-lease basis varies from developing to structure: “Of the advancements that are just coming up to conclusion, the number that will be readily available for rent ranges between 30-50% at the minute. So, although need has increased, there will be rather a great deal of condo supply coming on.”

This means that competitors is going to be tight in the coming year. Normally, expats provided the choice would choose a single ownership house, states Pitchon, due to the fact that the owner is able to service all their requirements whereas in a condo the owner might not even remain in Thailand. And in most cases the owner has not put in place a regional manager to look after his house. The obstacle for condominium owners who have actually purchased to lease out is how to manage their units due to the fact that occupants will have concerns.

” So if the a/c unit breaks down, who’s going to repair it? It will not be the staff taking care of the typical areas of the condominium, since their responsibility is not personal residential or commercial property. So owners must consider how they will handle and preserve the units.”

This includes implementing insect control agreements, regular A/C maintenance contracts, and, most significantly, there has to be a clear understanding between the owner and the renter of who’s accountable for doing what.

The most popular location for expats is still Sukhumvit, followed by Central Lumpini and the Sathorn area. There are 2 satellites, one being around the International School of Bangkok and there is likewise a smaller sized cluster around Bangkok Pattana School. When it comes to the up-and-coming riverside, presently there is minimal need from migrant occupants, normally since of access problems. A little section of expats are heading to other locations, such as Thonglor. “Again you’ve got access to the skytrain however in a somewhat lower density environment,” said Pitchon.

The expat rental market is driven typically by housing allowances granted to employees and employees generally invest all of their allowances, but not put their own cash in. “The most significant modification in the market has been that Japanese with families now receive greater allowances than they did previously,” states Pitchon. “Some will provide Bt70,000 or Bt75,000 for a three-bedroom house. The Japanese tend to be at the lower end of the marketplace but they are a considerable level of need.

” What’s taken place is that much of the existing stock is over 10 years old. We’ve seen extremely couple of apartments developed considering that the financial crisis over the last 10 years, more condos, and what has been occurring is that brand-new supply, with smaller units, is in fact getting greater rents since it looks much better. Modern design.”

As for housing rentals, Pitchon says the marketplace is little because there a restricted supply of homes in central areas, including in the Sukhumvit location. “Sansiri on 67 had actually leased well, however there is a restricted market for individuals with over Bt100,000 a month to invest,” he stated. “There are couple of business that pay that kind of real estate allowance.”

When it comes to two-tiered prices for Thais and Foreigners, there actually isn’t a Thai rental market. Given that Thais have the liberty to purchase and offer what they select, unlike immigrants, those with high wages and incomes simply won’t go out and lease 75,000 a month homes. There is no Thai market above Bt15,000 a month.

” The rental market is effective in terms of transparent rates, info on items and a routine turnover,” stated Pitchon. “So if a structure doesn’t preserve its requirements, then brand-new expats will not move in.”

“Recently a new supply has actually appeared in the downtown location, and there’s been a greater focus on little sized systems, numerous of them intended at the Thai market, so not all the new condo supply will be of a requirement that appeals to expats, but there are a lot of condo systems.”

The expat rental market is driven generally by real estate allowances approved to employees and workers usually spend all of their allowances, but not put their own money in. “The greatest modification in the market has actually been that Japanese with families now receive greater allowances than they did formerly,” states Pitchon. As for real estate rentals, Pitchon says the market is little since there a limited supply of homes in main locations, consisting of in the Sukhumvit area. As for two-tiered rates for Thais and Foreigners, there really isn’t a Thai rental market.