Hong Kong’s high-end apartments are the world’s most expensive to rent, followed by  those in Tokyo and New York, according to a survey on expatriate accommodation released Tuesday.

The survey, conducted by UK-based human resources consultancy ECA International, noted that an executive three-bedroom apartment in Hong Kong costs more than $8,500 a month to rent.

Rents for typical expatriate apartments in Hong Kong rose an average 10% last year and 15% in 2005, due to the Chinese territory´s strong economic growth, said Lee Quane, general manager of ECA International Hong Kong.

The gap between Hong Kong and other cities was widening, he added.

The survey compared rental prices in 92 locations worldwide. Tokyo rents for expatriates averaged $7,358 while in New York, they were $7,249. Moscow was ranked fourth most expensive at $6,526, followed by Seoul, London, Mumbai and Shanghai, the survey found.

The Venezuelan capital of Caracas was ranked ninth as expatriates there need to live in high-security compounds for safety reasons, Quane said. Paris was 10th.

The cheapest location of the 92 cities was Nairobi, Kenya, where a three-bedroom apartment cost about $1,000 a month, the survey said.

Source: www.property-report.com

Source: www.property-report.com

With housing allowances in the range of  Bt70,000 to Bt100,000 a month, Bangkok’s  high-paid expatriates have money to burn - and they want homes with all the Western-ammenities they’re accustomed to.

For condominium and apartment owners, this segment of the market is a potential gold mine, particularly given most of these expats are here on a short-term basis. The statistics certainly are promising, but as competition grows, it’s not an easy market to enter.

CB Richard Ellis Thailand executive director James Pitchon told Property Report Thailand that demand for high-end rentals increased in 2006 and the number of expatriates in bangkok with work permits grew to 67,412 in 2006, a 12.5% increase year on year according to statistics by the Alien Occupational Control division of the Department of Employment. The largest segment of this market is Japanese - 22% - as the so-called “land of the rising sun” is the largest foreign direct investor in Thailand.

Pitchon noted that the rental market is in actuality even higher, as those numbers excude diplomats and agencies such as the United Nations. They also exclude foreigners without work permits, but Pitchon says they consider most of these to be part of the retiree market, who traditionally buy their units.

“The good news is that demand increased. Last year there was only a limited amount of new supply in apartments, and there were only about 330 units completed last year. But the number of condominium units grew by over 4,000 units. That will continue to be the case in the next two to three years,” he said, but added this figure excluded serviced apartments, which are considered a very different product – somewhere in between a hotel and an apartment. Many now have a hotel license, so they’re operating on a more short-term basis.

“From a supply point of view, the big question is, how many of these apartments are expat quality, and how many owners of these new condominiums will want to lease them out?” asks Pitchon. “Recently a new supply has appeared in the downtown area, and there’s been a greater focus on small sized units, many of them aimed at the Thai market, so not all the new condo supply will be of a standard that appeals to expats, but there are a lot of condo units.”

Pitchon says the proportion of owner occupation and units purchased by people on a buy-to-lease basis varies from building to building: “Of the developments that are just coming up to completion, the number that will be available for rent ranges between 30-50% at the moment. So, although demand has risen, there will be quite a lot of condominium supply coming on.”

This means that competition is going to be tight in the coming year. Generally, expats given the choice would prefer a single ownership apartment, says Pitchon, because the owner is able to service all their requirements whereas in a condo the owner might not even be in Thailand. And in many cases the owner has not put in place a local manager to look after his apartment. So the challenge for condominium owners who have bought to lease out is how to manage their units because tenants will have questions.

“So if the air conditioner breaks down, who’s going to fix it? It will not be the staff looking after the common areas of the condominium, because their responsibility is not private property. So owners must think about how they will manage and maintain the units.”

This includes implementing pest control contracts, regular A/C maintenance contracts, and, most importantly, there has to be a clear understanding between the owner and the tenant of who’s responsible for doing what.

The most popular area for expats is still Sukhumvit, followed by Central Lumpini and the Sathorn area. There are two satellites, one being around the International School of Bangkok and there is also a smaller cluster around Bangkok Pattana School. As for the up-and-coming riverside, currently there is limited demand from expatriate tenants, generally because of access issues. A small segment of expats are heading to other areas, such as Thonglor. “Again you’ve got access to the skytrain but in a slightly lower density environment,” said Pitchon.

The expat rental market is driven generally by housing allowances granted to employees and employees generally spend all of their allowances, but not put their own money in. “The biggest change in the market has been that Japanese with families now receive higher allowances than they did previously,” says Pitchon. “Some will give Bt70,000 or Bt75,000 for a three-bedroom apartment. The Japanese tend to be at the lower end of the market but they are a significant level of demand.

“What’s happened is that much of the existing stock is over 10 years old. We’ve seen very few apartments built since the financial crisis over the last 10 years, more condominiums, and what has been happening is that new supply, with smaller units, is actually getting higher rents because it looks better. Modern design.”

As for housing rentals, Pitchon says the market is small because there a limited supply of homes in central areas, including in the Sukhumvit area. “Sansiri on 67 had rented well, but there is a limited market for people with over Bt100,000 a month to spend,” he said. “There are few companies that pay that kind of housing allowance.”

As for two-tiered pricing for Thais and Foreigners, there really isn’t a Thai rental market. Given that Thais have the freedom to buy and sell what they choose, unlike foreigners, those with high salaries and incomes just won’t go out and rent 75,000 a month apartments. So there is no Thai market above Bt15,000 a month.

“The rental market is efficient in terms of transparent pricing, information on products and a regular turnover,” said Pitchon. “So if a building doesn’t maintain its standards, then new expats will not move in.”

Bangkok’s high-paid expats keep rental market flush.

Why rent a house in Bangkok?

When I first moved to Bangkok, I rented an apartment like most newcomers to Bangkok do, but as I became more familiar with my new home town, I decided to be a little more adventurous and rented a house. Having lived in houses over the past five years now, I’ve found that renting a house in Bangkok not only offers more space and privacy, often it is also much better value compared to apartment living. More often than not, it is also a cheaper option (per square metre) compared to renting an apartment or condo, which are getting smaller in size these days! If you enjoy wide open spaces, appreciate some green in your life - a garden perhaps, have pets, a large family or simply want to maximize your budget, consider renting a house instead.

Another advantage in renting a house is, apartments tend to put a high surcharge on your electricity and water bills. Many apartments have a minimum charge of 800-1000 bht for water alone. That is a significant amount considering my water bill never cost me over 500 bht living in a house with a family of 5, and we do A LOT of washing! Electricity can be anything between 5 – 7 baht per unit compared to the actual 3.75 baht charged by the MEA. Living in a house can save you up to half your utility bills compared to living in an apartment, and believe me it is A LOT of difference!

Thailand is cheap!

As you may already know, Thailand (more accurately, “Bangkok”) is not the cheap haven many foreigners once thought it to be, especially when it comes to housing. Property prices and rental have gone up considerably and that’s the way it goes everywhere around the world. The very same 2 bedroom unit I rented 5 years ago (in Silom) has gone up by 30% in rental and hardly any refurbishment has been done to it since! “That’s ridiculous” you say and believe it or not, I agree! But hey, I don’t make the prices and if you think agents benefit from that higher commission, that’s only true when clients actually think these houses are worth the price and that isn’t always the case.

Renting a house in Sukhumvit, Silom or Sathorn.

If you are looking to rent a house in the the Sukhumvit, Silom or Sathorn area, then the very minimum rental you are looking at is 40,000 bht for a BASIC 3 bedroom house. Even then, they are far and few in between that range, and more often than not are above 15 years old, with dark parquet flooring and lots of wooden built-ins which many people find dark and depressing.

Most people prefer something a little brighter and contemporary. That would mean newer houses between 1 – 5 years old and these start around 70,000 bht for a townhouse and 90,000 - 120,000 bht for a nicely renovated detached house. Depending on the location, size, décor, facilities etc. these can go up to anything from 150,000 – 350,000 baht per month. For that price, they usually have 4 bedrooms and come with a private pool and beautifully landscaped garden.

In any case, you do get what you pay for so be realistic when it comes to expectations and budget. If you want something new and modern but lack the budget, then move further away from the city centre. Which also means further away from the BTS line. Unfortunately, we cannot have it all and something’s gotta give.

Generally, if you go further towards the end of the BTS line and beyond i.e. Mo Chit, Phayathai, Phrakanong, On Nut, Bangna, Srinakarin, Rangsit etc. prices drop significantly and you get much better deals which are sometimes worth the extra time commuting.

Is it possible to find a house for 15,000 bht?

Not many agencies deal with houses below 25,000 bht. Just search the various property website in Thailand and you will see that the minimum range for houses are 25,000 - 30,000 bht, where the search usually returns 0 - 5 results. Several reasons for that:

1) There are a lot less decent and rentable houses at < 25,000 bht than there are at say, 50,000 bht.

2) If there is, it is usually way out of town, far from any BTS/MRT station.

3) Most people want to live in town, close to the city centre, CBD or near a BTS/MRT station.

4) Apart from location, houses below 25,000 bht are usually older (thus old fashioned) and not very well-maintained, which makes it very hard to rent.

Thus, it’s hard to find nice, decent houses at 25,000 bht or less…

Regardless, there are plenty of cheap houses as low as 15,000 bht for rent, but remember, and I stress again - you get what you pay for! And most 15,000 bht houses I’ve seen are usually in serious need of repair and maintenance, and the really nice ones are located way out in whoop whoop district.

I don’t care as long as rent is cheap. Where do I look?

Again, you won’t find any agents to help you there and finding that perfect yet cheap and nice house is undoubtedly the hardest step. It usually takes months of driving around moo baan after moo baan, which would mean having your own transport and knowing your way around.

The word “Moo Baan” translates to “village” in Thai, but the term “housing estate” would be far more accurate. These usually have a guard posted at the entrance and are situated all over Bangkok. These houses usually offer much better value than stand alone houses, and are a good place for the house hunter to start his/her search. Try areas like On Nut between Sukhumvit 77 – 103, Bangna, Rangsit, Ramintra, Phayathai, Mo chit etc.

Concerns and other issues

1) Security

Honestly, I know of many farangs, including myself who have lived in single houses and existed peacefully without any disturbances or trouble for years. I also do not know anyone who has been burgled personally because they were living in a house. Do you?

If you are considering renting a house and security is a main concern, rent a house in popular areas like Sukhumvit, Silom and Sathorn where there are many nearby apartments and condos with security. That way, you can benefit from the dense security in the neighbourhood.

Another option would be to opt for houses or townhouse within a “moo baan.” There are plenty around and majority of them have tight 24 hour security. Common sense would also tell me to explore the neighbourhood a little and have a chat with shopkeepers and a neighbour who might be willing to share some information with you. I’m sure you’ll have no problems getting a friendly neighbour to spill the beans on the house, its previous tenants and probably things you don’t need to know about your landlord. Welcome to Thailand!

2) Air conditioners

Check to see how many rooms have air-conditioning; and how old the air-conditioners are. If you are looking at an older house, chances are it will have those big, old blocks that rumble every time you turn them on. These old air-conditioners consume a lot more energy than a new one, and would greatly increase your electricity bills. It is also unlikely that the landlord will install new air-conditioners for you unless they are completely dead (even then they will always try to revive the monster before even considering replacing it), so make sure that they are serviced and cleaned before you move in or if you got a good deal on the rent, invest in some new airconditioners!

3) Water Pressure

Now this is important. Always check that there is a water pump. Then check the water pressure on the upper floors to make sure the pump has enough power to deliver a decent jet of shower. I’ve learnt from experience that size does not necessarily mean power when it comes to a water pump, and sometimes a 2^nd pump needs to be installed to ensure constant deliverance of water into the house.

4) Telephone lines

Again, from experience it is in your best interest to check the phone lines to make sure that 1) you have one and 2) it is working, because some areas (and this includes many areas in the Sukhumvit, Silom and Sathorn) do not have anymore available numbers and you will have to join a looong waiting list to apply for a new one. Also, older houses above 10 years old tend to be on the old, analog system which when faulty, cannot be replaced unless the whole area is re-cabled. No telephone lines = no internet. You don’t ever want to be caught in that situation!

5) Maintenance

Houses within a secured compound will have what they call “moo baan fee” or “community fee” which goes into the maintenance of the estate i.e. security, pool and garden maintenance etc. This is usually included in the asking rent. However, if you try negotiating on the rent, then more often than not, the landlord will exclude this from the rent and make you pay for it, so check to see what your rent includes when you are signing the contract. This ranges between 20 - 45 bht per square metre. Thus, the larger your house the more you pay! I currently pay 3,500 baht per month for my “moo baan fee” (I got a 5000 bht reduction in rent, so it works out) and we have 24 hour security, a well-maintained common garden and a superb pool that is regularly cleaned, so I am happy.

At Bangkok Finder, we specialize in properties for rent. Home rental is our only business and that gives us all the time in the world to help find you that perfect house within your budget when you move to Bangkok. Our website http://www.bangkokfinder.com features hundreds of houses and apartments for rent, and is updated daily with quality rental homes. Our negotiators have long established relationships with landlords, which means you will always pay the best rate when we negotiate for you.