Demand for office space in Bangkok continued to show improvements during the latter part of last year, and this trend is expected to continue as long as the political and economic situations remain stable.
Colliers International Thailand, in its Bangkok Office Market Report covering Q4 2014, and released yesterday, noted how the Thai Government recently approved tax and non-tax incentive packages to attract and encourage international companies to establish their International Headquarters and International Trading Centres in Thailand.
Supply remains limited due to a lack of new supply entering the market. Large space occupiers have limited relocation options available to them. New developments expected to complete during 2015 and 2016 will equal approximately 260,000 sqm, and the majority of this space is outside the traditional central business district.
Older existing buildings will re-position themselves through renovation and upgrading existing facilities to retain existing tenants and attract new ones.
Occupancy rates in the key locations within Bangkok are above 90 percent with Grade ‘A’ buildings in close proximity to mass transit systems enjoying the greatest occupancy. Lower quality buildings located in areas not currently serviced by mass transit systems are not in any great demand, said Colliers.
Rental rates have moved upwards over the past 12-months and this is predicted to continue. The main influencing factor will be whether demand continues to grow as new supply is limited for the next few years.
Some people are beginning to question as to why rental rates are not moving upwards more than they are?
Bangkok continues to be one of the cheapest office locations across Southeast Asia. Our advice and strategy For tenants suggest the current office market conditions are more in the favour of landlords; hence tenants, especially large space occupiers, need to review their office accommodation further in advance of lease expiry than previously.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
