A Feasibility Study of Investing in Apartment in Ratchayothin Area, Senanikom, Chatuchak District, Bangkok

Abstract

This study aimed to study the competitive environment of rental apartments in the Major Ratchayothin area and assess the feasibility of investing in rental apartments in terms of market, law, and finance. Primary data from interviews with entrepreneurs was used to analyze the financial feasibility, and secondary data from websites and related publications was used to analyze the market and law, presented in a descriptive manner. The results of the study found that the competition in the project was moderate in terms of intensity of competition from existing competitors, threats from new competitors, threats from substitute products, and bargaining power of suppliers. The bargaining power of customers was low, so the market feasibility was high, and the project could be developed at a price level of 6,001 baht or more. Since there were few establishments in the high price range, there was low internal competition. In terms of law, from a comparative study of legal limitations, it was found that the project’s land could be developed into apartments. When studying the financial feasibility, the project’s life was set at 25 years with a weighted average cost of capital (WACC) of 5.56 percent per year. The project was found to be financially worthwhile. With a net present value (NPV) of 4,995,044.38 baht, a benefit-cost ratio (BCR) of 1.09, an internal rate of return (IRR) of 7.12 percent per year, and a payback period (PB) of 12 years and 29 days, the sensitivity analysis results show that the project will experience financial unworthiness when the rental rate decreases or the occupancy rate decreases by 15 percent, and if the construction cost increases by 20 percent, the project will experience financial unworthiness. Therefore, the project is suitable for investment, but caution must be exercised in events and situations that affect the performance in terms of costs, occupancy rates, and room rates.