The office sector was one of the Thai real estate market’s stronger areas, but demand declined in the 1st half of this year causing some to worry. However, demand for grade A office space in Bangkok could rebound in the 4th quarter, according to research from Knight Frank Thailand.
The decline in demand in the 1st half was the only dip in demand over the last 3 years and it may not continue, according to data in the Asia-Pacific Prime Office Rental Index for Q2. Demand fell in Bangkok by 0.2% from the 1st quarter to the 2nd quarter, but overall the office market in Asia-Pacific performed well.
The index increased by 1.2% in the 2nd quarter and 0.6% when compared to the same period last year. The uptick was accredited to a pickup in global trade and domestic demand which has provided the Asia-Pacific region’s office market with a strong base despite some geopolitical concerns.
“The increase in the index was the result of rising rents in 15 of the markets over the quarter, with rental declines experienced in 2 (Bangkok and Kuala Lumpur) of the 20 markets tracked. Phnom Penh topped the chart this quarter at a 4.2% increase quarter on quarter, compared to a flat performance in the last quarter,” says Nicholas Holt, Head of Research for Asia-Pacific, in the report.
The completion of Exchange Square in Cambodia served to boost that market. In addition to providing a new standard for grade A offices in the city, its strong pre-commitment level helped increase rental levels in Phnom Penh which had been struggling. The entire Asia-Pacific office market is predicted to continue its strong performance.
“Over the next 12 months, we expect rents in 15 cities out of the 20 tracked to either remain steady or increase, which is the same as our previous forecast,” says Holt.
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