Corporate tenants are sought after by landlords everywhere; in Bangkok, more than many other cities, it is not difficult to get them due to the city’s status as regional headquarters for many local and foreign companies.
Photography by Jan Yong
Bangkok is without doubt the urban and economic center of Thailand. The international city is an important economic pillar of Southeast Asia and it is home to the headquarters of hundreds of national and international companies. This makes Bangkok an attractive expatriate hub, as the city offers attractive business and career opportunities.
The capital is an incredibly cosmopolitan destination, with nationalities from all over the world such as the Japanese, French, Americans, Singaporeans, et cetera, converging in this megacity to partake of its myriad opportunities. According to CBRE, the number of expatriates with Work Permits in Bangkok increased to 83,000 in Q1 of 2016. Of this impressive number, it is likely that hundreds are benefitting from some form of “housing allowance” from their respective employers. This represents a lucrative opportunity for Bangkok landlords, as this “housing allowance” can be substantial with budgets such as 150,000+ THB Per Month not unheard of for corporate tenants!
So what are the biggest benefits of having a Corporate Tenant?
1. HIGHER MONTHLY RENT
When providing “housing allowance”, companies tend to provide fixed budgets to their employees. This means that Corporate Tenants are usually not concerned with the general price of the Property; they are even prepared to pay rental rates above the market price.[ihc-hide-content ihc_mb_type=”show” ihc_mb_who=”1,2,3,4,5,6,7,8″ ihc_mb_template=”1″ ]
In many cases as a Landlord, it is standard to charge slightly higher rent (5-10% higher) for a Company Rental Agreement (Company is not the occupier/resident is the official Lessee). This is usually the case as Corporate Clients require more administrative support (i.e. receipts, etc.).
2. LONGER CONTRACTS
Companies that can afford to provide “housing allowance” tend to relocate/ transfer employees from other corporate offices overseas. This means that their employees are here on a fixed-term employment contract (usually 2 Years, 3 Years, etc). Usually, these employees will sign longer-term contracts above the standard 12 months.
3. SECURITY AND STABILITY
If a Tenant is a Corporate Tenant that has signed a Company Lease Agreement, this means that his employer is the guarantor of the rent. In practice, this means that a company is responsible for paying the monthly rent which is an added level of security and stability. Secondly, Landlords can be assured that the tenant comes from a good professional background and is likely to take care of the unit.
There are of course certain adjustments required if a Landlord wants to host corporates:
PAPERWORK AND TAXES
Paperwork and administrative support are a little more extensive for example, receipts and in some cases, Withholding Tax certificates need to be prepared monthly. Also, since rentals will be declared as a source of expense for the Company to the revenue department, Landlords will need to get registered within the
tax system and pay income tax on rental income.
CONTRACT NEGOTIATION FLEXIBILITY
While Companies tend to be relaxed about the general price of the property, there may be negotiations on the general “terms and conditions” within the Lease Agreement. A common clause that is often required is the presence of a Diplomatic/Break Clause within the Lease Agreement. This provides the possibility of ending a contract early, if an employee is transferred before the end of his employment contract. This is usually the case with Embassy Diplomats which require this clause as a matter of “best practice”.
PROPERTY PRESENTATION & AUXILIARY SERVICES
The competition amongst private Landlords for Corporate Tenants is rife, and this means that a Condo needs to be in pristine condition and decorated in a stylish manner to attract corporates. In many cases, accessories such as bed sheets, pillows, duvets, cutlery and cooking utensils need to be provided to ensure a smooth hotel-like move-in. In addition to this, some Companies may demand the provision of services such as pre-installed Internet/ Cable TV.
So what’s the best way to get access to this type of clientele?
1. SELECTING THE RIGHT PROPERTY
Attracting Corporates is determined early, starting from the selection of the right property; condo details/specifications such as the “Type of Condo” and “Location” are vital. Most corporates only select middle to high-end Condos. The rule of thumb is location is critical, with most corporates selecting properties only in the Central Business District.
Certain areas benefit more than others, with Thong Lo/Ekamai benefitting from Japanese and Korean Corporates. Alternatively, Chit Lom, Ploen Chit, Ratchadamri benefit from numerous diplomats due to the fact that numerous embassies are clustered around Wireless Road.
2. MARKETING
It is important for Landlords to contact Agencies that have direct relocation agreements with Companies and Embassies. Japanese Property Agencies are a good starting point as they often have Corporate Tenants from Japanese-run companies.
If you are the proud Landlord of a Condo that unfortunately might struggle to attract a “Corporate Tenant”, do not despair! While there are attractive monetary benefits of having a Company Lease, it is important to note that tenants working in Bangkok are essentially “Working Professionals” and thus technically are “Corporate Clients”. Bangkok benefits from a huge rental market from both Expats and Locals, therefore there is a massive buy-to-let opportunities for savvy investor either way![/ihc-hide-content]