Office market report

Transcription

1 research Q Office market highlights Rental rates continue to climb as Grade A office buildings in Bangkok s Central Business District (CBD) continue to be highly sought after. Wireless Road now commands the highest office rents in Bangkok, followed closely by Sukhumvit and Sathorn Roads. Grade A buildings in secondary locations cost on average THB 150 per sq.m. per month less than their counterparts in the Central Business District.

2 Q OfficE Market market overview Demand The Thai economy performed well in the first quarter of 2013; as such, the business sentiment index has remained positive since the floods of However, the expected outlook has taken a slight dip recently due to concerns about the effect of the strengthening Baht on the export sector. Figure 1 Business Sentment Index Source: Bank of Thailand Remarks: 1/ Business Sentiment Index is compiled from BOT survey data of 1,010 businesses. 2/ Below is the interpretation of the index: Index = 50 indicates that business sentiment remains stable. Index > 50 indicates that business sentiment has improved. Index < 50 indicates that business sentiment has worsened. Demand for office space in Bangkok has continued to grow since the elections in mid 2011, but it has been the Grade A segment in particular that has seen the greatest improvement. 2

3 Figure 2 Bangkok Office Market The overall office occupancy rate in Bangkok in Q1 stood at 88.02%, an increase of 2.88% Y-o-Y and 0.45% Q-o-Q. We continue to see the strongest demand for buildings located in the Central Business District (CBD) and for those located close to mass transit lines. Grade A buildings have been especially sought after as occupancies increased substantially by 6.2% Y-o-Y, and up 0.99% from last quarter. Table 1 Occupancy Rate (%) Grade A B C Overall Q % 88.28% 87.33% 86.01% Q % 88.98% 88.18% 87.18% Q % 89.05% 87.97% 87.57% Q % 89.17% 88.09% 88.02% Q-o-Q 0.99% 0.12% 0.12% 0.45% Y-o-Y 6.20% 1.64% 0.49% 2.88% 3

4 Q OfficE Market Figure 3 Occupacy by Grade Supply In Q1 2013, the total Bangkok office supply remained at 4,628,564 sq.m.; it has been unchanged for the last few quarters. However, there is expected to be 57,000 sq.m. of new supply entering the market in the second half of 2013, and 200,529 sq.m. next year. Note: These figures exclude multi-owner occupied premises and office buildings smaller than 5,000 sq.m. 4

5 future Supply The majority of future supply will be outside of the areas traditionally viewed as the CBD. Out of the 200,529 sq.m. coming on stream next year, 56,000 sq.m. will be located in the CBD, with the rest located on Rama 9, Ratchadapisek and Paholyothin Roads. Table 2 Future Supply Lettable Space (sq.m.) Completion Location The 9th Tower A 33, Rama 9 The 9th Tower B 23, Rama 9 57,428 Equinox 19, Paholyothin-Viphavadi-Rangsit AIA Capital Center 59, Ratchadapisek UBC III (Bhiraj Tower) 50, Sukhumvit Magnolia Ratchadamri Boulevard 6, Ratchadamri Road G-Land Tower 65, Rama 9 200,529 Golden Land Rama IV 48, Ratchadapisek-Rama IV 48,071 AIA Sathorn 38, Sathorn Central Lumpini Park 40, Rama IV 78,500 Figure 4 Future Supply 5

6 Q OfficE Market rental Table 3 Office Rental (THB/sq.m./month) Grade A B C Overall Q Q Q Q Q-o-Q 2.65% 0.71% 1.68% 1.75% Y-o-Y 5.76% 2.05% 3.63% 3.96% Average market rents increased by 3.96% Y-o-Y, and whilst growth was seen in every sector, grade A buildings saw the greatest change up 2.65% from the last quarter. This also marks a notable 5.76% Y-o-Y increase, making this the greatest year on year growth that we have recorded, as landlords responded to growing demand and improving occupancies. Figure 5 Office Rental Rate 6

7 The graphs below displays the minimum and maximum asking rents for office buildings on major roads in the CBD. Figure 6 Office Rental Rate In the CBD, the prestigious address of Wireless Road is able to command the highest asking rents in Bangkok, with a current peak of THB 1,000/sq.m./month which is approaching all time record levels. This is followed closely by Sukhumvit Road at THB 900/sq.m./month and Sathorn Road at THB 850/sq.m./month. Whereas the best buildings in the most popular non-cbd locations are as yet unable to command an asking rent of more than THB 650/sq.m./month 7

8 Q OfficE Market Table 4 Average Office Rents by Location Grade CBD Non-CBD Difference A B C Average On average, Grade A buildings in non-cbd locations cost about THB 150 per sq.m. per month less than their counterparts in CBD locations; for a 200 sq.m. tenant translates into a little more than THB 1,000,000 over the course of a typical three-year lease term. outlook Tenants should brace themselves for office rents to continue rising in the CBD as high occupancy rates and robust market demand, particularly for Grade A space, is likely drive continued rental growth throughout the rest of New buildings entering the market throughout the latter half of this year in emerging business locations, such as Rachadapisek, may however give tenants pause for thought. Competitive rents in quality buildings, with convenient access to the expressway, mass transit lines, and retail outlets, may challenge some tenants to consider the value of a central business location to their businesses. 8

9 research Americas USA Bermu da Brazil Caribbean Chile Australasia Australia New Zealand Europe UK Belgium Czech Republic France Germany Hungary Ireland Italy Monaco Poland Portugal Russia Spain The Netherlands Ukraine Africa Botswana Kenya Malawi Nigeria South Africa Tanzania Uganda Zambia Zimbabwe Asia Cambodia China Hong Kong India Indonesia Macau Malaysia Singapore Thailand Vietnam Thailand Contacts Phanom Kanjanathiemthao Managing Director +66 (0) Ext 110 Chaturawit Wattanapruk Executive Director +66 (0) Ext 120 Surasak Limpa-Arayakul Executive Director, Head of Valuation and Advisory +66 (0) Ext 143 Roong Sitthisankunchorn Executive Director, Head of Property Management +66 (0) Ext 144 Marcus Burtenshaw Executive Director, Head of Commercial Agency +66 (0) Ext 121 Frank Khan Executive Director, Head of Residential +66 (0) Ext 280 Risinee Sarikaputra Director, Research and Advisory +66 (0) Ext 180 Phuket Contact Nattha Kahapana Executive Director, Knight Frank Phuket +66 (0) Ext 300 Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs. Knight Frank Research Reports are also available at Knight Frank LLP 2013 This is published for general information only. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this, no legal responsibility can be accepted by Knight Frank Research or Knight Frank LLP for any loss or damage resultant from the contents of this document. As a general, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this in whole or in part is allowed with proper reference to Knight Frank Research. Knight Frank LLP is a limited liability partnership registered in England with registered number OC Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members names.