Bangkok Office Market Registers Strong Performance

Office rents dramatically increased by 10.8-23.2% on a year-on-year basis in 2005. Average achieved rents have risen to 678 baht per square meter per month in grade A offices in the CBD, representing a 23.2% year-on-year. Rents in grade B offices in the CBD area increased to 473 baht, a rise of 19% from the previous year, according to international property consultants CB Richard Ellis Thailand ( http://www.cbre.co.th/cbrecontent/homepage.htmWT.mc_id=50002 ).

About 387,000 square meters of office space will be added in 2006-2007. In 2005, construction restarted on Athenee Tower and C.U. Hi-Tech Square projects where development was halted during the 1997 economic crisis. Altogether, six offices are now being developed namely Exchange Tower, The Column, Comlink, Fenix Tower, Rasa Tower II, and Supalai Grand Tower. Office buildings expected to complete in 2007 include the King Power building, the C.U. Hi-Tech building, Athenee Tower, and the Thai Beverage building. Although eleven offices are under construction, the future supply is lower than the expected demand, which is for about 300,000 square meters per year.

The office net take-up increased by 306,666 square meters in 2005. The total take-up of offices increased to 6.25 million square meters, a 5.2% increase compared to the end of 2004. Some of this is due to tenants reluctance to pay higher rents. In 2005, the net take-up over the whole year was 307,000 square meters, a 8.7% less than annual new take-up in 2004. CB Richard Ellis expects that demand for offices will continue to be strong as, although Thai economy may grow more slowly, demand can still clearly be seen in many sectors. Tenants are still focusing on the CBD area or buildings close to the BTS or MRT stations.

2006 is likely to be another year of solid growth in the office market. Demand for office space is expected to continue to be strong as a result of newly established companies and those which are expanding, while supply will continue to tighten. Although some new buildings will be completed, this new supply will still be lower than the level of demand (about 300,000 sq.m. per year). Consequently, the vacancy rate is expected to continue to drop and rents increase.




Bangkok Office Market Registers Strong Performance



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