Record office rents for what is still a cheap capital
The Thailand division of the international property consultancy company CB Richard Ellis (CBRE) conducted a local office rents survey in conjunction with its parent firm and noted Bangkok had reached a new peak, but still remained the cheapest in the region.
Bangkok office rents surpassed their previous peak, set in 1992, with so-called Grade A rents in the central business district (CBD) averaging 770 baht per square metre per month.
Bangkok’s CBD office space currently stands at around 8.1 million square metres with occupancy running at 88 percent in 2012. This equates to almost 5.5 billion baht in annual rental returns, just within the Bangkok CBD for Grade A rents. Rental prices jumped nine percent in 2012, but remained the cheapest in the Asia-Pacific region according to CBRE.
Out of 31 Asia-Pacific cities included in the CBRE survey, 20 saw top-line rents rise, and 11 others fell. The most expensive city surveyed was Hong Kong where CBD Grade A rentals run at an average of 6,600 baht per square metre per month. This is 116 percent more expensive than Bangkok, and yet rents in Hong Kong actually fell by 18 percent during 2012.
In terms of the most expensive in the world, Hong Kong’s Central district topped the rankings followed by London’s West End, the Marunouchi Otemachi area of Tokyo, Beijing and then, perhaps a little surprisingly, New Delhi.
In Bangkok, it is expected that just 88,000 square metres of Grade A rental space will be added to the market over the next two ears or so. The largest will be the Bhiraj Tower, opposite the Emporium Shopping Centre, which will bring 50,000 square metres on line and the AIA Sathorn Tower which will have 38,500 square metres available some time in 2015.
Given the lack of Grade A office rental space within the Bangkok CBD, it’s almost certain rents will rise yet again during 2013, and this rise could easily be more than the nine percent witnessed in 2012.
The lack of available office rental space means potential tenants who require around 3,000 square metres on a couple of adjoining floors face a very difficult time finding suitable premises.
Outside of the 88,000 square metres being built in the CBD, just 342,000 square metres of office rental space is being constructed and due for completion by the start of 2016. This will force some companies to set up business on the fringes of the CBD.
Currently the most expensive place to rent in Bangkok is within the Park Ventures Ecoplex on Wireless Road where the price is 925 baht per square metre per month.