Bangkok office market on the rise

“If the political situation in the country is positive, the office-for-rent businesses will enjoy strong growth,” Nithipat Thongpun, executive director and head of office services at CBRE Thailand, told a news conference yesterday.

Meanwhile, the outlook for next year looks even better, as foreign investors seek to expand their interests in Asean, with some selecting Thailand for their regional headquarters, he said. 

“As a centre of the Asean region geographically, low office rents will attract international companies to Thailand next year,” he said.

There are no significant differences in the quality of offices between Thailand and neighbouring countries, and yet rents in places like Singapore are considerably higher. Average rental rates in the city-state are around Bt3,000 per square metre, while a Grade A office in Bangkok’s central business district (CBD) goes for about Bt870 per square metre. This makes Thailand an attractive choice for foreign firms needing a regional HQ, Nithipat said.

A survey by CBRE of the Thai office-rental market found demand for 97,000 square metres since the beginning of this year. The agency expects demand for 100,000sqm in the second half, with the full-year demand 10 per cent higher than last year’s 180,000sqm.

Meanwhile, supply in the first half increased by 86,000sqm year on year, and it is expected to reach 156,000sqm before the end of the year, 20 per cent lower than new supply last year, which recorded 197,000sqm. 

The decreasing trend to construct new office buildings is due to property firms being more interested in developing residences for sale than offices for rent.

With the demand for rental offices expected to grow by 5-10 per cent a year but the supply rate declining, CBRE foresees the vacancy rate dropping from the current 10 per cent to around 5 per cent by 2017.

Meanwhile, rental fees are rising by 4-10 per cent per year. The current average rent for a CBD Grade A office is Bt870 per square metre, while the non-CBD Grade A average is Bt687. The average rent for a CBD Grade B office is Bt646 per square metre, and for a non-CBD Grade B it is Bt593, the survey found.