Q3 2012 | SERVICED APARTMENT

Bangkok SeRvICed apaRTmenT maRkeT RepoRT

Bangkok Serviced Apartment Market
execuTive SummARy
Serviced apartments are still popular with foreign companies in Bangkok, although the market is changing due to global economic conditions. Fewer new serviced apartments came on to the market in Q3 2012 than in the previous quarter. Around 420 units have opened so far this year, and another 156 are due to open by the end of 2012. Occupancy rates are stable at around 78%, although that is lower than at the start of the year. Serviced apartment projects are trying to keep their clients by renewing contracts early at the current rate, and offering special corporate discounts. However, the rental rates for top quality serviced apartments rose slightly in Q3 compared to the previous quarter. Foreign companies have had their budgets for staff accommodation cut due to the global financial situation. However, political and economic stability in Thailand is prompting many foreign companies to set up offices here, particularly those looking for a base from which to conduct business in ASEAN. Foreign direct investment and the number of expatriates in Bangkok continue to rise, and that will continue to drive demand for serviced apartments.
hiSTORicAl Supply, Q3 2012

ThAilAnd

mARkeT indicATORS
Q2 2012 / Q3 2012 new Supply RenTAlS OccupAncy

Source: Colliers International Thailand Research Note: F = Forecast

Approximately 420 units were completed in the first three quarters of 2012, and nearly 156 units are scheduled to complete by the end of the year. The total supply of serviced apartment units at the end of 2012 is expected to be

around 18,259 units. GM Serviced Apartment, on Sukhumvit Soi 20, was completed in September 2012, with a total of 89 units ready to rent.

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BANgkok SERVICED APARTMENT REPoRT | Q3 2012

Supply by lOcATiOn, Q3 2012

Source : Colliers International Thailand Research

More than 50% of the serviced apartment supply in Bangkok is located along Sukhumvit Road in the early and late Sukhumvit areas. The total

supply in the early Sukhumvit area has been more than in other locations for the past 20 years.

cumulATive fuTuRe Supply fROm Q4 2012 TO 2014, by lOcATiOn

Source: Colliers International Thailand Research

Nearly 80 units in early Sukhumvit area are scheduled for completion in Q4 2012, and nearly 70% of the new units scheduled to complete in

2014 are located on Sukhumvit Road.

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BANgkok SERVICED APARTMENT REPoRT | Q3 2012

hiSTORicAl OccupAncy RATe by gRAde, 2010 TO Q3 2012 by QuARTeR

Source: Colliers International Thailand Research

The average occupancy rates in Q3 2012 for grade a and B serviced apartments increased slightly from the previous quarter. However, the

average occupancy rates in the second and third quarters were still lower than in the first quarter of this year.

OccupAncy RATeS by lOcATiOn, 2011 TO Q3 2012 by QuARTeR

Source: Colliers International Thailand Research

The average occupancy rate in the third quarter in all locations was up slightly from the previous quarter, except in late Sukhumvit and other areas which decreased slightly. Serviced apartment projects are trying

to retain their current clients for long periods by renewing contracts before the expiration dates at the current rate.

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BANgkok SERVICED APARTMENT REPoRT | Q3 2012 demAnd dRiveRS

numbeR Of expATRiATeS in bAngkOk, Q3 2012

Source: office of Foreign Workers administration (Work permit), department of employment of The ministry of Labour and Colliers International Thailand Research Note: Above information does not include Lao, Burmese and Cambodian citizens.

The number of expatriates in Bangkok continues to rise. The eU debt crisis is still a major concern for investors and affects the entire global economy. However, asia has shown it has potential for investment, especially in the ASEAN region. Bangkok is highly attractive for investors who wish to take a first investment step into aSean, especially the sub-

region of Myanmar, Laos and Cambodia. As a result, several international companies are looking for regional office space in Bangkok. There is also good potential for serviced apartments. The total number of expatriates in Bangkok in Q3 2012 was approximately 61,190.

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BANgkok SERVICED APARTMENT REPoRT | Q3 2012 RenTAl RATe

RenTAl RATe fOR One-bedROOm uniTS by lOcATiOn, 2011 TO Q3 2012 by QuARTeR

Source : Colliers International Thailand Research

Rental rates in Q3 2012 were similar to the previous quarter. only the Central CBd and early Sukhumvit areas saw rates fall by around 5%

compared to Q2, although the Central CBd still commands the highest rental rates.

AveRAge RenTAl RATe by gRAde, 2011 TO 3Q 2012 by QuARTeR

Source: Colliers International Thailand Research

The average rental rate of grade a and B serviced apartments increased slightly from the previous quarter, and the rental rates for Grade A

serviced apartments are still higher than for Grade B by more than 45%.

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BANgkok SERVICED APARTMENT REPoRT | Q3 2012 fORecAST

The increase in Foreign direct Investment (FdI) and the political stability during the past two to three years are main drivers of demand for serviced apartments. Many foreign investors may be new to investing in Thailand and are in the development stage of their businesses, but it is a good sign for the future of the serviced apartment business in Bangkok. The global economic slowdown has directly affected company budgets for staff accommodation and is driving people towards lower-cost residences, such as condominiums for lease and apartments for foreigners in the City Area. Serviced apartments in Bangkok are trying to retain existing clients by renewing contracts at the same rate or slightly less. In addition, they directly contact foreign and Thai firms employing expatriates to offer special rates. The average rental rate for most serviced apartments in Bangkok did not change much from the previous year due to intense competition, as there are lots of apartments for foreigners as well as condominiums for lease in the City area.

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BANgkok SERVICED APARTMENT REPoRT | Q3 2012

Appendix

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BANgkok SERVICED APARTMENT REPoRT | Q3 2012 gRAding

no recognised standard for rating serviced apartments exists in Thailand and therefore Colliers International Thailand has classified them based on various criteria, of which a summary is given below. Furnished to a high standard and usually offering recreational facilities and a variety of services similar to an upscale or mid-range hotel. managed by a lower-end international or domestic operator.

gRAde A
Located in prime locations and luxury residential areas. Furnished to an exceptionally high standard, and offering recreational facilities and amenities similar to a luxury or upscale hotel. Managed by a top international branded operators or a comparable local brand.

gRAde c
Located in secondary areas. Furnished to a comfortable, but not luxurious, standard. Fewer provisions of facilities and amenities, similar to that of a mid-range or economy hotel.

gRAde b
Usually located in the city centre but in less sought-after locations.

ZOning
The serviced apartment area can be divided into five areas or pockets of concentration:

late Sukhumvit area

This is the section of Sukhumvit Road between Soi 37 and Soi 77 to the north, and Soi 26 and Soi 50 to the south.

Central CBD
This is the area that encompasses Silom, Sathorn, Surawong, Si phraya and Rama 4 Road, as well as other sois in between, such as Soi Saladaeng, Soi Convent, Soi pipat.

Southern Fringe area

This is the area that stretches along the bank of the Chao phraya River on Charoenkrung Road. narathiwas Ratchanakarin Road and Rama III Road are located in this area.

Central lumpini area

Central Lumpini covers the areas along Rama I, Rajadamri, Wireless, ploenchit, Langsuan, phayathai and phetchaburi Roads, as well as other sois in between, such as Soi Ruamrudee.

other areaS
Most of the remaining Grade B and C serviced apartments are scattered across the city, including phayathai, phetchaburi, Ratchadapisek, mitmaitri, Srinakarin, Bangna and Ramkhamhaeng Road.

early Sukhumvit area

This is the section of Sukhumvit Road between Soi 1 and Soi 35 to the north, and Soi 2 and Soi 24 to the south.

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BANgkok SERVICED APARTMENT REPoRT | Q3 2012 cOllieRS inTeRnATiOnAl ThAilAnd mAnAgemenT TeAm
advISoRY SeRvICeS | HoSpITaLITY Jean marc garret | director ReSIdenTIaL SaLeS & LeaSIng Napaswan Chotephard | Manager pRoJeCT SaLeS & maRkeTIng monchai orawongpaisan | associate director ReTaIL SeRvICeS asharawan Wachananont | associate director ReSeaRCH Tony picon | associate director Surachet Kongcheep | Senior Manager oFFICe SeRvICeS nattawan Radomyos | Senior manager IndUSTRIaL SeRvICeS narumon Rodsiravoraphat | associate director advISoRY SeRvICeS napatr Tienchutima | associate director ReaL eSTaTe managemenT SeRvICeS prasert Saiphrawan | Senior manager InveSTmenT SeRvICeS nukarn Suwatikul | associate director Wasan Rattanakijjanukul | Senior manager vaLUaTIon & advISoRY SeRvICeS phachsanun phormthananunta | director Wanida Suksuwan | associate director paTTaYa oFFICe Mark Bowling | Senior Sales Manager Supannee Starojitski | Senior Business development manager / office manager HUa HIn oFFICe Sunchai Kooakachai | Senior Manager

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ReSeARcheR: Thailand Surachet Kongcheep Senior manager | Research emAil surachet.kongcheep@colliers.com

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