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Office Market Continues to Improve with Falling Vacancy Rate and Rising Rents

By on Oct 25, 2012 in Research

Bangkok Office MarketView, Q2 2012

The  office  market  has  been improving  steadily.    The  net  take-up  in  the  second  quarter  of  this year  was  36,709  sq.m.,  which increased  by  3.20%  Q-o-Q  and 107.67%  Y-o-Y. The  overall vacancy  rate  decreased  from 13.86%  to  13.25%.    The  grade  A CBD vacancy rate fell from 18.33% in  Q1  2012  to  17.16%  in  Q2 2012.    There  was  no  new  office supply this quarter.

The  total  office  supply  in  Bangkok fell  to  8,080,818  sq.m.,  a  0.80% decrease  Q-o-Q  but  a  1.07% increase  Y-o-Y.    The  office  supply did  not  grow  since  no  new  office building was completed during this quarter  (The  decrease  in  total supply was due to a revision in our database).

Overall, 7,010,000 sq.m. of space was occupied in the Bangkok office market.    This  represents  a  slight decrease  of  0.1%  Q-o-Q  and  an increase of 1.4% Y-o-Y.  The fall in the  amount  of  occupied  space  is due  to  an  overestimation  of  the take-up  and  total  supply  in previous  quarters. Thus,  the  total take-up  has  decreased,  but  the occupancy  rate  increased  from 86.14% to 86.75% this quarter. MarketView Q2 2012

Office  rents  increased  for  both grade  A  and  grade  B  offices  in CBD and non CBD areas.  Grade A CBD rents rose to an average of THB 734 per sq.m. per month from THB 713 per sq.m. per month last quarter.

The highest rents are in new grade A  buildings  in  the  CBD.    In  Q2 2012,  average  rents  for  grade  A office  space  in  the  CBD  rose  by 2.9% Q-o-Q and by 7.9% Y-o-Y.

Currently,  the  main  threats  to  the growth in demand for office space are global economic instability and  domestic  political  instability.    If  a major  external  economic  event occurs, similar to the crisis in 2008, then office expansion is likely to be put  on  hold.    Rents  are  not expected  to  spike  but  should increase  steadily  if  there  is  no  big external  economic  shock  or domestic  political  instability.    In addition,  with  limited  new  supply, the outlook  for the Bangkok office market remains positive.

This is an extract from Bangkok Office MarketView Q2 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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