Condo Boom Squeezes Out Dorms, Ending an Era of Easy Profit
Traditional apartments and lodging houses face obsolescence as renters migrate to secure, amenity-rich condominiums, signalling the collapse of a former "cash cow" business
- Renters in Thailand, particularly near universities and industrial parks, are abandoning traditional dorms for modern condominiums due to their superior security and amenities, despite higher rents.
- The once highly profitable "cash cow" business of owning dorms is collapsing as owners face intense competition and find it more lucrative to sell their aging properties, driven by soaring land values.
- Many dorm owners are choosing to exit the market because younger generations are unwilling to inherit and manage the business, preferring the large cash payout from a sale.
- While this trend is most pronounced in urban centers like Bangkok, the traditional dorm model remains viable in provincial industrial regions where demand for affordable worker housing is still high.
Traditional apartments and lodging houses face obsolescence as renters migrate to secure, amenity-rich condominiums, signalling the collapse of a former "cash cow" business.
A new property dynamic is sweeping across Thailand's rental market, where modern condominium developments are rapidly eroding the viability of traditional apartment and dormitory businesses.
Once considered a highly lucrative, low-effort investment—colloquially known as a "sleeping partner business"—the sector is now struggling to compete.
The shift is particularly stark in areas surrounding major universities and industrial parks, where tenants are increasingly opting for condominiums.
Although monthly rents are often higher, renters are prioritising the superior security and facilities offered by condos over the basic provisions of older lodging houses.
This intense competition has led to a steep decline in new dormitory and apartment construction, and many existing owners are choosing to exit the market altogether.
From 'Cash Cow' to Obsolete
Just two or three decades ago, constructing a small apartment block of 30 to 70 rooms near a higher education institution or a large employment hub was a favoured investment strategy.
Rents were modest—often between 1,500 baht and 5,000 baht per month—but the low operating costs meant investors quickly paid off loans, allowing them to continuously compound their earnings.
Today, many of these older buildings appear neglected or dilapidated. Those that are sold are often immediately demolished to make way for newer, more profitable property ventures, predominantly condominiums.
The appeal of traditional lodging houses has been undermined by several factors:
Direct Competition: In some university neighbourhoods, over 20,000 new condo units have been released in the last decade, directly targeting the same student and worker demographic.
Asset Liquidation: Many long-term owners are selling their land and buildings after years of operation, having already recouped their original investment. The massive surge in land prices, particularly near new rail lines, makes a sale far more appealing than managing an aging business.
Succession Issues: A common problem is the lack of continuation, with younger generations often choosing not to inherit the management of the often tiresome rental business, preferring the large cash payout from a sale.
A Divided Market
While the downturn is most pronounced in inner Bangkok, the dormitory and apartment model remains resilient in key provincial regions where industrial expansion is booming.
New construction permits are still being issued actively in provinces like Chonburi, Rayong, and Chachoengsao, as well as major regional centres such as Phuket, Nakhon Ratchasima, and Chiang Mai.
In these areas, the demand for affordable, short-term accommodation for factory workers and provincial employees remains high, keeping the traditional rental format relevant outside of the capital's increasingly expensive, condo-dominated property market.
