The total supply of apartments in the downtown area was 10,182 units in the 2nd quarter of 2007, which was an increase of 2.6% year-on-year but a slight fall of 0.6% quarter-on-quarter. The slight drop on a quarterly basis was because five apartments were removed from our stock as they were no longer used as apartments. Two new grade A apartment projects were completed in this quarter, both adding 90 units in Sukhumvit area. This area remains the most popular area, where about 7,194 units or 70% of the downtown apartment supply is located. The RiversideRama III area had the lowest supply, with about 5% or 508 units.

The number of expatriates in Bangkok was 70,757 in the 2nd quarter of 2007, an increase 0.7% from the previous quarter. The Japanese still made up the largest share, with about 21.6% of the total number of expatriates in Bangkok. This was followed by Indian, Chinese, British and American expatriates, with 11%, 9%, 8% and 7%, respectively.

The average occupancy rate for the apartment market increased from 87% in the previous quarter to 89.2% in this quarter, an increase of 2.3% quarter-on-quarter. Occupancy rates improved, due to supply increasing only slightly while take-up continued to increased at a faster rate in the 2nd quarter of 2007. The average occupancy rate of grade A apartments was 95.7%, an increase of 2.5% year-on-year, while that of grade B apartments decreased by about 1.4% year-on-year, this indicates that grade A apartments are still in demand.

Asking rents and achieved rents for both grade A and B apartment in all areas increased on a quarterly basis except grade A apartments in the Sukhumvit area. The achieved rents per square meter for grade A apartments in SilomSathorn, Central Lumpini, Sukhumvit and RiversideRama III were THB 388, 414 and 386 and 337, respectively.

Newly opened grade A apartments will continue to enjoy high occupancy rates and rents could also increase for these new units.

Supply
There were two newly completed apartments in this quarter G. M. Height on Sukhumvit 22, comprising 56 units ranging from 3 to 4 bedroom units and Bangkok View Tower on Sukhumvit 31, comprising 34 units ranging from 3+1 bedroom units to penthouse units.

13 new apartments with at least 1,108 units will be added to the market within the next two years. Of these, 662 units or 65% of the future supply are planned to be completed this year.

In the condominium sector, 2 projects with 362 units were completed in this quarter. However, these will not compete in the rental market until the 3rd quarter of 2007 or later.

The competition in the rental market is anticipated to intensify, due to the continued growth in the number of condominium units that will soon finish being decorated.

Demand
The occupancy rate increased from 86.9% in the 1st quarter of 2007 to 89.2% in the 2nd quarter of 2007. There were 9,086 occupied units from the total of 10,182 units, an increase of 1.8% year-on-year and 2.1% quarter-on-quarter. Occupancy rates improved, due to supply increasing only slightly while take-up continued to increase at a faster rate in this quarter. The average occupancy of grade A apartment was 95.7% in the 2nd quarter of 2007, indicating an increase of 2.5% year-on-year, while that of grade B apartments was at 88%, a fall 1.4% year-on-year. The Sukhumvit area achieved the highest rate, with about 96.4%.

There is demand for brand new units that meet expatriate requirements, in both the apartment and condominium sector. Sukhumvit is still the most popular area due to its convenience and range of facilities.

Overall, condominium units being let out by individual landlords are able to achieve higher rates per square meter as they are relatively small compared to apartment units. The achieved rent for grade A condominium units remained stable, in the range of THB 500-600 per square meter.

Prospects
Although the total supply will increase significantly this year, the expatriate apartment market is expected to be healthy especially if the economy improves and foreign investment increases. Some 662 new apartment units are expected to be added in the downtown area within this year, raising the total supply to 10,844 units. There will also be competition from new condominiums which will gain some share in the expatriate residential market. In the next two years 19,600 condominium units will be completed and up to 50% of these new condominiums will be available for rent.

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