Thailand's leading real estate agent

APAC Office Vacancy Declines but New Supply Increasing While Bangkok Office Rents at 20-Year High

By on May 29, 2012 in Property News

Office vacancy in Asia Pacific continued a slow decline in Q1 2012, however, this trend is likely to end in Q2, given slowing occupier demand and new supply coming online across the region, according to the latest Asia Pacific Office MarketView report published by CBRE, the world’s leading commercial real estate services firm.

The minor dip in overall office vacancy in Asia Pacific resulted from diverging performance in markets across the region. Nearly half the countries in Asia Pacific recorded a drop in vacancy, slightly offsetting those regions that experienced an increase in vacancy. In Asia, overall vacancy in Bangkok, Hong Kong, Shanghai and Beijing continued to decline, while Tokyo, Singapore, Kuala Lumpur and New Delhi all saw vacancy rise.

In Bangkok, the Grade-A CBD vacancy rate fell to 18.3%, down from 20.5% in Q4 2011, as space in 2 new buildings completed in late 2011 was gradually filled.  Limited future supply and steady leasing momentum will support further rental growth in 2012.

Demand for office space in other cities in Asia Pacific weakened further in Q1 2012, as corporates continued to seek opportunities to reduce real estate costs via consolidation and/or relocation. This trend is spurring the release of secondary space in a number of key markets, which will continue to exert pressure on vacancy.  Demand for large floor plates also fell during the quarter, with most leasing deals completed over the period for smaller spaces. In terms of industry sector, financial institutions—particularly major international banks—remained generally inactive. Professional services including IT and consumption-related sectors accounted for the bulk of office leasing demand.

New supply in Asia Pacific anticipated to come online in 2012 will also put pressure on the overall vacancy rate. In Q1 2012, new office stock of 770,000 sq.m. was completed across Asia Pacific, 33% above the 10-year quarterly average. Completions are expected to exceed 418,000 sq.m. in 2012, a 30% rise year-on-year. It should be noted that the development pipeline for 2012-2013 as a proportion of current stock varies significantly per market, ranging from as high as 44% in New Delhi to virtually zero in Wellington and Bangkok. Tokyo, Seoul, Mumbai, Kuala Lumpur and Ho Chi Minh City will witness an increase in completions over 2012.

Currently, tenants looking for Grade-A CBD offices in Bangkok have a limited choice, particularly larger space users. According to CBRE Research in Thailand, there will be only 390,000 square metres under construction due for completion by the end of 2014.
Source : Q1 2012 Asia Pacific Office MarketView, CBRE Research

“Bangkok’s office market is on an upward trend with grade A rents risen by 1.6% q-o-q amid steady demand from sectors tied to domestic consumption.  Rents are starting to rise and have topped the last peak, which was 20 years ago, at over THB 850 per sq.m. per month at Park Ventures Ecoplex in Q1 2012.  Its landlord will increase the rent further to THB 900 per sq.m. per month on June 1st,  2012 as over 60% of their office space have been leased,” reported Mr. Nithipat Tongpun, Executive Director and head of Office Services, CBRE Thailand.

Mr. John Falkiner, Managing Director of Transaction Services, Asia for CBRE, said, “Looking at occupier demand, it is important to emphasize that while decision making is protracted it has not stalled. Balancing growth with cost and efficiency has always been, and will remain, a key consideration for multinational companies. Asia corporations remain aggressive in acquiring space in many Asia Pacific markets.”

“A combination of weakening demand and limited availability of development finance is slowing the pace of construction activity. Nevertheless, considerable new supply will still hit the market in 2012, which means newer and often better quality product for those occupiers looking to secure alternative space this year,“ said Dr. Nick Axford, Executive Director and Head of CBRE Research, Asia Pacific.

To read the full report of Q1 2012 Asia Pacific Office MarketView, please click here.

No comment





 

emailSubscribe Via Email

Privacy guaranteed. We will not share your information.

Follow Me on Twitter

Follow Me on Facebook

Subscribe via RSS Feed

Copyright © 2020 CBRE (Thailand) Co., Ltd. All Rights Reserved.