The number of serviced apartments in Bangkok rose 6.5 per cent during 2002 and is growing even more quickly this year. This may depress rentals further, JEREMY COLSON reports.

The serviced residence market in Bangkok has been growing for the past three years and the opening of several new buildings this year is likely to result in even lower rental rates.

According to property experts CB Richard Ellis, the increase in supply is already impacting occupancies and is beginning to translate into softer prices.

Managing director for Thailand and Indochina, Mr David Simister, said: “Supply increased to 6,621 units during April to June this year, and occupancy rates dipped to about 80 per cent compared with 90 per cent for the second quarter in 2002.”

With an additional 1,500 units due to be completed this year, buyers will find themselves in an even stronger position. But business travellers should not expect prices to fall to levels of the “Asian depression” between 1997 and 2000, when expatriates went home and business slowed across the region.

“A lot of the demand in 2001 and to some extent last year, came from the people who came in to restructure the companies that needed repairing as a result of the damage inflicted by the Asian crisis,” Mr Simister said. He added last year’s occupancy rates of 90 per cent were exceptionally good for a product that was a quasi hotel, but even at 80 per cent occupancy, the sector was grossing returns of two or three times a regular rented apartment.

Little wonder hotel companies and traditional operators are keen to establish a position.

Latest to open is Natural Ville, a 27-storey 150-unit property. Natural Park is the owner, while Accor provides the management.

Accor managing director, Mr Michael Issenberg, said the project should prove popular not only with the increasing number of expatriates looking for quality housing in Bangkok but also with high income-earning Thais. Natural Park president and CEO, Mr Sermsin Samalapa, said the serviced apartment market in Bangkok’s central business district would continue to grow rapidly. But he believes well-built properties will hold their own even if an oversupply occurs.

Table compiled by BTN Asia-Pacific