Si

Racha
Serviced Apartment Market Update

September 2016

Surging pipeline projects override supply and

demand equilibrium in Japanese-centered market
Industrial sector remains the Supply vs. Demand Trend
key feeder of room nights Number Number of
of Units Expatriates
Si Racha emerged as an industrial town that has 5,000 160,000
attracted many large-scale companies investing 4,000
in the manufacturing sector. With this came a 110,000
3,000
rapid growth of the expatriate population, which
2,000
has previously pushed robust demand for short 60,000
and extended stay accommodations. As a result, 1,000
developers were drawn to the investment 0 10,000
opportunities in the hospitality sector, and in turn 2013 2014 2015 2016F
catalyzed the expansion of midscale to upscale Hotel and Serviced Apartment Units
Expatriates in Si Racha
hotels and serviced apartments.
Source: C9 Hotelworks Market Research

Over the past few years, Si Racha experienced a Additionally, the slowdown of foreign direct
sharp rise in accommodation supply of 46% investment (FDI) in the industrial sector is forcing
between 2013 to 2015. Looking at the existing a drop in demand for serviced apartments as the
and pipeline projects, we see a surging market number of expatriates is seeing a slight reversal.
competition that looks to have a decisive impact This phenomenon will leave the destination with
on forward trading. A growing residential no choice but to target a broader market by
condominium supply also poses to become revisiting the geographic sources.
predatory to hotels and serviced apartments. Bill Barnett, Managing Director, C9 Hotelworks

Trends Forward Outlook

One-bedroom conFiguration accounts for nearly Development of a high-speed rail that connects
70% of total units in serviced apartment Bangkok to the Eastern Seaboard is pending for
inventory with high demand for single use environmental approval and projected to start in
rooms from unmarried expatriates. the next two years.

Mainstream hotels and serviced apartments in Addition of internationally branded and managed
Si Racha consist of 3,503 units, which are mostly hotel chains in the pipeline is expected to put
clustered on Sukhumvit, Jerm Jompon and pressure on rates and occupancy on the market
Surasak roads. and raise the standard of product offerings.

High dependency on Japanese labor force for Decline in foreign direct investment in Thailand
occupancy has caused concerns for hotels due to last year is creating a domino effect for industrial
the continuous weakening Yen in recent years. properties in Chonburi Si Racha.
 MARKET DEMAND OVERVIEW
In 2015, Japan represented 39% of the total foreign direct investment projects in Thailand,
followed by Singapore and China at 12% and 7% respectively.
Expatriate Workers by Province
Number of Work Permits

250,000 Annual work

permits issued
200,000
in Chonburi Si
150,000 Racha shrank
100,000 by 53% last
50,000 year as a result
0
of pullbacks in
2012 2013 2014 2015 FDI
Chonburi -Si Racha Bangkok Rayong
Source: Thailand Ministry of Labor and C9 Hotelworks Market Research

Top 5 Provinces by Industrial Estate Scale

Area Number of
Si Racha is the in Sq. m. Establishments
100,000,000 16
second largest 14
industrial area, 80,000,000
12
covering 21% 60,000,000 10
8
of combined 40,000,000 6
estates in 20,000,000
4
Thailand, only 2
0 0
5% behind Rayong Chonburi -Si Petchaburi Prachinburi Ayutthaya
Rayong Racha
Industrial Coverage Area Industrial Establishments
Source: Thailand Board of Investment (BOI) and C9 Hotelworks Market Research

Key Geographic Source Markets

4% 1% 5%
2% 4%
2% 2% Japanese
3%
7%
expatriates
6%
remain highly
inIluential in
16%
2015 9%
2014 the demand
market, and
68%
71% are expected to
continue in the
coming years
Japan Thailand Europe Other SE Asia Taiwan US/Canada Others
Source: Amata Nakorn Industrial Estate and C9 Hotelworks Market Research

2 C9 Serviced Apartment Market Update: September 2016

 MARKET SUPPLY OVERVIEW
Expatriates who seek long-term stays are the key source of business that serviced apartments in
Si Racha leverage on. Apart from the daily rates hotels normally offer, serviced apartments also
offer monthly rates which are comparatively lower than the hotels average daily rates, allowing
them to secure a strong clientele base for long stay guests.
Average Monthly Rate vs. Average Daily Rate
Average Monthly Rate Average Daily Rate
Average in THB in THB
120,000 8,000
monthly rate is
100,000
within most 6,000
80,000
companies
60,000 4,000
accommodation 40,000
allowance 20,000
2,000

0 0
Studio/Deluxe One-bedroom Two-bedroom Three-bedroom
Average Monthly Rate Average Daily Rate
Source: C9 Hotelworks Market Research
Supply by Tier Median Unit Size

Upper- Three-bedroom
Upscale
6%
Midscale Two-bedroom
31%
One-bedroom

Upscale Studio/Deluxe
63%
0 20 40 60 80 100 120
Unit Size in Sq. m.
Source: C9 Hotelworks Market Research Source: C9 Hotelworks Market Research

Serviced Apartment & Hotel Pipeline

It is anticipated that 8 projects representing 2,239 keys will enter the accommodation supply by
2018. A number of these pipeline properties are mixed-use developments with hotel, residential
and retail components.
Project Name Location Keys Opening Date
Novotel Sriracha Marina Bay Jerm Jompon 281 Q4 2018
Atara Hotel Sriracha Si Racha Nakhon 8 N/A 2018
Balcony Seaside Hotel and Serviced Apartments* Sukhumvit 100 Jul-16
Citi Resort Sriracha Sukhumvit 379 Sep-16
Nusa Sriracha Condotel Sukhumvit 1,166 2018
Karabuning Resort and Residence* Surasak 30 Aug-16
Centara Sonrisa Residence and Suites Sriracha Thetsaban 1 150 Q4 2017
Somerset Harbourview Sriracha Thetsaban 3 133 2018
*Additional keys for existing serviced apartments and hotels Source: C9 Hotelworks Market Research

C9 Serviced Apartment Market Update: September 2016 3

About C9 Hotelworks
C9 Hotelworks is an internationally recognized
consulting Wirm with extensive experience in the
Asia PaciWic region. Its core business focus
includes:
Hotel and Resort Development
Asset Management / Ownership Representation
Project Feasibility and Analysis

Key competencies include international hotel operator search,

selection and contract negotiation, mixed use hotel and residential
planning and operation reviews.

A wide range of both institutional and private developers and a
comprehensive portfolio of completed projects give C9 the skill set
and background to focus on key issues, evaluate complex ones and
assist clients in achieving solid results. Based in Phuket, Thailand
and led by Managing Director Bill Barnett, who has 30 years of
experience in Asia PaciFic, the Firm is well positioned to serve an
increasing demanding marketplace.

C9 Hotelworks Company Limited

9 Lagoon Road, Cherngtalay, Thalang, Phuket, 83110, Thailand

(OfFice located at the entrance of Laguna Phuket)
T: +66 (0)76 271 535
F: +66 (0)76 271 536

www.c9hotelworks.com
info@c9hotelworks.com