The serviced apartment market is facing stiff competition from rental condominiums just as hoteliers ask the Interior Ministry to crack down on their offers of daily and short-term stays.

The Thailand Hotels Association is continuing to pressure the Interior Ministry on issuing controls for serviced apartments without a hotel licence, which are not permitted to serve daily or short-term clients.

Property consultant Colliers International Thailand said this will have a significant impact on the serviced apartment market, even as serviced apartments continue to be built for launches up to 2014.

Colliers’ quarterly report on the Bangkok serviced apartment market showed the number of new developments being built has fallen every year since 2009 and will continue to decline.

Fewer serviced apartments entered the market in the second quarter of 2012 than in the first quarter, but a drop in demand of 4.8% has kept rents stable. An estimated total of 18,100 serviced apartments will be available in Bangkok by the end of 2012, up from 17,970 units at the end of the first half.

The number of serviced apartments in lower Sukhumvit is higher than any other area.

Average occupancy rate in the second quarter dropped 4.8% quarter-on-quarter but was higher than the same period last year.

Some condominium developers have also kept units as monthly rentals and set up a subsidised management company.

At the same time, foreigners are focusing on condos or apartments in the same locations with similar facilities as serviced apartments but lower monthly rates.

There will be a limited supply of serviced apartments in one to three years due to intense competition.

Although the number of expatriates in Bangkok will continue to increase every quarter, they will have a lot of choices so rental rates in the second half should remain stable.

Bangkok is a preferred location for investors looking to penetrate Myanmar and Laos, due to poor supporting facilities in both countries. Most stay in Bangkok and set up regional offices here for operations in Myanmar and Laos.

Mass transit extensions to the suburbs are also attracting attention from serviced apartment developers, as some of these lines are scheduled to be completed by 2015. Areas with international schools and hospitals are especially popular with developers.

source :