Rented condos gaining popularity with Thais

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While expatriates working in Bangkok provide the biggest demand for rental condominiums in Bangkok’s central business district (CBD), Thais are showing an increasing interest in renting, according to JLL, a services firm specialising in real estate.

The unresolved traffic problem and growing affluence of the locals are the two major key factors driving Thai demand for rental condominiums in downtown Bangkok.

MahaNakhon, a 314-metre luxury mixed-use skyscraper in the Silom-Sathon central business district of Bangkok, was opened in late August 2016. The project comprises a hotel, retail space and residences, with 200 units of The Ritz-Carlton Residences priced between around $1.1 to $17 million.

“Many Thais rent condominiums in Bangkok, with most of them being employees of corporates with offices located in the CBD,” said Bunthoon Damrongrak, head of residential sales and leasing at JLL.

“The majority of Thai tenants rent units in non-CBD areas along extended mass transit routes where rentals are much more affordable compared to the CBD. It was not until recent years that more Thais have now renting condominiums in the CBD,” he added.

JLL estimates that demand from Thai occupiers now accounts for 10% of the total demand for rental condominiums in the CBD, as compared to less than 5% in previous years.

Most Thai demand for condominiums in the CBD concentrates in fully furnished studio units with rentals ranging between 20,000 and 25,000 baht per month.

“In the past, renting a small condominium or apartment unit for more than 20,000 baht per month was a luxury for Thais. But these days, more office workers are willing to pay more to stay closer to their office. This reflects the insufficiency of mass transit infrastructure that allows residents in satellite communities to conveniently commute to work in the city centre. It also shows growing affluence of Thai workers in Bangkok,” Mr Bunthoon said.

Some Thais are also renting large units with rentals ranging between 200,000 and 300,000 baht per month. Rental motivations of these tenants vary, with some needing only temporary residence.

Recently, JLL let on a three-bedroom condominium unit in an ultra-luxury development on behalf of the owner to a Thai family for 300,000 baht per month. The family had been looking for a temporary residence while their home was undergoing a major renovation.

Still, other tenants want, as a trial, to live in a unit they want to purchase or in a condominium development where they intend to buy a unit. This group of tenants want to assess if they really like the unit or the development before making purchasing it.

“Generally, the typical minimum rental term is one year. This means such a trial could cost between 2.4 million baht and 3.6 million baht. However, these tenants are happy to pay for it to prevent situations where they find out later that they do not really like a unit they spend more than 100 million baht on purchasing, or that condominium living does not suit their lifestyle,” Mr. Bunthoon explained.

While condominium purchases are becoming more costly, as reflected by a continued increase in prices in new condominium development projects, condominium rentals are growing at a slower pace.

This slower growth is due to stronger competition in the leasing market, fuelled by continued growth in new supply. As a result, JLL expects the growing number of Thais renting condominiums to continue.

Source: Bangkok Post

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