Occupancy rates and rents in Bangkok central business district (CBD) have significantly increased during the last two years, according to new research from Colliers International, who also cautioned that political instability is hampering future potential in the sector.
Just one office building was completed in 2013 – in the Northern Fringe area, while the total office space as of H2 2013 remained at approximately 8,066,000 sqm.
The average occupancy rate and rents in all locations are similar to in the previous quarter, although the occupancy rate and rents in the CBD area have significantly increased over the past two years.
Many multinational and local companies are continuing to seek office space in Bangkok, especially in the area along existing mass transit lines in the CBD area, so the average occupancy rate rose slightly.
More than 80 percent of the total office supply in Bangkok was completed before 2003, so there is potential for a significant amount of renovation in the near future if rents continue to rise, noted the real estate agency.
The area along Ratchadapisek Roa from the Rama 9 junction is becoming a new Bangkok business zone, and most new office buildings expected to be completed in 2014-2015 are located in this area.
In its summary, Colliers said: “Rentals and occupancy rate will continue to increase in 2014, due to limited supply against rising demand from the past few years.
“In 2013, the total new occupied office space was approximately 150,000 sqm. This is the highest recorded within the past few years as demand from Thai and multinational companies was on the increase for new offices or expansions.
“The central government announced a decrease in the corporate tax from 30 to 23 percent last year, and further reduced it to 20 percent in 2013 to attract foreign investors and businesses.
“Although still higher than in Singapore and Hong Kong, other expenses in Thailand are lower than those two countries, such as office and residential rents, and the cost of living.
“In Bangkok, some large projects are planned for development in the future in several locations around the city, such as the Ladprao intersection, the area close to BTS Mo Chit Station and Bang Sue Station, the former Suan Lum Night Bazaar, Makkasan Complex and the Bangkok port terminal. These are envisaged as mixed use projects comprising residential, retail, hotel and office space. Some of these projects could change the surrounding area and will probably create new business centres in Bangkok.
The prospect of the AEC in 2015 and the opening up of Myanmar are also factors in raising demand for office buildings in Bangkok because Thailand is seen as an increasingly important regional centre for companies with operations in the sub-region, that is, Myanmar, Laos and Cambodia.
“Political instability is still the major factor affecting the confidence of Thai and foreign investors, businessmen and tourists over the past few years, and also in 2014.
Colliers International Bangkok Office Report H2 2013 can be found here.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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