Luxury condominium rentals are in high demand in Thailand for the first time in three years, primarily from long-term international residents and those who have been impacted by the conflict in Russia and Ukraine. High-end condos in Bangkok now command monthly rents of 100,000 baht.
As the Covid-19 situation eases and people resume their international travel, Sunchai Kooakachai, director and head of research and consultation at Knight Frank Thailand, believes it would be a good indication for the condominium market if rentals were to return. Since the end of last year, there have been more foreign tourists, corporate workers, and long-term visitors to Thailand, which is evidence of this.
The Russia-Ukraine war has helped the condominium market rebound in part, particularly in Bangkok where there has been an increase in Russian tourists. The rental market for condos has been boosted by the rise in demand. The market for condo rentals would also be stimulated by a group of FIT (free individual travelers) visiting Thailand as a result of China’s opening, according to Sunchai.
Renting to foreigners is an opportunity to make money, particularly for high-end condos in the central business area where they are more likely to want to stay for a longer period of time (long-stay), which drives up rental costs. For instance, Sunchai noted, the rent for a one-bedroom condo in the Lumpini, Sathon, and Silom neighborhoods next to a big department store dropped to 35,000 baht per month during the Covid-19 era but has since increased to 50,000 baht per month, matching the cost prior to the epidemic.
Due to the enormous number of hotels in Bangkok that are prepared to house tourists, the rental market for condominiums still has certain restrictions. Nevertheless, there are still tour groups that choose to travel independently and rent condos rather than use hotel services because it is more expensive. According to Sunchai, this pattern is intensifying, and the high demand is raising condominium rental rates.
The demand for condos with monthly rents between 50,000 and 70,000 baht and 100,000 baht has significantly increased recently. According to Sunchai, this clientele has significant spending power and primarily rents luxury residences.
Sunchai claims that the corporate employee-dominated rental market in the region between Asoke and Phra Khanong has undergone some adjustments as well. The majority of the tenants in this neighborhood are employees who work in Bangkok, but some of them have left the city as a result of the work-from-home legislation, making it challenging to entice them back to rent condos close to BTS stations for 20,000 baht per month.
The majority of office workers now work three days a week at the office and two days from home, which has decreased the demand for condo rentals. The need for rentals won’t remain the same even if Covid-19 vanishes. Despite the restricted supply, condo prices in the city center have not climbed significantly. The Asoke-Phrom Phong area’s once-high 20,000 baht rental rate has dropped to only 15,000 baht as tenants’ spending power hasn’t recovered to its pre-Covid-19 level. However, according to Sunchai, condo prices in Bangkok’s best regions and the city’s commercial sector have stabilized.
According to Sunchai, the typical rental sector for corporate clients will need to draw in tourists to make up for the decrease in staff renters.
With the return of Chinese tourists, the rental market for condos in Bangkok, in his opinion, should strengthen. According to him, there will be a transition from renting to buying condos once more, which is anticipated to take 1-2 years.
According to Sunchai, the condo rental industry will become a significant rival to Airbnb and 3–4 star hotels that are vying for business travelers (FIT) as well as digital nomads or backpacker groups that can work remotely 90–95 percent of the time. This group primarily consists of Europeans who enjoy staying for several months at a time, and their numbers have been rising.
According to Sunchai, the split between local and foreign corporate personnel and nomads will likely change from 70% local and foreign corporate employees and 30% nomad group (visitors who come to remain long-term and rent monthly) to 50%.