Bangkok’s office market has remained one of the few economic bright spots due to well-balanced demand and supply. While the overall state of Thailand’s economy is poor, the office market continues to buck the trend.
Rents hit new highs once again in July, with the average market-wide rental rate increasing 25 percent from the previous peak in 2007, according to a press release from JLL.
“Over the first half of 2015, the Thai economy was exposed to high uncertainty following a number of negative internal and external factors such as continuing high levels of household debt, declining domestic exports, and the global economic uncertainty following problems in Greece and China,” Suphin Mechuchep, Managing Director of JLL, said. “At this stage, these unfavorable factors have not yet had any concrete impact on Thailand’s business sector. This is reflected by continued demand for office space in Bangkok in the first half of the year.”
JLL’s Thailand Property Intelligence Centre revealed that the Bangkok office market witnessed net absorption of 98,000 sqm of space in the first half of 2015. This exceeded the average first-half-year take-up level recorded between 2010 and 2014. The expansion of companies in the finance, insurance, logistics, and e-commerce sectors accounted for the majority of space take-up in the first half.
JLL expects vacancy rates to continue moving downward as low vacancy levels across the market coupled with a scarcity of large contiguous blocks of space attractive to large companies have help spur the market on. The limited supply and continued demand will ensure conditions will remain favorable for landlords.
“For the remainder of 2015, rents should continue to grow, but the pace of rental growth will vary by grade and location. For example, in the CBA, we expect office rents to grow at a slower pace as they have already risen to such a high level that there is a growing resistance from tenants,” Yupa Sathienpabayut, Director of Office Agency at JLL noted. “On the other hand, the growing popularity of new emerging business locations such as Ratchadapisek and Rama 9 is expected to allow rents in prime grade office buildings in these areas to enjoy more rapid increases.”
