Office supply in Bangkok continued to be limited during the first quarter of 2015, according to real estate firm DTZ.
“Grade A” offices in the central business district were in particularly short supply, mainly due to limited availability of prime land combined with high land prices.
AIA Sathorn Tower was the only major completion in Q1 2015, with net office space of 38,500sqm, whilst Bhiraj Tower is expected to complete in Q2 (Figure 4). The total stock in the market in Q1 was 1.74 million sqm.
Following the completion of AIA Sathorn Tower and Bhiraj Tower in Q1 and Q2 respectively, new supply will be very limited until 2016.
Office space remains in high demand
The demand for Grade A office space remained strong during Q1 2015, with a total occupied area of 1.57 million sqm. Office vacancies increased temporally due to the new completion of AIA Sathorn Tower. The vacancy rate stood at 9.9 percent, up from 8.5 percent in Q4 2014, and 9.5 percent year-on-year.
The government recently approved a number of special tax and non-tax incentive schemes to encourage foreign companies to establish their International Headquarters (IHQs) and International Trading Centres (ITCs) in Thailand, as well as to promote Thailand as a hub for the ASEAN Economic Community.
Rentals increased, especially for offices near BTS mass-transit stations
Office rents increased steadily and are likely to continue to increase as demand for offices remained strong. The average rental levels for prime locations in Q1 2015 reached THB760-per-sqm per month, representing an increase of 7 percent year-on-year from THB710-per-sqm per month in Q1 2014 (Figure 6).
Office buildings that are located adjacent to BTS stations with sky bridges connected to the buildings command the highest rents. Park Venture commands the highest asking rent with the rate of THB1,300 per sqm per month, followed by Exchange Tower with the asking rent of THB1,100 per sqm per month.
Story: DDProperty.com / Photo: Transformer18
