Limited new supply supports Bangkok office rents

Bangkok is the third cheapest city in Asia in term of office space with only Jakarta and Kuala Lumpur offering lower office rentals, according to leading international property consultants CB Richard Ellis. London has the most expensive office rents in the world, at over 10,000 baht per square meter per month. Mumbai in India is the most expensive city in Asia with grade A rents of almost 6,000 baht per square per month. Meanwhile, Singapore rents increased by 100% in 2007 to around 3800 baht per square meter per month, overtaking Hong Kong rents, which rose to 3600 baht per square meter per month. Rents in Ho Chi Minh City also doubled rising to 2300 baht per square meter, which is almost three times more expensive than in Bangkok.

Demand for office space in Thailand property Bangkok is beginning to recover from the increase in the number of transactions. The overall increase in leased space of about 158000 square meters in 2007, which is half the average take further steps made in the year between 2000 and 2005.

Supply only increased by 88,500 sq. m. in 2007. The limited amount of new supply supported office rents despite weak demand and rental levels remained flat in 2007 with average for grade A space in the Central Business District of 740 baht per square meter.

This, in contrast to the office market, and in most other Asian countries, where demand has exceeded the proposal, which would result in an increase in rentals.

Bangkok rents has been growing at 15-20% a year since 2000, but growth slowed in 2006 and rents have been flat in 2007 due to weak demand.

“Demand had dropped because of the political uncertainty, weak economic growth and proposed amendments to the Foreign Business Act which would have further restricted foreign ownership of companies in the services sector,” said Mr. Nithipat Tongpun, Director and Head of Office Services at CB Richard Ellis Thailand property.

The problem is that much of the demand for office space, and, in particular, Class A office comes from multinational companies.

Proposed restrictions on ownership means that multinational companies chose not to expand or create new companies in Thailand property.