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Possible Signs of Movement in Office Condominiums Market

The concept of office condominiums has long existed, but today we rarely come across it in the market. The majority of office supply in Bangkok is single ownership, which means the building is wholly owned by the landlord with office space available on a rental basis. Office condominiums, on the contrary, offer outright ownership structure as a condominium project.

Daniel Lorenzzo

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The concept of office condominiums has long existed, but today we rarely come across it in the market. The majority of office supply in Bangkok is single ownership, which means the building is wholly owned by the landlord with office space available on a rental basis.  Office condominiums, on the contrary, offer outright ownership structure as a condominium project.

At present, out of the total office supply in Bangkok, 25 per cent are office condominiums, the majority of which are located in non-CBD locations. In CBD locations, office condominiums only account for 4 per cent of the total CBD office supply. The market for office condominiums was at its peak during the 90s with demand driven by speculators and investors.

office condominiums Bangkok

As a result of the above factors, after the 1997 financial crisis there has been little new supply of office condominiums on the market.

One of the primary reasons office condominiums did not do well is that there is limited demand from the end-user market

Most corporations, especially multinational companies, prefer not to own assets and they all want the flexibility to expand and relocate. If they cannot find space to expand within the building, they will be left with the problem of disposing of the office space, which is challenging as the office condominium resale market lacks liquidity. With this inflexibility, renting office condominiums is also less popular for tenants, compared to single ownership buildings.

Another factor is the quality of the building and management. Like aging condominiums, office condominiums face a similar problem of upkeep and maintaining the building quality and management under a strata title. Poor management and lack of funds for building improvements reduces the building’s attractiveness, as well as the price appreciation potential.

As a result of the above factors, after the 1997 financial crisis there has been little new supply of office condominiums on the market.

The most recent one in the CBD is Trendy building, which was completed in 2008.

Prices of office condominiums have been static, averaging around Bt35,000 to 38,000 per sqm during the early 2000s. Today, the average achieved price of office condominiums in the CBD has gradually moved up to the region of Bt40,000 to Bt50,000 per square metre. There are a few buildings that are better managed and have achieved higher than the market average. For example, Lake Rajada is one of the best quality and better-managed office condominiums and has achieved close to Bt70,000 per sqm.

With the ongoing demand, there are certain end-user companies who do want to own an office building but are unable to afford one, or the decision would not make financial sense given the current land cost in the CBD. It is doubtful whether there is sustainable demand to develop new office condominiums for sale and whether the prices achieved will justify the investment as the current prices are well beloe replacement cost.

The choices for large end-user companies are confined to developing a new building or purchasing old buildings in a less than prime location. For small and medium-sized companies, apart from shophouses, CBD office condominium is a good alternative. We believe prices for a good quality and well-managed office condominium in the CBD will appreciate further.

However, price appreciation may not be as favourable as it should be as office condominiums are still faced with limitations in terms of capital expenditure available for major renovations of the building, particularly monitoring and evaluation. Published on The Nation Dated 28 May 2012 by Aliwassa Pathnadabutr, Managing Director of CBRE Thailand

via Possible Signs of Movement in Office Condominiums Market | Thailand Property News.

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Real Estate

Pre-Built raises revenue target in Thailand

In the first quarter Pre-Built Plc mainly received condominium projects in Phuket and in the northern provinces of Thailand. The Phuket Post reported that the listed contractor Pre-Built Plc (PREB) has revised this year’s revenue target to THB 4 billion (US$125.4 million) from THB3.7 billion (US$116 million)

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phuket airport

In the first quarter Pre-Built Plc mainly received condominium projects in Phuket and in the northern provinces of Thailand. The Phuket Post reported that the listed contractor Pre-Built Plc (PREB) has revised this year’s revenue target to THB 4 billion (US$125.4 million) from THB3.7 billion (US$116 million) as concerns about a contractor shortage and higher costs lead developers to accelerate condominium construction. ctor shortage amid the higher costs.

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Pre-Built raises revenue target in Thailand

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Real Estate

Essentials knowledge to rent on the expat market

Rental yields remained largely unchanged in the first quarter of this year in the downtown Bangkok condominium market, ranging from 3% to 9%, despite prices for new properties rising and no significant growth in the number of expatriate tenants. The findings appear in CBRE’s quarterly survey based on all of the company’s letting transactions for the last quarter.

Daniel Lorenzzo

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Bangkok Condo

Prospective investors in the market must understand the basics of demographics and what appeals to renters while also taking into account the trends that are likely to dictate its future. Rental yields remained largely unchanged in the first quarter of this year in the downtown Bangkok condominium market, ranging from 3% to 9%, despite prices for new properties rising and no significant growth in the number of expatriate tenants. The findings appear in CBRE’s quarterly survey based on all of the company’s letting transactions for the last quarter. (more…)

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Silom most expensive piece of land in Thailand

Land prices on Ratchadamri (from Ratchaprasong Intersection to Khlong San Saeb), Rama I, and Ploenchit Roads will be appraised from around 400,000 baht to 800,000 baht per square wa.

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The Treasury Department has released a new list of land price appraisals, citing Silom as the most expensive area in Thailand. The new price appraisals will be effective from July 1st onwards. Deputy Finance Minister Wirun Techapaiboon said the ministry has told the Treasury Department to enforce the new price appraisals on July 1st this year until 2015. The new price was scheduled to be enforced in January this year, but was delayed by another six months due to the flood crisis in 2011. (more…)

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