Bangkok going short of rental penthouses

Affluent buyers purchasing penthouses for own use, not as an investment

October 11, 2018

Bangkok is facing a shortage of penthouses for rent. While demand continues and existing supply is limited, lower rental yields have discouraged investors from buying penthouses to rent out, according to property consultancy JLL.

Suphin Mechuchep, Managing Director at JLL, says "Penthouses represent only a small segment of Bangkok's condominium market. The growth of supply in this segment is confined by the definition of a penthouse itself which generally must be situated on the top floor of the building and offers larger usable space than regular condominium units in the same development."

According to JLL's Thailand Property Intelligence Centre, the penthouse supply in Bangkok has seen an accelerated growth since 2013, with an average of over 80 units entering the market per annum between 2013 and 2018, accounting for a 7% annual growth. Despite a faster growth, the city's total supply will rise to only 1,590 units by the end of 2018, accounting for less than 0.3% of Bangkok's total condominium stock. Of the total, 440 units are in the luxury and ultra-luxury developments, representing less than 0.1% of the market-wide condominium stock.

Whilst supply is limited, there is continued demand from expatriate families for rental penthouse.

Penthouses that are offered for rent in Bangkok generally offer more than 300 square metres of usable space with 4-5 bedrooms and are asking rents ranging between THB 250,000-350,000 per month. These units are leasing well and are taken up not before long when tenants move out.

"Most of these rental penthouses are in aged condominium developments where investors purchased the units many years ago at a much lower price than now and thus still enjoy rental yields of 3% on average," says Mrs. Suphin.

"Today, investors purchasing first-hand penthouses to rent out can expect rental yields averaging less than 1%. Such low yields have reduced investor appetite to buy penthouses for rental income," she adds.

The lower rental yields have been driven largely by a sharp increase in capital values of penthouses. Whilst price per square metre of a penthouse is generally 20% higher than regular units in the same development, prices of condominiums in Bangkok have grown by more than 30% in the last five years whereas rents have increased by less than 10% over the same period.

"For this reason, penthouses in newer condominium developments cannot fetch as competitive rents as those in older buildings. This explains why demand from investors buying first-hand penthouses to rent out has dried up over the past 3-4 years," says Mrs. Suphin.

Observations from JLL show that most of the penthouses in Bangkok have been purchased by high-net worth Thais and foreigners for own use in recent years. While most Thais buy units as a second home in the city centre in addition to their main house in a fringe location, foreign buyers purchase penthouses in Bangkok as a holiday home. Some buyers are collectors who purchase penthouses because their superior specifications and rarity.

"The rental penthouse market will remain undersupplied in the years ahead. Whilst demand is on an upward trend, supported by a steady growth in the number of expatriates in Bangkok, compressed rental yields will continue to demotivate investors buying penthouse to rent out. This is good news for owners of existing penthouses. However, demand will concentrate in buildings that are well managed and maintained," Mrs. Suphin concludes.

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of over 91,000 as of March 31, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit

About JLL Thailand

The firm’s operation in Thailand began in 1990 and today is the country’s largest international property service provider with 1,600 employees and more than five million square metres of property and corporate facilities managed. In Euromoney Real Estate Survey 2018, JLL was voted as Thailand’s number one overall real estate advisor for the 8th consecutive year and also won top votes for agency/letting, research and valuation in the same survey. The firm was also named Thailand’s five-star winner in the commercial property consultancy and commercial real estate agency categories at the International Property Awards Asia Pacific 2019/2020. For more information, visit

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