Market Research B A N G KO K O F F I C E M A R K E T BANGKOK OFFICE MARKET HIGHLIGHTS | 4 th q u arter | 2 0 0 8
c o l l i e r s i n t e r n at i o n a l
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The Knowledge Report B AN G KO K o f f i c e M A R K E T |
4 th Q u a rt e r
|
2008
BANGKOK OFFICE MARKET OVERVIEW Total Current Supply During 2008, approximately 275,717 square metres was added to the Bangkok office stock, representing growth of 3.7% and bringing total supply of office space to approximately 7.71 million square metres. The average rate of growth of new supply was 2.35% per year from 2004 to 2008.
The majority of office supply was in the Inner CBD area, representing about 38% of the total, followed by the Northern Corridor, and Eastern Corridor, representing about 21%, and 11%, respectively.
Figure 1 : Supply of office space by location, Q4 2008
Source : Colliers International Thailand Research
Future Supply New supply of office space in the pipeline and scheduled for completion from 2009 totals approximately 849,762 square metres, mostly concentrated in Government-owned projects in the Northern Corridor: the 470,000 square metre new Government centre on Chaengwattana Road. As most of this
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new supply will be pre-committed by Government entities, new supply being developed for open market rentals remains relatively limited, at around 190,009 square metres.
The Knowledge Report | 4th Quarter | 2008 | Bangkok Office Market
Demand Trends Demand for the prime space in Bangkok’s CBD remained firm in the first half of 2008, however during the third and fourth
quarters of the year, the absorption rate declined due to the global economic crisis as well as the political uncertainty in Thailand.
Occupancy and Rental Rates The overall occupancy rate of the Bangkok office market has remained relatively stable at around 89.07% at year-end 2008. The highest occupancy rate was in the Outer CBD, (91.42%), followed by the Eastern Corridor (91.29%) and East Zone (91.29%). The rental rate of Grade A office space in the Inner CBD ranged from THB 580 – 750 per square metre per month at the end of 2008, although deals around THB 600-650 per square metre were more typical towards year-end. The average rental rate of Grade A in the CBD area was THB 700 per square metre.
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Rental rates for Grade B office space in the Inner CBD ranged from THB 300 - 700 per square metre per month. A broad-based reduction in office rentals has been seen as landlords have made tenant retention a top priority. However, the average rental rate of Grade B office in the Inner CBD was THB 590 per square metre per month.
The Knowledge Report | 4th Quarter | 2008 | Bangkok Office Market
Outlook: The twin effects of the global economic recession and political instability in Thailand will make the overall office market slow down in 2009. The top end of office market will be one of the first sectors to rebound. Office landlords are planning to forgo upwards-only rent renewal clauses this year to help their customers to maintain their businesses. While the cost of relocation will deter many tenants from moving out of existing premises, many tenants can be expected to push for lower rentals at renewal, while new projects are already offering substantial discounts to secure major tenants and ensure occupancy rates through what could be a prolonged downturn. Overall, we would expect rents to decline by at least 5% in 2009.
293 offices in 61 countries on 6 continents USA 99 Canada 19 Latin America 18 Asia Pacific 62 EMEA 95 US$ 2 billion in annual revenue 868 million square feet under management 11,048 Professionals
Apart from substantial new Government-owned space coming onto the market, private sector landlords are adding relatively little space. As a result, even if net absorption remains static in 2009, overall occupancy rates are unlikely to be greatly affected this year. Contact information THAILAND: Patima Jeerapaet Managing Director
Risinee Sarikaputra Director | Research
Colliers International 17/F Ploenchit Center Klongtoey Bangkok 10110 Tel: 662 656 7000 Fax: 662 656 7111
This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.
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This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.