By Andrew Batt:
Thailand’s office market saw an increase in net take up during Q2 2012 at a time when challenging macroeconomic conditions in Asia Pacific resulted in a slowdown in the region’s office rent growth.
Commenting on the decline, Mark Lampard, Managing Director of Corporate Solutions, Asia Pacific at Colliers International, said that although office leasing enquiries remained steady in Q2, occupation cost continued to be a lingering concern in tenant decision subsequently causing pressure on office rents in the region.
“There is no doubt that the rental market has been affected by the various gloomy external factors, however despite this unsettled backdrop, the Asia Pacific office leasing market was still active especially with enquiries from firms in the finance and IT industries,” added Lampard.
Unlike much of the rest of the region, Thailand’s office market experienced growing demand in the quarter.
“Although rents remained flat, net take-up in Bangkok’s CBD increased due to limited new supply coupled with increased demand activity,” said Surachet Kongcheep, Senior Research Manager at Colliers International Thailand. With limited new supply in the pipeline, prospects remain good for increased rents in Bangkok in 2013, according to Colliers International Thailand.
The average office rent in the region edged down by 0.1 percent quarter-on-quarter (QoQ) during Q2, representing the first dip since Q1 2010. The marginal drop could be attributed to the rental correction of 2 percent to 3 percent in individual markets such as Hong Kong and Singapore while most cities in China and Australia still saw positive office rental growth during the quarter.
Despite the slight downward adjustment in rents, office prices in Asia Pacific resisted the downtrend and registered a mild growth of 0.4 percent quarter-on-quarter in Q2. This led to slight compression of the overall investment yields during the quarter.
Lampard noted that although interest rates continued to stay low, access to real estate financing remained the common challenge for many prospective buyers in Asia Pacific. He added that two notable exceptions are China – where owner/occupiers remained active – and Sydney, which saw an increase in investment activity.”
Looking forward, as firms press forward in their consolidation and cost reduction strategies, leasing activities in Asia Pacific are expected to hold its fort. Office rent, while expected to also hold firm, will come under downward pressure if the economic environment in the Euro zone deteriorates further.
Get daily property news in Thai and English straight to your Inbox from Thailand’s number one property website. Subscribe today for free.