With the Thai capital’s real estate sector booming, any business district hotel in Bangkok has a comfortable future to look forward to, and so do the offices in the city, with the Bangkok office market having a positive outlook, at least for the short term.
The outlook for the Thai capital’s office market for the next three years remains positive, mostly due to a scarcity of new supply, but the market is showing signs that the demand growth rate would slow down during the second quarter.
The city has a total office supply of 8.6M m2 with vacancy rate still sitting at a 20-year low at 7.5%. Between 2017 and 202, there is only about 420,000 m2 due for completion.
Despite the recent troubles with the Thai economy, growth in demand for the office sector has been strong over the past 4 years, with the city’s annual occupation growth rate sitting at approximately 200,000 m2/yr.
According to most, the reason for this is due to the emerging e-commerce sector, as well as the consumer finance sector moving.
The slower demand growth won’t really impact the market in the short term due to the limited supply of office real estate currently under development, but the rate of rental growth could slow down and see considerable deviation based on the location and quality of the building.
CBRE Thailand, a property consultant, have been seen notable discrepancies in the rent of the CBD’s grade-A office subsector.
The Sukhumvit-Phloenchit sector, usually home to many business district hotel in Bangkok, have also noted good growth, with four completed buildings recording rents of at least Bt1,000/m2 whilst some of the older buildings in the CBD record slower growths and more vacancy.
According to the CBRE, some office tenants are willing to pay more money for high-specification office buildings located in prime real estate. Newer grade-A buildings are also seeing tenants from the older grade-A building migrating into them.
There is at least 2,000,000m2 of office space in the city where developers have acquired sites and made their announcements for development, but have yet to actually begin construction. The key information being sought out is the date of completion, as, if the completed new supply outgrows demand, vacancy rates will go up and rents will go down as a consequence.