AIA Thailand sees potential in the Thailand office property market and announced plans to invest more in office buildings to increase its property investment to 3.5 percent of its portfolio between now and 2020. The insurance company wants to add 100,000 sqm of office space to its portfolio by the end of the decade as the company believes in Thailand’s economic fundamentals and thinks the market will improve.
Chief investment officer Sukkawat Prasurtying explained to the newspaper that office buildings are Bangkok’s best long-term investment choice since the vacancy rate for office space is high while other recurring-income assets including hotels and serviced apartments have too much supply on the market.
A lack of high-grade office space in Bangkok in the last quarter of 2015 saw rental rates increase by more than 2.6 percent from the previous quarter, according to research from Jones Lang LaSalle Thailand. This jump in rents was the highest increase found in Southeast Asia.
“We are looking for a land plot in prime locations to develop an office building but it’s difficult to find one to suit our investment policy as the land price has soared to more than THB2 million per sq. wah,” Sukkawat said.
However, acquiring an office building with tenants is not an attractive option for investors. This is because owners usually offer high prices for less than appealing buildings while more desirable office buildings rarely hit the market.
At the moment, about 2 percent of AIA Thailand’s investment portfolio consists of property. The company has four buildings: AIA Tower 1 and 2 on Surawong Road and two new towers AIA Capital Center on Ratchadaphisek Road and AIA Sathorn Tower on Sathon Road.
“We expect the occupancy rate at AIA Sathorn Tower will increase once the new Suksa Wittaya skytrain station starts construction and it will be fully occupied when the station is nearly completed,” Sukkawat stated.
