Bangkok’s office rents continue to rise

BANGKOK: Office rents are expected to continue to grow, albeit at a slower rate as office buildings that command a premium rent are almost full, according to CB Richard Ellis (CBRE) Research Thailand’s latest MarketView report.

High occupancy and limited new office supply mean that rentals will not fall even with weaker demands due to political uncertainty, said CBRE.

In the fourth quarter of 2013 (4Q13), Bangkok’s Grade A central business district (CBD) office rents rose 1.2% quarter-on-quarter (q-o-q) and 7% year-on-year (y-o-y) to 820  baht (RM83.52) per square metre (psm) per month, while Grade B CBD rents also increased to 578 baht psm per month, an increase of 1.8% q-o-q and 9.1% y-o-y.

For non-CBD areas, rents for Grade A offices rose 1% q-o-q and 5.4% y-o-y to 608  baht psm per month. In the 4Q13, rents for grade B offices in non-CBD areas increased by 0.9% q-o-q and 7% y-o-y to 536 Thai baht psm per month.

“We saw that some Grade B CBD offices near mass transit stations achieved higher rents than those of Grade A CBD offices futher away from such stations,” said CBRE.

For Bangkok’s retail, sales slowed down in 4Q13, 7.6% y-o-y, due to rising personal debt levels which combined with political uncertainty to reduce consumer confidence.

“The political situation affected tourist spending in December 2013 but the full impact of lower tourist arrivals will not be felt until 1Q14. There will be continued growth in suburban areas. Central Pattana Public Co Ltd has started development on two shopping centres called Central WestGate and Central Plaza Salaya,” said CBRE.

According to CBRE, total sales for Bangkok’s Total Serviced Industrial Land Plot (Slip) sales in 2013 dipped 56% y-o-y to 760ha from 1,740ha in 2012.

“One reason for the decline in sales was the Board of Investment of Thailand (BOI)’s plans to change investment incentives in 2012. Consequently, companies advanced their plans by fuelling the 2012 land sales. The BOI’s proposed changes have been cancelled for the time being,” CBRE said.

However, Slip sales rose from 200ha in 3Q13 to 215ha in 4Q13, representing an 8% increase q-o-q and 70% y-o-y.

This article first appeared in The Edge Financial Daily, on March 21, 2014.

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