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The future of Bangkok’s Chinatown

Bill Barnett

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The future of Bangkok’s Chinatown | The Thaiger
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by Bill Barnett of c9hotelworks.com (First appeared on linkedin.com)

The emergence of boutique hotels, hostels, hip bars and cafes has revolutionised the way Chinatown, Bangkok is seen. This, together with the entry of international branded operators setting the stage for exciting changes.

Overview of Chinatown

For over 200 years, Yaowarat Road in Bangkok or Chinatown has been a center of Chinese immigrants in Thailand. Although some newer development has taken away some of Chinatown’s authenticity, it is still to this day one of Bangkok’s most visited areas which hasgenerated a splendid mixture of the old and new, be it street-food vendors, temples, or art galleries. On top of that, what really draws both local and foreign demand to the area is the ultimate experience itself.

Jammed streets with full tuk-tuks, small vans, and street merchants are what the other areas cannot offer. With some buildings and land is left unused, there have been many redevelopment projects for hotels and residences, and now domestic and international hotel chains are entering the market. What follows, is meant to shed light on the transformation of Chinatown.

Tourism

With the combined number of passenger arrivals at Suvarnabhumi and Don Mueang International Airports close to 50 million in 2017, the gateway experienced a 5-year compound annual growth rate (CAGR) of 11%. Based on our research and market interviews with hotels in the area, the number of tourists visiting Chinatown has sharply increased over the past few years. Thus, hoteliers in the area foresee that Chinatown will be reinvented over the next five years

Chinatown is now one of the hippest areas in Bangkok, while a few short years ago Millennials would view Chinatown as an ‘ancestor’s area’ where elders meet up and have their Asian breakfast. Similarly, the traditional food scene still exists, except that the average age of visitors has dropped substantially and visitors now are becoming bar or café hoppers. What changed is how the vibe shifted over a short period of time.

The future of Bangkok's Chinatown | News by The Thaiger

Mass Transit

After five years of construction, the upcoming MRT station of Wat Mangkon is now close to completion. Scheduled to open to the public in mid-2019, this station will be the nearest mass transit connection to Chinatown and sits right across from the upcoming 224-key Holiday Inn Express Bangkok Chinatown.

The station’s name originated from the largest Chinese Buddhist temple in Bangkok, Wat Mangkon Kamalawat. Regardless of how trendy Chinatown is, the area is not expected to be another Thonglor as there is no plan for a BTS station. It will be advantageous to have better access to public transportation, but the MRT does not carry the same clout as the BTS since many tourists are not familiar with the MRT.

Hotel Performance

Due to the location of Chinatown, budget hotels face challenges in competing with similar hotels in other parts of Bangkok such as Sukhumvit. Boutique hotels in the area are on an upward trajectory, yet accessibility to public transportation in the area remains a key factor.

The average daily rate (ADR) of boutique hotels in Chinatown ranges from 2,000 up to 6,000 baht, with occupancy averaging over 75%. Due to the constraints on development scale, hotel inventories for the existing hotels range from a handful up to 70 or 80 rooms. Given a captive guest base, revenue from food and beverage cannot be overlooked. Hotel operators are generally more focused on generatingother income for their properties compared to other areas in Bangkok. According to our research, some hotels’ F&B contribution can reach 70%, while the market-wide average is 31%.

Demand Characteristics

Online travel agents (OTAs) play an important role in this market among all distribution channels as boutique hotels mainly target younger guests who search for more authentic locations. Some boutique hotels try to stimulate direct bookings by offering complimentary breakfast and discounts on F&B and spa packages. One of the best performers in the market is able to achieve 70% for direct bookings.

In general, OTAs account for 75% bookings on a broad basis. For the nationality mix, the Asian market accounts for 38%, followed by European and American markets with 34% and 29%, respectively. The purpose of stay is mostly leisure at 93%, and only 4% of guests come for business.

Land vs. Rental Prices

With a peak land price of 375,000 baht per square metre, Chinatown is one of the most expensive areas in Thailand. Such high land prices result from the limited land supply and the vintage-style buildings. It is important to highlight the inverse correlation between land prices and rental/lease rate in Chinatown. Rental prices vary but generally tend to be in the range of 300 baht per square metre per month, while they can be well over 1,000 baht per square metre in Bangkok’s CBD areas. With a business model heavily reliant on leasing property, small boutique hotel and hostel supply isexpected to surge in Chinatown.

The future of Bangkok's Chinatown | News by The Thaiger

International vs. Domestic Chain Offerings

There has not been an international hotel brand in Chinatown until recently, with the InterContinental Hotels Group (IHG) poised to enter. The agreement between IHG and Uniland Company Limited to open a Holiday Inn Express is expected to be completed bythe end of this year. On the other hand, the notable Thailand-based Burasari Group, who own and manage Shanghai Mansion Bangkok, has signed an agreement to manage a new 128-key property in Chinatown early this year, marking itself as a leading operator in the area.

Burasari Group, with seven hotels in the portfolio domestically and internationally, is expanding its hotel network within the country. The group has been managing Shanghai Mansion for almost 10 years and believes the upcoming changes in the area will elevate guest experience and draw more demand to Chinatown.

Pipeline Projects

Holiday Inn Express Bangkok Chinatown is part of the THB3-billion ’I’m Chinatown’ mixed-use project. Positioned as ‘Modern Chinese’ in terms of design, the project includes 5,000 square meters of retail space, a 224-key hotel and 46-unit residence for sale. With its strategic location situating across the upcoming mass transit station, the hotel will mainly target foreign tourists and business travelers. The property is expected a year-round occupancy over 80% with average room rate over 2,000 baht.

Another project in the Chinatown pipeline, which will be managed by Burasari Group, is the redevelopment of a 50 year old vacant hotel. With 128 keys, W22 will be situated on Wongwian 22 with an opening in the mid of this year. Positioned as a boutique budget hotel, it is targeting Asian travelers and tour groups. The hotel will offer multiple room types including dormitories, double, twin and family rooms with an average room rate of 1,000 baht projected.

The two projects will create a new dynamic. Firstly the HIEX will provide standardised accommodations with expected amenities such as a swimming pool, which only a handful of hotels in the area have. Secondly, the W22 hotel will not only offer an affordable stay but also a varietyof room types and a large common space for guests to relax.

The future of Bangkok's Chinatown | News by The Thaiger

PHOTO: shanghaimansions.com

Forward Outlook

Because of the continuously increasing number of cafes, bars, and restaurants, further hotel development is expected to highlight the importance of design. Although cultural experience hasbeen the whole point of coming to Chinatown, the ‘chic’ experience will be a secondary factor to generate demand. From the recent developments and upcoming hotels, all properties have their uniqueness in design no matter in common areas or F&B outlets.

Even the 10 year old Shanghai Mansion Bangkok has been able to maintain high performance due to its unique interior design. Looking across Bangkok’s luxury Riverside projects, such as Four Seasons and Capella which will come into the market soon, it is clear that luxury hotels have come out of the Bangkok Central Business District. With mass transit and proximity to the river, there is a high possibility to see more upscale development coming up in Chinatown.

In the bigger picture, the new MRT station will be a key turning point for the area and its future potential remains unique in its offering.

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Interested in more property news or buying property in Thailand - check out FazWaz today!

Bill Barnett has over 30 years of experience in the Asian hospitality and property markets. He is considered to be a leading authority on real estate trends across Asia, and has sat at almost every seat around the hospitality and real estate table. Bill promotes industry insight through regular conference speaking engagements and is continually gathering market intelligence. Over the past few years he has released four books on Asian property topics.

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North East

Thai teenager dreams of being an architect, sells his artwork to earn tuition fees

Maya Taylor

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Thai teenager dreams of being an architect, sells his artwork to earn tuition fees | The Thaiger
PHOTO: Khaosod English

A talented teenager in the north-eastern province of Kalasin has taken to painting landscapes of his local area and selling them to earn his university fees. 18 year old Krittamet Saisaen, known as “Earth”, dreams of being an architect, but the prohibitively expensive fees put that beyond his reach. Earth’s mother died 2 years ago, at which point his father abandoned him and his brother to the care of their farmer grandparents.

While their mother was ill in hospital, Earth and his brother would alternate time in school with time spent looking after her. It was at this point that the young boy returned to his childhood passion of drawing in order to make some money. He started out by selling his work to neighbours for as little as 20 or 50 baht, all the time improving his skills with the help of You Tube videos and an art teacher at school.

The arrival of the Covid-19 lock-down provided him with extra time to focus on his art, reproducing more of his hometown’s rural landscapes. A report in Khaosod English says Earth’s long-term goal is to be an architect, but he found the Arsom Silp Institute of The Arts in Bangkok would cost 60,000 baht for his first term. In order to get a degree, he would be required to complete 10 terms, something his farmer grandparents could never afford.

“I would not have had money to go to school, unless my grandparents sold off their farmland, our family’s last asset. I won’t let them sell it because I love nature and I love the land. Although I have my dreams, if I can’t go to school then I can let it go.”

The teenager says a student loan is also out of the question as he couldn’t afford the repayments. Instead, he is relying on his talent with a paintbrush, saying that in addition to landscapes, he can produce still-life work such as flowers and other objects, although he draws the line at doing portraits.

After his story was highlighted in various media outlets, orders have started to flood in for his work, with each piece priced between 1,000 – 2,000 baht. Earth is also hoping to use his newfound success to shine a light on the environmental challenges faced by Kalasin, and hopes to build an environmentally-friendly hut in which to teach others how to paint while caring for the environment.

“Maybe people pity me, because they heard about my story. But I want to raise the issue of the environment too, to put the focus on that. There are so many issues in this area, deforestation, trash pollution, burning trash, chemical fertilisers. The issue is about both the environment and art. I want children to care for nature and the environment.”

Anyone interested in purchasing Earth’s work can contact him through his Facebook page.

SOURCE: Khaosod English

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Expats

Property investors offered access to Thai developer discounts – Thaiger Flash Sale

The Thaiger

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Property investors offered access to Thai developer discounts – Thaiger Flash Sale | The Thaiger
PHOTO: 24 hour Flash Property Sale starts at midday today - Agoda.com

PROPERTY EVENT

Today is the start of The Thaiger Property Flash Sale. It’s only for 24 hours (starting at midday today). The Thaiger has teamed up with fazwaz.com for this first-of-a-kind event.

When in a buyer’s market, that demand should be catered for, with discount offerings a key driver of success. The level of discount will depend on the developers’ willingness to accept lower profit margins, along with the supply available in the market. Bangkok, for example, has a large volume of property units available with many high-density development projects. In light of this market reality, a good ballpark figure to start discounting at is 15%-20%.

Since the beginning of April 2020, developers have begun launching their own e-commerce stores with incentive schemes to draw in clients. Although a good initiative in response to the current situation, around 90% of such offerings are only available in Thai, missing the opportunity to engage with international buyers.

Brennan Campbell, CEO at FazWaz, says that over the past 2 months, traffic to their property portal has increased exponentially.

“A huge proportion of our inquiries are explicitly looking to secure a deal.”

What is the potential for discount rates? Generally, discounts are uniform over an entire project and dependent on the saleable area, which can vary slightly. A recent survey of property developers, undertaken by FazWaz, showed that 31% of those questioned are willing to offer discounts of more than 10%.

Demand in the market is down and market sentiment is depressed; a clear indicator that developers need to be offering higher levels of discount to maintain a reasonable transaction volume. 69% of the developers surveyed haven’t implemented additional discounts during the current crisis – other than those that were already in place. The prediction is that this sentiment will change over time.

Flash Thursday will directly link potential property buyers with developers and sellers in one of Thailand’s largest online sales events. Developers from all regions and sectors in Thailand will be represented to bring enticing discounts to real estate investors.

Register now, it’s free. Runs from midday today (Thursday) to midday Friday.

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Events

4 reasons why you should register for this Thursday’s Thaiger Flash Sale

The Thaiger

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4 reasons why you should register for this Thursday’s Thaiger Flash Sale | The Thaiger

THAI PROPERTY EVENT THIS THURSDAY

Real estate experts are sounding the alarm… property prices are starting to drop! And The Thaiger Flash Sale, in conjunction with fazwaz.com is giving you the chance to own your dream home with the biggest discounts ever seen, all in one place for just 24 hours.

The Thaiger Flash Sale, happening this Thursday, June 18, 2020, starts at midday for just 24 hours. It’s the first online property sale where buyers can take advantage of great deals from Thailand’s best developers. If you’re not yet convinced, here’s a summary of the biggest benefits by joining this limited time property sale:

Big discounts

Big discounts and exclusive selections go hand-in-hand in any Flash sale. Fazwaz.com is delivering the same value to homebuyers and investors in Thailand real estate, as it puts all the best properties and marking them with the biggest discounts – all in one place!

Once-in-a-decade opportunity

It’s no stretch of the imagination that these discounts are part of a real estate market cycle that only happens once a decade. It’s a time where the savviest investors buy the best properties at the lowest price possible, making their value margins better than any other time of the decade. This goes to show that the best way to profit of your property investment is not by selling high, but by buying low.

Top-tier developments

Just because these are the biggest discounts ever seen, doesn’t mean they’re your mediocre selections! Fazwaz.com has built a strong relationship with Thailand’s top developers and has partnered with a number of them to deliver their best developments at the best prices exclusively for the duration of the Thaiger Flash Sale.

Refundable reservation fee

Buyers can reserve a property that they like with a refundable reservation fee within 14 days. Fazwaz.com understands that property investments are big commitments, especially in these uncertain times. That’s why buyers, who do not pursue the properties they reserved, can receive a full refund.

Are you ready for the biggest online property sales event in Thailand real estate? Register now at our expo.fazwaz.com

4 reasons why you should register for this Thursday's Thaiger Flash Sale | News by The Thaiger

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