bangkok office market report q3 2011 from colliers international

8/3/2019 Bangkok Office Market Report Q3 2011 from Colliers International

1/11

Q2 2011 - Q3 2011

new Supply

DemanD

RentalS

occupancy

Bangkok office MarketthailanD

.rs..

Bangkok Ofce Market

highlightS

Occupancy rates fall in CBD on back of signicant new supply.

Sh Squ d P Vus emplx pd h ds Q3 2011, dd ud

100,000 sq m to the CBD.

Rental rates remain largely unchanged q/q.

Global nancial fears are likely to maintain low oce relocation and upgrades for the next

quarter.

Q3 2011 | office

maRket inDicatoRS

occupancy Rate in 3 main locationS, Q1 2009 Q3 2011

Su: clls il thld rsh

th upy h cBD ll m h pvus qu by

nearly 0.6%, due to two new buildings being completed with a total area

of around 100,000 sq m which has directly aected the occupancy rate.

The Northern Fringe occupancy rate increased by around 0.25% despite

two oce buildings being added to the market in Q3.


2/11COLLIERS INTERNATIONAL | P. 2

M h 118,200 sq m hs b s shduld b mpld

2011, ppxmly 100,000 sq m cBD d h s h

Northern Fringe area. At the end of 2011 oce stock in Bangkok will be

around 8,016,000 sq m.

The CBD area represents the biggest share of the oce building market

in Bangkok with around 36% of total supply, followed by the Northern

Fringe area and Outer CBD area with 20% and 13% respectively. Overall

oce supply is dispersed widely throughout the city.



commulative Supply

Supply by location, Q3 2011

hiStoRical Supply

Bangkok office Market rePort | Q3 2011


3/11

FutuRe Supply by location

occupancy Rate by location, Q3 2011

COLLIERS INTERNATIONAL | P. 3



Nearly 285,084 sq m of oce space is scheduled to be supplied in

Bangkok in the next four years in four zones, with the lions share

expected in 2014. Eight oce buildings are scheduled to be completed

in the Northern Fringe area in the next four years. Overall expected

additional new supply will represent a 2.7% increase in total supply with

more than 13% for the Northern Fringe area. Over the period of four

years this presents a limited amount for the market to absorb.

th ou cy Ws sll mmds h hhs upy

Q3 2011, and the Outer City North has the lowest occupancy rate. The

Southern Fringe occupancy rate recorded the second lowest gure due

to its location away from mass transit lines.

FutuRe Supply

DemanD take up




The eect of the introduction of Sathorn Square and Park Venture

Ecocomplex in Q3 2011 are likely to have a short term detrimental eect

on occupancy after a recovery in H1 2011. However with modest growth

predicted for the following two years and a limit on new supply, Colliers

il thld pds dul bu susd s upy

rates in 2012. However the recent downturn in global economic

ds s lly u dmp sm d h d

oce relocation and expansion to a certain degree.

Since January 2011 onwards more than 2,000 new companies registered

h Dpm Busss Dvlpm d lhuh vll

month to month basis the trend seems to be in a positive direction which

bodes well for oce demand.


Su: Dpm Busss Dvlpm d clls il thld rsh

actual anD FutuRe eStimate oF occupancy RateS

newly RegiSteReD FiRmS DuRing JanuaRy 2009 auguSt 2011

DemanD DRiveRS




expoRtS FRom thailanD on a monthly baSiS

Rental Rate by location

Su: B thld d clls il thld rsh


Industrial growth is the main driver that powers the oce market as it

leads to the need for trading, nancial, legal and insurance services,

amongst others, to support it. Exports started to recover from the GFC in

2009 with a steady pattern of growth despite setbacks from political

disturbances.

Usupsly h cBD mmds h hhs l s du hlocation and number of grade A buildings. Rents in the Outer CBD

dropped while increases were recorded in the CBD and Northern Fringe

areas. This could be explained by the fact that a signicant number of

oces in the Northern Fringe are located close to both BTS and MRT as

well as Srirat Expressway, while most oces in the Outer CBD areld sm ds m mss s ls d my lvly

old with smaller oorplates. Oce buildings located near a mass transit

station are preferable for both employees and business visitors alike.


Rental Rate, Q3 2011



Grade A buildings command higher rentals than grade B buildings. There

is also some distinction between B & C grade oces although not so

pronounced.

Is not surprising that the rent of grade A building higher than grade B &

c, du ms d a bulds b ld h cBD d

the area along the mass transit system.


Rental Rate by gRaDe Q3 2011

In Q3 2011, rental rates for oce buildings in the CBD area remained

more or less the same when compared to Q2 2011. In light of the current

softened market conditions landlords have found it dicult to raise rents

during renewal negotiations.


hiStoRical Rental Rate in thRee main locationS, Q1 2009 Q3 2011




Rental Rate oF oFFice builDing in bangkok by DiStance FRom btS / mRt (metReS), Q3 2011


Sll ps dmum pjs ls mss s s

tend to be higher and, the same seems to be the case for oces. Being

ld mss s s s pbl bh mplys d

business visitors alike. Recently a number of oces have direct access

to a BTS station that further adds to the appeal.



8/11

After a signicant increase in new supply in the CBD for Q3 2011 the

next few years are expected to see no new supply coming on-stream in

the CBD. Increasing land prices in the urban areas, especially close to

the mass transit lines has meant that oce development is scheduled to

be located in the fringes, primarily in the Northern Fringe area. Retailand oce developments along Ratchadapisek road, especially in the

vy rm iX, lly ld lv cBD l h

can compete with lower rentals and put pressure on the existing CBD

area. However the CBD may simply expand to encompass the new

growth areas.

The recent deterioration of the global nancial system is likely to aect

oce expansion and relocation even after the political situation in

Thailand has stabilized following the election. However, overall inventory

levels in most signicant economies remain low compared to the advent

of the global downtown in 2008 allowing room for growth. Also the

sovereign debt issue has not signicantly worsened but Greecesmpd dul hs sh bd ms d vss d pu h

larger economies in the unwelcome spotlight along with a fear of lack of

cohesion from the Eurozone countries and within the USA for creating

vh mhsms h pvd supp l b

systems. Also lacking are credible plans to reduce the high levels of

government debt to GDP ratios in the longer term.

At present news relating to the global nancial situation is a trying one

for any investor or business with sentiment and share prices falling with

alarming frequency. At present this has not translated into a reduction of

exports for Thailand and is unlikely to have any fundamental eect on the

Thai economy. However the current situation will prolong pent updemand for oce space that has aicted the oce market in Bangkok

since 2006.

Although it is dicult envisioning Bangkok supplanting Singapore as the

nancial hub of the ASEAN area, the growing interest in Cambodia, Laos,

Myanmar and Vietnam could see Bangkok as a sub-regional centre

supp hss ms d uh vs rl

Operating Headquarters by the Board of Investment could allow the

Bangkok oce market to benet from this emerging trend.

FoRecaSt





appenDix



10/11

oFFice Zoning


th l l z ss B hs ld h xs

of signicant oce supply in a wide range of locations in the city and

how the market has perceived the CBD has evolved over the past 20years. The original CBD was located at the Silom and Surawongse roads,

home to the vibrant gold market and other trading businesses. The

development of modern oce buildings in the nineties, with a larger

oor plate could not be accommodated in this area and the CBD began

to take shape in the eastern section of Sathorn road.

Whl Suhumv d up as s pmly pvd s

m d sdl , l umb d a bulds

sprung up in the nineties and also in the past few years. It is thereforeconsidered as part of the CBD. As a working denition the CBD, for the

purposes of oce classication, is where a signicant number of Grade

A oce buildings are located. As such the old CBD is now considered

the Outer CBD as well as Petchburi road where more grade B oces are

located. Over time this structure could evolve.



11/11

collieRS inteRnational thailanD

management team

OFFICE & INDUSTRIAL SERVICES

num rdsvph | S M

RETAIL SERVICES

Asharawan Wachananont | Senior Manager

ADVISORY SERVICES | HOSPITALITY

J M g | D

PROJECT SALES & MARKETING

Monchai Orawongpaisan | Senior Manager

RESIDENTIAL SALES & LEASING

Napasawan Chotephard | Manager

aDViSorY SerViceS

np thum | ass D

REAL ESTATE MANAGEMENT SERVICES

Bdd chyu | ass D

inVeStMent SerViceS

Nukarn Suwatikul | Associate Director

Ws rjjuul | S M

reSearcH

ty P | ass DSuh khp | S M

VALUATION & ADVISORY SERVICES

Nicholas Brown | Associate Director

Phhsu Phmhu | ass D

Sp kmh | S M

Wanida Suksuwan | Manager

PattaYa office

Mark Bowling | Senior Sales Manager

Sup Sjs | S Busss Dvlpm

Manager / Oce Manager

coLLierS internationaL thaiLand:

Bangkok Ofce17/F Ploenchit Center,2 Suhumv rd, kly,B 10110 thld

tel +662 656 7000

Fax +662 656 7111

email [email protected]

Pattaya Ofce519/4-5, Pattaya Second Road (Opposite Central FestivalPattaya Beach), Nongprue, Banglamung, Chonburi 20150

tel +6638 427 771Fax +6638 427 772


ReSeaRcheR:

thldty Pass D | rsh


ReSeaRcheR:

thldSuh khpS M | rsh


512 oces in 61 countrieson 6 continents

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bangkok office market report q3 2011 from colliers international

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