Bangkok remains one of the few office markets in Asia Pacific where both take-up and rents are rising, largely due to Increasing demand, very little new supply and increasing rents.
Rates in the Thai capital are the third cheapest office location in the region, according to the Q2 2013 edition of CBRE’s Asia Pacific Office MarketView. Only Manila and Wellington are cheaper.
The report also shows office occupiers across Asia Pacific remained cautious as the regional economic outlook remained downbeat, a trend which continued to inhibit leasing activity across most markets.
The CBRE Asia Pacific Office Rental Index recorded marginal growth of 0.1 percent quarter-on-quarter in Q2 2013 and has been flat for the past seven quarters. The year-on-year change was -0.2 percent, marking the third consecutive quarterly decline.
The most significant rental movement was in Beijing where Grade A rents fell for the first time in three years. Comparatively more upbeat markets were led by Tokyo which recorded Grade A rental growth of 1.5 percent quarter-on-quarter, the first time in five years that rents have risen for two consecutive quarters.
Nithipat Tongpun, Executive Director – Head of Office Services, CBRE Thailand, said: “Bangkok recorded an eighth consecutive quarter of growth for prime ‘grade A’ central business district rents, an 8.6 percent increase year-o-year to THB 880/sqm/month.
“Demand was firm and primarily came from international companies across a wide range of sectors. No new ‘grade A’ supply was completed. ‘Grade A’ rents will continue to rise on the back of limited supply and steady demand but the growth rate has now passed the peak,”
Net absorption in Asia Pacific in Q2 2013 totaled 660,000 sqm. (7.1 million sq ft), slightly below the five-year historical average for the same period. In more mature markets where rents are falling, some occupiers were taking advantage of falling rents to upgrade the quality of their office space, although it remained challenging for large users to secure big contiguous spaces.
“There is very little choice of space available in Bangkok central business district ‘grade A’ buildings, especially for tenants seeking more than 1,000 sqm. Tenants needing more space are now having to look at pre-leasing before completion in buildings under construction,” added Nithipat.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote
this story. To contact him about this or other stories email andrew@allproperty.com.sg
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