ECONOMY
According to the National Economic and Social Development Board (NESDB), Thai economy in Q4-2013 experiences a sluggish growth due to deceleration in private consumption and investment, declining exports, and a slowing global economy.
Ongoing political conflict also plays a major role in decelerating the nation’s economic growth. NESDB has revised its 2013 annualized GDP forecast from 3.8%-4.5% to 3%, after a lower-than-expected Q3-2013 GDP of 2.7% was announced. However, Thai economy next year is expected to gradually expand at an annualized rate of 4%-5% benefiting from the recovery of the global economy and Thailand’s major trading counterparts, whereas the recovery of the political situation is crucially needed for Thailand’s economic to grow.
SUPPLY
From H1-2013, none of new serviced apartment project has been luanched. Probably, the unstable political situation in Thailand affected development plans of starting new projects. The number of stock was stable at approximately 15,800 units, comprising of 3,018 units in North Bangkok (BN), 4,348 units in South Bangkok (BS), 3,430 units in Lower Sukhumvit (LS), and 5,004 units in Upper Sukhumvit (US). The net Addition from H2-2012 was 756 units, a 5.03% increase y-o-y. The new supply was concentrated in Lower Sukhumvit (LS) area with approximately 20.69% of total new supply.
DEMAND
The upward trend of occupancy rate has continued from 2010. The occupancy rate in H2-2013 has risen slightly to 84%, grew by 4.3% y-o-y. However, due to the high rental rate and the anti- government protest on Silom Road, South Bangkok (BS) encountered the least increase between 78.53% in H2-2012 and 79.67% in H2-2013, raised by only 1.45%. On the other hand, North Bangkok (BN) faced the most increase in occupancy rate between 71.98% in H2-2012 and 78.51% in H2-2013, raised by 9.08%.
ROOM RATE
The average rental rate in this period has insignificantly increased to THB 2,592 per room per night (/room/night), raised by 10.12% y-o-y. In more details, North Bangkok (BN) illustrated the highest room rate at THB 2,692 while South Bangkok (BS) showed the lowest room rate at THB 2,354.
OUTLOOK
Although the number of granted work permit in Thailand decreased dramatically, the decreased number was only from the reduced granted work permits of citizens from Thailand’s neighborhood countries, Laotians, Burmeses, and Cambodians, which might not be targets of serviced apartments. There was still an upward trend in the granted work permits of citizens from other countries as a result of the coming of ASEAN Economic Community (AEC) in 2015.
According to the above, Bangkok’s serviced apartment market trends to grow continually. However, this depends on the improvement of Thai Politics. Also, the supply probably not increases considerably because of limited number of large land plots in Bangkok CBD. In addition, the serviced apartment market faces stiff competitions on rental rates from both existing and new small condominiums and hotels targeting short-stay. Most competitors would compete by reducing their room rates to increase their occupancy rates. In conclusion, the occupancy rate is forecasted to be 80 – 90% with the room rate of THB 2,500 – THB 2,600/room/night.