Research from Knight Frank Thailand revealed that the office market had an occupancy level of 92.1 percent in the second quarter with limited supply causing prices to rise. This continues to the trend of low vacancies and slowly climbing prices for office space, particularly in Bangkok’s CBD areas.
“Bangkok’s commercial property market is currently one of the strongest performers in the Thai real estate sector,” Marcus Burtenshaw, executive director and head of commercial agency department, Knight Frank Thailand, explained in a press release. “We are starting to see many of the well-known residential developers shifting their focus to commercial property. By the end of this year, a total commercial space of 163,604 sqm. would be added to the market.”
The research also noted there is a growing list of future office supply scheduled to come online in Bangkok during the next few years. This indicates that supply should finally be able to catch up with the growing demand. During the second quarter, it was announced that up to 288,000 sqm. could make its way onto the market. Only 28,705 sqm. of supply were added during the past few months with M Tower and The Metropolis both launching.
One recent deal saw a 50-year lease for a site in Silom agreed upon for commercial development. Knight Frank Thailand thinks this has set a precedent for plots previously deemed financially unsuitable for office space not being used for commercial projects. Most new launches, however, are still taking place outside of the traditional Bangkok CBD areas in new business sub-districts such as the mid-Sukhumvit and mid-Rama IV.
The consultancy added that there was some good news for the Thai economy during the first quarter thanks to an impressive GDP growth rate despite the poor economic outlook. It’s unknown if either of these will affect the demand for office space with similar trends likely continuing until the outcome of the upcoming general election in 2017.
