Ratchada/Rama 9 emerges as new popular office area: Research
About 40 per cent of total new office supply under construction in Bangkok is in the Ratchada/Rama 9 area, as the area emerges as an extension of the central business district (CBD), said a property consultancy firm.
CBRE Thailand said that new buildings under construction in the area include G Land Tower, the Stock Exchange of Thailand New Head Office and Rungrojthanakul 4. There are plans to start construction on the 125-storey Super Tower with 90,000 sq. m. of office space, retail and convention centre, next to G Land Tower at the Ratchada/Rama 9 intersection.
Only 340,000 square metres of office space are under construction in Bangkok which is scheduled to be completed between the second half of 2015 and 2017. Among new buildings, Gaysorn Tower 2 is the only grade A office in the CBD that is under construction while the construction of Singha Complex, another grade A CBD office, is expected to start this year and to be completed in 2018.
“Over the past few years, office leasing transactions in the CBD accounted for about 70-80 per cent of CBRE's new leasing transactions. 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,” said Nithipat Thongpun, executive director and head of Office Services at CBRE Thailand.
Yet, he does not expect that office tenants will move out of the CBD.
"The majority of tenants in the newly completed office buildings in Ratchada were already in Ratchada or in the north of Bangkok and wanted to expand or upgrade their office space, only a few came from the CBD,” added Nithipat.
Based on the current market and economic conditions, CBRE expects that the Bangkok office market will continue to be steady in 2015 with falling vacancy rates and rising rents. The lack of new supply means that even if quarterly take up does not increase or falls due to weak economic conditions, occupancy levels will remain high, pushing up rents, but the rate of rental growth will be lower.
In its research, Park Ventures Ecoplex on Wireless Road is still the most expensive office building in Bangkok with the highest rent at Bt1,200 per sqm per month for a small unit. Average office rents in Bangkok continued to increase by 4-10 per cent on year in every grade and every area.
It did not provide the average rents.
Despite the increase, Bangkok is still one of the cheapest office locations in the world. In the Asia Pacific region, only Canberra in Australia is cheaper.
Bangkok's office vacancy rate in the first half of this year remained unchanged from the same period last year at 9.7 per cent, though the office space increased by 86,000 square metres on the completion of two new buildings. At the end of June, total office space supply stood at 8.4 million sqm. In the period, AIA Sathorn Tower and Bhiraj Tower at EmQuartier were completed.
The overall net take-up increased by 4.8 per cent from the same period last year to around 100,000 sqm in the first half of 2015.
CBRE also pointed out that accessibility to a mass transit station is the most important factor for office tenants in deciding where they set up their offices. Beside Ratchada/Rama 9, other potential areas are Phaya Thai/Rajtchathewi and Late Sukhumvit (from Prakanong station to Bangna station).
As only 14 per cent of total office supply in Bangkok was built in less than 10 years. CBRE anticipates that new office take-up in the future will be in new office buildings because most of the existing offices are full and obsolete, located in inferior locations.
