With a more positive political outlook, the Bangkok office market is beginning to see a move forward and growth in demand and rent, following a period where the market has been held back due to the combination of the global crisis and Thailand’s political uncertainty, according to a leading property consultant CB Richard Ellis CBRE.
Whilst office demand has been slow, the market as of Q2 2011 was more active with clearer signs of expansion from existing tenants and a marginal increase in occupancy rates from the previous quarter to 86.5%. CBRE’s office enquiries were up 34.2% q-o-q, an upswing indicating the market is heading towards the right direction.
An analysis of CBRE’s office enquiries also shows that 59% of enquiries involved an expansion, indicating that the key demand driver is from the expansion of existing businesses and space requirements from existing tenants rather than demand from entry of new multinational companies (MNC’s). Key growth industries in the past several years have been in the service and consultancy sectors.
The trend of expanding businesses and space requirements is expected to continue and with limited new supply coming to the market, rents will increase. In 2011, Park Ventures Ecoplex and Sathorn Square are the only two Grade-A CBD office buildings to be completed, adding approximately 100,584 sq.m. to the office supply. The only other new Grade-A CBD building currently in the construction pipeline is the UBC III building on Sukhumvit 35 which will offer 50,200 sq.m. of lettable space and is due for completion in Q1, 2014.
Bangkok falls 19 places to 49th most expensive location worldwide
Locations reliant on international tourism have seen their rental markets hit especially hard during the pandemic, resulting in some major drops in the rankings. Bangkok has fallen 19 places to 49th, while Hanoi saw a similar drop of 12 places to 81st.
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