Residential rentals ambling along nicely
THE outlook is good for residential rental business with clear growth seen from last year but this also depends on which segment one is positioned in, Dr Piyasak Manason, Kiatnakin Bank’s research head said at his bank’s annual seminar yesterday.
Overall growth was seen in both parts of residential rental business, daily and monthly, with four key factors driving it forward and one is this bank’s estimated economic growth of 2.8% this year.
The second factor is tourism with the total number of tourists steadily rising and expected to reach 32 million this year from 30 million last year and likely reach 34 million in 2017 and 36 million in 2018.
It is the Chinese who currently propel the tourism industry as they form around 70% of the total number of tourists from just 1% twenty years ago.
“Chinese tourists are a little careful with money and this means mid- to low-end hotels are doing fine – the various budget hotels.
“We might have to be a little careful with apartments which are meant to be rented out on monthly basis but have been converted to hotels.”
The third factor is the expansion of the rail network which is helping workers and benefiting apartments near railway lines.
Lastly the formation of Asean Economic Community has greatly helped Asian businessmen with more of them, particularly from Japan, Taiwan and South Korea, coming to Thailand.
“This has led to constant demand for serviced apartments for senior workers … there is a good opportunity for growth at grade B level.”
Dr Piyasak mentioned two markets which need to be carefully monitored and these are student and worker hostels.
“Where student hostels are concerned, we might have to keep an eye on future growth because we have observed that the number of students would likely decrease.
“We have seen that there are more mathayom 1 to 3 students than mathayom 4 to 6 and universities, particularly Bangkok universities.”
However universities and educational institutions in the provinces still continue to attract students leading to constant demand for hostels. Provinces with potential for this business include Maha Sarakham, Khon Kaen and Chiang Mai.
Care has to be taken in operating worker hostel business because industrial and technological development has led to fewer workers being required in certain fields and some multinationals, such as Samsung and LG, have moved to Vietnam.
However this business can still thrive in the provinces promoted as special economic zones or already have a lot of factories.
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