Office Rents in Bangkok cheap on the world stage

In March this year the international consulting firm CBRE conducted its latest Global Prime Office Occupancy Costs survey and of the 126 major cities they surveyed, Bangkok ranked 109th, thereby making it among the cheapest in terms of office space in the world.

This ranking was down from 105th spot in 2015, even though the average rent for prime Grade A offices in Bangkok’s central business district has increased by 6.6 percent year-on-year and is among the top 25 annual rental increases of the cities in the survey.

Bangkok certainly rates as one of the cheapest in the Asian region, with Hong Kong as the most expensive office location. Asia in general has some of the most expensive Grade A office rents in the world.

While the average prime Grade A rent was 959 baht per square metre per month in Bangkok, a rise from 900 baht in 2015, Hong Kong (Central) rates stand at the equivalent of 9,140 baht.

In second place is London (West End) at the equivalent of 8,261 baht followed by Beijing (Finance Street) and Beijing (CBD) at 5,923 and 5,720 baht respectively. In fifth position is the West Kowloon section of Hong Kong at 5,653 baht while Tokyo (Marunouchi/Otemachi) at 5,054 is the last to be at 5,000 baht or more.

In what might be perceived as somewhat of a surprise, New Delhi (Connaught Place-CBD) ranks seventh (4,715 baht), ahead of London-Central (City) at 4,579 baht, New York (Midtown Manhattan) at 4,306 baht and Shanghai (Pudong) at 4,182 baht.

CBRE Thailand noted, ‘Bangkok office demand has remained strong despite the weak economy and this, combined with the limited amount of new space completed, will continue to push up rents.’

“We expect the global economy to keep growing, and the global service sector, the primary occupier of prime office properties, will continue to expand through periods of volatility,” said Richard Barkham, CBRE’s global chief economist.

The service sector should show particularly strong growth in Asia as pensions and insurance products gain market share so occupancy cost growth will continue to trend upwards at a moderate pace.

“With low vacancy rates and lack of prime space in Hong Kong, this has allowed landlords to push rents upwards,” said Henry Chin, head of research, CBRE Asia Pacific.

Another part of the reason Hong Kong rents are so high is that mainland Chinese financial firms have been seeking prime office space to support their overseas business expansion and to cater for the clients’ needs to manage their capital outside China.