CBRE Thailand reported that office rents in Bangkok saw modest increases of four percent to 10 percent year-on-year in every grade and every area during the first half of 2015. The vacancy rate in the city remained unchanged at 9.7 percent with only a small amount of new supply becoming available.
Bangkok is still one of the cheapest office locations in the world. Only Canberra in Australia is cheaper in the Asia Pacific region, according the CBRE Thailand’s research. With high land costs in Bangkok coupled with the low office rents, few developers are buying land to build office buildings. This means new office supply will remain limited in the future.
During the first half of 2015 only the AIA Sathorn Tower and Bhiraj Tower at EmQuartier were completed to increase office space by 86,000 sq. m. There is 340,000 sq. m. of office space in Bangkok under construction or slated begin construction in 2015. Gaysorn Tower 2 is the only Central Business District (CBD) project under construction at the moment while the Singha Complex should start construction soon and be completed by 2018.
Nearly 40 percent of Bangkok’s new office supply is under construction in the emerging Ratchada/Rama 9 area which has become new extension of the CBD. Projects already under construction in the area include G Land Tower, the Stock Exchange of Thailand New Head Office and Rungrojthanakul 4 while there are plans to start construction on the 125-storey Super Tower, which wil have 90,000 sq. m. of office space plus retail and convention centre space, sometime soon.
“Over the past few years, office leasing transactions in the CBD accounted for about 70 percent to 80 percent of CBRE’s new leasing transactions each year however in 2014 the proportion of CBD transactions has dropped with an increase in transactions in Ratchada. This shows the popularity of Ratchada area as an office location,” Nithipat Thongpun, executive director and head of office services at CBRE Thailand, said.
CBRE Thailand said it expects falling vacancy rates and rising rents in the Bangkok office market for the reminder of 2015. The lack of new supply means occupancy levels will remain high with rents rising, but the rate of rental growth will be lower.
