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New grade A Office Buildings in the CBD are in the Highest Rents

By on Oct 18, 2012 in Research

Bangkok Office MarketView Q1 2012

Bangkok office MarketView Q1 2012

Bangkok office MarketView Q1 2012

The office market continued to improve. Net new take- up was around 35,000 sq.m. 32,000 sq.m. of new office supply was completed, which was all grade B. The overall vacancy rate fell to 13.73% from 14.13% in Q4 2011, grade A CBD vacancy rates fell to 18.33% from 20.51% from the previous quarter.

The total office supply in Bangkok increased to 8,146,340 sq.m., a 0.3% increase Q-o-Q and 2.0% Y-o-Y. The supply grew by 31,833 sq.m. upon the completion Central Rama 9, Olympia Thai Plaza, and the Palladium.

Overall, 7,017,547 sq.m. of space was occupied, up by 0.65% Q-o-Q and 1.8% Y-o-Y. The occupancy rate improved slightly to 86.1 % from 85.9% in the previous quarter.

Grade A CBD rents rose to an average of THB 713 per sq.m. per month from THB 702 per sq.m. per month.

The highest rents are in new grade A buildings in the CBD. In Q1 2012, average rents for grade A office space in the CBD rose by 1.6% Q-o-Q and by 4.9% Y-o-Y.

The main threat to the growth in office demand is a major external economic event similar to the 2008 global financial crisis. If such an event occurs, then all office expansion will be put on hold.

If there is no big external economic shock or domestic political event, then the outlook for the Bangkok office market is positive, with the possibility of increased take up, rising rents and limited new supply.

However, given the global economic situation, growth in demand will be slow and we do not expect a dramatic increase. Rentals will increase but they will do so steadily rather than suddenly spiking.

This is an extract from Bangkok Office MarketView Q1 2012, click to download the full report.

Toby has been living in Bangkok for a number of years and has a strong research background. With his years in Thailand Toby brings a wide range of property knowledge to his research writing

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