Industry Benchmark

By Mark Harris

Regional Analysis

Asia

Hong Kong is in the midst of a continuous 7-8% year-on-year growth in the financial, insurance and real estate sectors, so demand for serviced apartments continues to remain healthy with nearly 100% occupancy rates being driven by limited supply. Source: Harvest Capital Partners.

By the end of 2007, Bangkok's serviced apartment sector had increased supply to 11,963 units; a year-on-year growth of 11%.

Average rental rates of 5-star serviced apartments in CBD and in Sukhumvit areas at end of 2007 were Baht 1,370 ($40) per square metre and Baht 1,394 per square metre, respectively.

The average occupancy rate of Bangkok serviced apartments decreased from 85% in 2006 to 83% in 2007, facing a year-onyear decrease of 2.4%.

There is still a lot of demand for serviced apartments despite current global economic turmoil. However, in-line with a general decrease in the duration of expat relocations, companies are starting tomove long-term expatriates on long leases in villas, bungalows and condominiums to serviced apartments with flexible leases.

It is predicted that some key serviced apartments will focus more on long-term stay guests and family guests to improve occupancy rate.

Singapore's Frasers Hospitality plans to add 5,000 serviced apartments by 2010 to 8,478 units by 2010. China, India and Vietnam are also on Frasers' radar for growth given the continued rise in foreign direct investments and sustainable expansion in gross domestic product. At least half of its serviced apartments will be operated under management contracts, from one-third currently.


Source: Knight Frank Newmark: Bangkok Serviced Apartment Market Annual Report