Golden era kicks off in Thonglor (BKK)

GOLDEN ERA KICKS OFF IN THONGLOR

Luxury rental segment shows healthy growth with demand from foreigners

PROPERTY REPORTERS THE NATION

Several property developers are spending almost Bt10 billion to develop luxury serviced apartments in Sukhumvit Soi 55 (Soi Thonglor), marking a golden era for Sukhumvit Road’s high-end market.

Research conducted by Colliers International Thailand shows that three new serviced-apartment projects worth almost Bt3 billion will be launched next year in Soi Thonglor. They include 148 units at Eight Thonglor by Pacific Star, 268 units at Somerset Sukhumvit Thonglor and Oakwood Residence Thonglor.

Meanwhile, a Nation survey showed more serviced apartments were under construction and scheduled for completion this year and next.

These include The Alcove Thonglor 5 worth Bt350 million, developed by the Alcove Group and a new building worth up to Bt1 billion developed by Tan Passakornatee, founder of the Oishi Group, owner of the country’s leading brand of greentea beverages.

Alcove Group director Anand Singjirakul said serviced apartments on Sukhumvit Road, especially in the Thonglor area, had great potential for appreciation, due to high demand from foreigners.

The group has already been very successful with its first project, The Alcove Residence Thonglor 23, he said. Driven by this success, the group has kick-started a new Bt350-million serviced- apartment project called The Alcove Thonglor 5, with 46 units.

The project will be completed this year and target foreign nationals, especially Japanese businessmen.

The Alcove Thonglor 5 has 36 units covering 51-67 square metres for rental fees of Bt65,000 to Bt75,000 a month. Ten units covering 80 square metres each have a rental fee of Bt90,000 a month.

Singaporean-based Pacific Star International (Thailand) has introduced its second residential project in Soi Thonglor Soi 8, called Eight Thonglor Residences, a mixed-use building worth Bt4 billion. Condominiums start at Bt100,000 per square metre. Rents for a serviced apartment range from Bt1.5 million to Bt3.5 million a month. The project is under development and will be completed by mid-year.

Apart from serviced-apartment projects that are still under construction, the Nation survey found many condominium and serviced-apartment projects available for rent.

Centre Point Thonglor, a servicedapartment project with 156 units on 12 floors, has been available since 2005 on an annual, monthly or daily rental basis.

A studio apartment covering 38 square metres is available for Bt51,000 a month; a one-bedroom apartment covering 68 square metres costs Bt74,000 a month; a one-bedroom apartment covering 80 square metres goes for Bt82,000 a month; a one-bedroom apartment covering 87 square metres is Bt85,000 a month; a two-bedroom apartment covering 131 square metres is available for Bt115,000 a month; and a two-bedroom executive suite covering 142 square metres costs Bt120,000 a month.

Most condominiums and serviced apartments in Soi Thonglor are available for more than Bt10,000 a month, with only a few available for less.

Marriott Thailand in major expansion.

Marriott International plans to open 11 hotels and serviced apartments in Bangkok, Phuket and Hua Hin between 2008 and 2010 due to the brighter outlook of the tourism industry, says Panjit Howe, the country’s director of human resources.

She said the tourism industry had been more active since the country’s political situation improved. However, competition in the hotel business on Sukhumvit Road is higher, with the entry of almost every major global brand.

‘‘Last year, all hotels in the central business district faced a drop in occupancy rates. This year they will pick up,’’ she said. The occupancy rate at the JW Marriott Hotel Bangkok declined from 81.9% to 78.5% but is expected to improve to 82.7% by the end of 2008.

In Bangkok, Marriott plans to open the luxury brand Renaissance at two locations: 333 rooms at the Ratchaprasong junction behind Maneeya Center this year and 310 rooms on Sukhumvit in 2010.

As serviced apartments have become a more popular alternative for guests, the hotel will also open three new Marriott Executive Apartments: 195 rooms on Soi Suan Plu off Sathon Road in 2008, 300 rooms on Sukhumvit 24 and 310 rooms near Benjasiri Park in 2010.

In Phuket, it will open two luxury resorts: Phuket Marriott Resort & Spa with 202 rooms this year, and Renaissance Phuket Resort & Spa with 175 rooms in 2010, with a targeted 80% occupancy rate in the first year, said Mrs Panjit.

To tap the economy segment in popular beach destinations, it plans three Courtyard hotels in Phuket: on Patong Beach with 399 rooms, Surin Beach with 256 rooms and Kamala Beach with 180 rooms and another 243-room Courtyard on Cha-am Beach within the year.

The opening rates at Courtyard in Phuket will range from 4,000 to 11,000 baht a night during the low season, 5,500 to 12,000 baht in the shoulder season (the period between the high and low seasons) and 9,500 to 19,500 baht in the high season. The average occupancy rate is targeted at 60% for the first-year operation.

‘‘Given such big expansion, we need to have around new 50 managers and 2,200 hotel staff,’’ said the humanresources director who joined the hotel 10 years ago.

‘‘It’s not only the building, the brand or the marketing plan that leads to a hotel’s success but it’s a spirit to serve which is hard to maintain,’’ said Mrs Panjit, adding that the hotel group’s staff turnover rate was 20% compared to the market’s average of 25%.

Marriott also has a time-sharing business under Marriott Vacation Club International, with at least 250 rooms at the JW Marriott Phuket Resort & Spa. The Phuket Marriott at Kamala Beach and Renaissance Phuket will join this vacation ownership property business in 2008 and 2010, respectively.

Since starting in 2001, it now has a total of 6,000 members and more than half of them are Thais. Membership fees start at US$12,000 or 360,000 baht for eight years. Each member can spend seven nights a year at any of 52 destinations under the chain worldwide.
KANANA KATHARANGSIPORN

Serviced Apartment sector BOOMS

Competition will increase with the number of units set to rise to 6,580 by 2011, stoking fears of oversupply

Central Lumpini is considered a prime location for serviced apartments, Grade A as well as Grade B. The price for Grade-A apartments is about Bt1,222 per square metre while Grade-B apartments are available for about Bt1,100 per sqm, according to research by Colliers International (Thailand).

Central Lumpini runs along Rama I, Rajdamri, Wireless, Ploenchit and Langsuan roads and serviced- apartment projects include Cape House, Centre PointWireless and Natural Ville.

These projects comprise 1,984 units.

Another 578 units will be added in the year 2011, the research said. These will be in the Bliss Residence at Soi Ruamrudee, the Baan Rajprasong at Soi Mahadlekluang 3, the Noble Ambience Ruamrudee at Soi Ruamrudee 2, the Siam Kmpinski at Rama I, at St Regis at Rajdamri Road, and two new projects on Ploenchit Road.

Colliers’ managing director Patima Jeerapaet said Central Lumpini was experiencing strong demand because the area is conveniently located for business travellers and tourists.

Meanwhile, Grade- A serviced apartments in the central business district (CBD), which stretches from Silom Road and Sathorn Road as well as other sois in between, ranks second in terms of offer price at Bt1,210 per sqm.

This is followed by the Sukhumvit area, where prices stand at Bt1,093 per sqm.

For Grade- B serviced apartments, prices in the Sukhumvit area are at Bt1,057 per sqm, followed by the CBD where prices stand at Bt738 per sqm.

Patima said demand for GradeA and B serviced apartments arose from the growing number of expatriates.

However, he said, nearly 6,580 new serviced apartments, which will be launched from next year until 2011, would stoke further competition in the market.

“Developers planning to build new serviced apartments this year will have to consider that there might be a oversupply situation by 2011,” he said.

SOMLUCK SRIMALEE THE NATION

The serviced apartment market

Apartment glut possible

Colliers International Thailand anticipates tougher competition in the serviced apartment market and has urged owners and to refocus their marketing strategy, said managing director Patima Jeerapaet.

The company’s research shows that by 2011, there will be 27 billion baht worth of investments in 38 new buildings, adding 6,580 units to total supply.

Mr Patima said the lower cost of investment and operation had attracted many investors to serviced apartments, instead of building hotels.

Risinee Sarikaputra, Colliers’ research department manager, said there currently were 10,685 units in 75 serviced apartment buildings in Bangkok with an average occupancy rate of 83.33% last year.

However, the increase in demand has lagged the increase in supply. Supply on a room-night basis increased by 167% year-on-year in 2007 as against roomnight demand of only 9.3%.

The traditional main business of serviced apartments has been expatriates residing in Bangkok for a period of more than one month. However, current core demand comprises two groups — new expat arrivals in Bangkok and shortstay tourists and business travellers.

Mr Patima said competition has meant that many apartments had shifted more to the short-stay market — as many as 65% of guests in some buildings.

He said that if the hotel market was too competitive, hoteliers would cut prices and cause a knock-on effect on serviced apartments. Therefore, apartment operators need well-planned marketing strategies to achieve sales targets.

‘‘With many new hotels also opening in Bangkok over the new few years, the more successful serviced apartments are likely to be the ones focused on the core longer-stay market and offering guests staying more than one month a product that meets their requirements, rather than those engaging in a price-cutting war with hotels,’’ he added.

The breakdown of new supply shows a strong concentration in the Sukhumvit area, with 3,659 new units, or 56% of the new supply that Colliers forecasts will enter the market by 2011.

Colliers International Thailand anticipates tougher competition in the serviced apartment market and has urged owners and to refocus their marketing strategy, said managing director Patima Jeerapaet.

The company’s research shows that by 2011, there will be 27 billion baht worth of investments in 38 new buildings, adding 6,580 units to total supply.

Mr Patima said the lower cost of investment and operation had attracted many investors to serviced apartments, instead of building hotels.

Risinee Sarikaputra, Colliers’ research department manager, said there currently were 10,685 units in 75 serviced apartment buildings in Bangkok with an average occupancy rate of 83.33% last year.

However, the increase in demand has lagged the increase in supply. Supply on a room-night basis increased by 167% year-on-year in 2007 as against roomnight demand of only 9.3%.

The traditional main business of serviced apartments has been expatriates residing in Bangkok for a period of more than one month. However, current core demand comprises two groups — new expat arrivals in Bangkok and shortstay tourists and business travellers.

Mr Patima said competition has meant that many apartments had shifted more to the short-stay market — as many as 65% of guests in some buildings.

He said that if the hotel market was too competitive, hoteliers would cut prices and cause a knock-on effect on serviced apartments. Therefore, apartment operators need well-planned marketing strategies to achieve sales targets.

‘‘With many new hotels also opening in Bangkok over the new few years, the more successful serviced apartments are likely to be the ones focused on the core longer-stay market and offering guests staying more than one month a product that meets their requirements, rather than those engaging in a price-cutting war with hotels,’’ he added.

The breakdown of new supply shows a strong concentration in the Sukhumvit area, with 3,659 new units, or 56% of the new supply that Colliers forecasts will enter the market by 2011.