Bangkok’s office market is witnessing the lowest vacancy rates for 20 years, and a lack of supply combined with growing demand is predicted to push rental rates up by between 4 percent and 8 percent across the board.
Real estate firm CBRE, in its Bangkok Office Marketview research report, reported that the total office supply in Bangkok increased to 8.14 million sqm at the end of Q1 2014, a 0.3 percent increase quarter-on-quarter and a 0.5 percent increase year-on-year. The overall vacancy rate was 9.2 percent, dropping by 0.4 percentage points q-o-q and 2.5 percent y-o-y – the lowest vacancy rate in the last 20 years.
Overall, 7.39 million sqm was occupied, up by 0.8 percent q-o-q and 3.4 percent y-o-y. The occupancy rate improved to 90.8 percent this quarter, up from 90.4 percent in the previous quarter.
In Q1 2014, average rents for ‘Grade-A’ office space in the central business district of the Thai capital rose by 1.5 percent versus the previous three months, and by 5.7 percent y-o-y to reach THB 832 per sqm per month.
“We expect rents will continue to grow but at a slower rate as office buildings that command a premium rent are already full,” said CBRE.
Based on the projects that have already been announced, 470,000 sqm of new office space will be completed between 2014 and 2016. Bhiraj Tower, AIA Sathorn Tower, FYI Centre and One Fenix Place are the only projects that will be developed in the central business district, but only the first two will be ‘Grade-A’ offices.
Currently, 67.8 percent of the total anticipated new space will be ‘Grade-A’ office buildings and only 31.4 percent of the office space under construction will be in the central business district.
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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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