Condo rental rates in Bangkok expected to face continued pressure

Rental rates in Bangkok´s condominium market are expected to face continued pressure during 2010 as more new units come onto the market.

Research from DTZ showed that during the final quarter of 2009, six projects with 1,408 units were launched within the Central Business District of the Thai capital. The total number of launches in 2009 stood at 5,726 – a 196 per cent increase on the 1,938 units the debuted during 2008. Most new launches during the quarter were in the mid-tier range.

DTZ reported considerable demand among these newly launched projects, with average take-up rates of between 60 per cent and 70 per cent.

Average capital values for condominiums inched up 0.2 per cent to THB 82,680 per square
metre at the end of the fourth quarter, and are forecast to rise in 2010. In the near term, the low interest rate environment will continue to appeal to home buyers, driving sales in the mid-tier condominium segment, according to DTZ.

Average rental rates for Grade A condominiums remained unchanged quarter-on-quarter at
THB457 per square metre per month during the fourth quarter, however this is a decline of 10.4 per cent year-on-year.

Wilailak Kraisuwannasarn, Associate Director of Thailand Residential, said: “Condominium rents will continue to face pressure from completed units being put onto the rental market. More than 2,000 condominium units are expected to be completed during the forthcoming quarter. This is on top of the competition from the apartment and serviced apartment sectors.”

She added that should the political situation remain calm in tandem with greater economic
certainty, Bangkok could also be an attractive alternative for residential investors priced out of faster-rising markets in the region.