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MarketResearchBANGKOK OFFICE MARKET HIGHLIGHTS | 4TH quARTER | 2008

B A N G KO K O F F I C E M A R K E T

The Quarterly Reportc o l l i e R s i n T e R n aT i o n a l | T H a i l a n D

BanGKoK oFFice MaRKeT HiGHliGHTs• The global economicmeltdowncoupledwith local political uncertaintieswas beginning to impacttheBangkokofficemarketinthesecondhalfof2008.Thisimpactwillbecomemore pronouncedin2009astenantslookatdownsizingorclosuresandlandlordsrespondbyoffering discountedrentstobothexistingandnewtenants.

• By the end of 2008, there was approximately 7.71million squaremetres of office space in Bangkok, of which 38% was located in the Inner CBD, 10% in the Outer CBD and the remainderinnon-CBDareas.Ofthetotalstock54%wasclassifiedasGradeB,26%asGrade Aand20%GradeC.

• Approximately275,717squaremetresinsevenofficebuildingswasaddedtotheBangkokoffice supplyin2008,ofwhich89,029squaremetres(32.3%)wasintheInnerCBDZoneandwas classifiedasGradeA.

• In2009,newsupplyof190,009squaremetresisprojectedtobeaddedintheBangkokoffice,but thisexcludes470,000squaremetresinthenewGovernmentCentreonChaengwattanaRoad.

• DemandforprimespaceintheBangkokCBDremainedfirminthefirsthalfof2008,however duringthethirdandfourthquarteroftheyear,theabsorptionratedecreasedslightlydueto theglobaleconomiccrisisaswellasthepoliticaluncertaintyinThailand.Largerelocations pre-committedin2008andlimitednewprimesupplyshouldensurethatoccupancyratesdonot declinemarkedlyin2009.• TheaveragerentalrateofGradeAofficeintheInnerCBDwasTHB700persquaremetreper monthinQ42008,whilstGradeBofficeintheInnerCBDwasTHB590persquaremetreper month.Downwardpressureonrentswillseeadeclineofatleast5%overtheyear.

MaRKeT inDicaToRs

Q4 2008 Q1 2009F

sUPPlY

DeManD

RenTal RaTe

occUPancY RaTe

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B a n G Ko K o F F i c e M a R K e T | 4 T H Q U a RT e R | 2 0 0 8

The twin effects of the global economic recession and political instability in Thailand will make the overall office market slow down in 2009. The top end of office market will be one of the first sectors to rebound. office landlords are planning to forgo upwards-only rent renewal clauses this year to help their customers to maintain their businesses.

collieRs inTeRnaTional2

The Quarterly Report | 4th Quarter | 2008 | Bangkok Office Market

BanGKoK oFFice MaRKeT oVeRVieW

Many multinationals choose Thailand as the base for theirregionalheadquartersbecauseofrelatedindustrialfacilitiesandBangkok is acknowledged as an important communicationsand transportation hub, offering an attractive and affordableworkingandlivingenvironment.Themainreasonisthatofficesare affordable and long term expatriates and directors can befurnishedwith a lifestyle thatwould be either very expensiveornotasagreeableorsafeinotherSouthEastAsiancountries.However,evenbeforetheonsetoftheeconomiccrisis,Thailandwaslosingsomeof itsattractivenessduetoaprolongedperiodofpoliticaluncertainty,theimpactofwhichcanbeseeninthedeclining absorption rates in the Bangkok officemarket since2004.TheBangkokofficemarketin2008heldfirmforthefirstthreeconsecutivequarters.However,theimpactoftheglobalrecession

was beginning to be felt in the last quarter of the year, withcompaniesrevisitingexpansionplansandtheagendachangingtopotentialclosuresanddownsizing.

The current political situation makes it hard to see a brightpicture.TheBusinessSentiment Indexposted just38.3pointsinOctober,thelowestlevelsinceearly2000.Withthegloomyinvestmentpicture,exportsexpandedonly7.4percentinOctoberincreasing only 1.9 percent year-on-year, compared with 3.3-percentgrowthinSeptember.Itisprojectedthatunemploymentwill be 2-3 percent of the workforce in 2009 ormore than 1millionpeople.

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sUPPlY TRenDs

Office Locations

As at the end of 2008, the Bangkok officemarket comprisedapproximately7.71millionsquaremetreslocatedineightareas

orpocketsofconcentration:

• Inner Central Business District (Inner CBD)

This area includes Sathorn Road, Silom Road, Surawongse Road, Wireless Road, Ploenchit Road, LangsuanRoad,RajdamriRoad,RatchaprasongRoad, RamaIRoad,PhayathaiRoadandRamaIVRoadstarts

fromPhayathaiintersectiontoSathornintersectionandcomprisestheprimeofficedistrict in thecity, thepreferredheadquarterslocationoffinancialinstitutionsandmultinationals.

• Outer Central Business District (Outer CBD)

This area popular with expatriates and tourists spans from Sukhumvit Soi 1 to Soi 21 and Sukhumvit Soi2toSoi16,RamaIVRoadfromSathornintersection

toRatchadapisekintersectionandNewRatchadapisekRoad.

• East Zone

This area covers Sukhumvit Road from Sukhumvit Soi21to77andSukhumvitSoi16toSoi50,RamaIV

from Ratchdapisek intersection to Kluaynamthai intersection,NaRanongandKasemraj.

• South Zone

ThisareacoversRatchada-RamaIIIRoad,Narathiwas Road,RamaIIIRoadandCharoenkrungRoad.

TaBle 1 : sUPPlY aDDeD in THe inneR cBD in 2008

PROjecT naMe LOcaTiOn aRea (SQ M) OPened

chamchuree square Rama iV 89,029 Q3 2008

Total 89,029

Source : Colliers International Thailand Research

TaBle 2 : sUPPlY aDDeD in THe oUTeR cBD in 2008


interchange 21 sukhumvit soi 21 45,000 Q3 2008

The Trendy sukhumvit soi 15 20,000 Q3 2008

Total 65,000Source : Colliers International Thailand Research


•NorthZone

ThisareacoversPathumwan,PhayathaiRoad,Ratcha-

prarobRoad,andRatchathewiRoad.

•EasternCorridor

ThisareacoversNewPetchburiRoadfromSukhumvit- AsoketoKlongtonpasstoPattanakarnRoad,Srina-

karinRoad,RamkamhaengRoad,RamaIXRoad,LadpraoRoadandBangnaTradRoad.

•NorthernCorridor

ThisareacoversRatchawithiRoad,Dindaeng,Asoke- RatchadapisekRoad,RatchadapisekRoad,Phaholyothin

Road,RamaVIRoad,VibhavadeeRoad,ChaengwattanaRoad,WongsawanRoad,TiwanonRoadandNonthaburi.

•WestZone

ThisareacoversBaromratchachonnaniRoad,RamaVII Road,PhetkasemRoad,SuksawatRoadandRatBuranaRoad.


TaBle 3 : sUPPlY aDDeD in THe noRTH Zone in 2008


Wanasorn Building Phayathai Road 17,796 Q2 2008

Total 17,796


TaBle 4 : sUPPlY aDDeD in THe noRTHeRn coRRiDoR in 2008


east Water Vibhavadee Road 12,077 Q1 2008

Pakin Tower Ratchadapisek Road 30,000 Q2 2008

cyberworld Tower Ratchadapisek Road 61,815 Q4 2008

Total 103,892


Total Current Supply

During 2008, approximately 275,717 squaremetreswas addedto theBangkok office stock, representing growth of 3.7% andbringing total supply of office space to approximately 7.71

millionsquaremetres.Theaveragerateofgrowthofnewsupplywas2.35%peryearfrom2004to2008.



FiGURe 1 : sUPPlY oF oFFice sPace, 2004-2008


The majority of office supply was in the Inner CBD area,representingabout38%ofthetotal,followedbytheNorthern

Corridor, and Eastern Corridor, representing about 21%, and11%,respectively.

FiGURe 2 : sUPPlY oF oFFice sPace BY locaTion, Q4 2008



Officespacecanbecategorizedintothreegrades:GradeA,GradeBandGradeC.ColliersInternationalcategorizesGradeAoffice

buildingsbasedonthefollowingcharacteristic:

TotalsupplyofGradeBofficespaceisapproximately4.14millionsquaremetres,representing54%ofthetotalofficesupply,while

GradeAofficespaceisapproximately2millionsquaremetres,representing26%.


TaBle 5 : GRaDe a oFFice sPeciFicaTion cRiTeRia

cRiTeRia gRade a

Floor plate> 1,000 sq mcolumn freeHigh efficiency floor plate

ceiling height Min. 2.6 M

air condition system central chiller system, with typical VaV system. separate air-conditioning for tenant computer room.

Fire ProtectionWater sprinklersHeat/smoke detectorat least 2 fire exits

security system 24 hours ccTV & Guard

elevator separate high zone and low zone.1 separate service lift

Waiting time for elevator less than 30 second.

common area interior & exterior – high quality finishes.

Facilities Retail outlet eg. Retail Banking, Restaurants, Food court & Minimart.

car parking : free of chargeTotal car parking space

1 space : 100 sq m1 space : 65 sq m

Property Management Professional and to international standard.


FiGURe 3 : sUPPlY oF oFFice sPace BY GRaDe, Q4 2008



Future Supply

New supply of office space in the pipeline and scheduled forcompletion from 2009 totals approximately 849,762 squaremetres, mostly concentrated in Government-owned projectsin the Northern Corridor: the 470,000 square metre newGovernment centreonChaengwattanaRoad.Asmostof this

newsupplywillbepre-committedbyGovernmententities,newsupplybeingdevelopedforopenmarketrentalsremainsrelativelylimited,ataround190,009squaremetres.


FiGURe 4 : FUTURe neW sUPPlY oF oFFice sPace BY YeaR, 2009-2011F



TaBle 6 : oFFice BUilDinGs scHeDUleD FoR coMPleTion, 2009-2011F

BuiLding naMe deveLOPeR LOcaTiOn LeaSeaBLe aRea (SQ M)exPecTed

cOMPLeTiOn

asia centre city Realty limited south sathorn Road 27,850 2009

central chaengwattanacentral Pattana Public company

limitedchaengwattana Road 20,000 2009

energy complex energy complex co., ltd. Phaholyothin Road 119,000 2009

sala @ sathorn st. louis Holding co., ltd. south sathorn Road 17,359 2009

sivatel sivayathorn company limited Wireless Road 5,800 2009

The new Government centre Dhanarak asset Development

co., ltd.chaengwattana Road 470,000 2009

sathorn square north sathorn Realty sathorn Road 70,000 2010

naamerican international

assurance co., ltd. (Thailand)south sathorn Road 38,500 2011

Park VentureUniventures Public company

limitedWireless Road 30,000 2011

central Rama iXcentral Pattana Public company

limitedRama iX Road na 2011

Trilogy Golden land Plc. Rama iV Road 20,000 na

UBc iii na sukhumvit Road 31,253 na

Former Pre-cadet school Projectcentral Pattana Public company

limited

Rama iV & Wireless

Roadna na

na (Former British embassy)central Pattana Public company

limitedPloenchit Road na na

na (opposite lumpini Park) KWs (Thailand) limited Wireless Road na na

na Ke land Kaset navamin Road na na

na Tcc Group Kaset navamin Road na na

na (land near airport link) na Makasan Road na na

na Tcc Vibhavadee Road na na

Total 849,762




TaBle 7 : selecTeD oFFice RenTal TRansacTions, Q4 2008

BuiLding naMe TenanT aRea (SQ M)

QH sathorn KTaM company limited 567

QH Ploenchit nobel Biocare 768

Wave Place solvay (Thailand) limited 2,500

all season Tower adidas (Thailand) limited 2,500

exchange Tower UTi Worldwide inc. 641

exchange Tower Grande asset Hotels and Property Plc 641

exchange Tower Japan international cooperation agency (Jica) 1,300

chamchuree square Total access communication Plc (DTac) 61,500

interchange 21 ace ina overseas insurance co., ltd. 9,600

cyberworld Tower cs loxinfo Plc 3,600

athenee Tower Deutsche Bank 4,000

Pakin Tower Tisco Bank Plc 5,000

supalai Grand Tower Tilleke & Gibbins international limited 8,500

Bangkok city Tower Trinity securities Group 1,000

asia centre KGi securities (Thailand) Plc 3,500


TaBle 8 : selecTeD oFFice RelocaTions To THe neW GoVeRnMenT cenTRe

gOveRnMenT dePaRTMenT PReviOuS BuiLding ReQuiRed aRea (SQ M)

Revenue office itthipol Building 4,220

national economic and social advisory council Phayathai Plaza 7,140

national Health security office (nHso) Jasmine international 8,110

office of the ombudsman eXiM Bank Building 11,790

central institute of Forensic science Thailand software Park Building 4,140

Department of investigation Rnc Building (sukprapruet) 7,300

office of the election commission of Thailand srijulasarp Building 48,330

The administration court empire Tower 23,100

central Bankruptcy court Bangkok insurance Building 9,280

Total 123,410



Further to the completion of thenewGovernmentCentre inChaengwattanaRoad,approximately123,410squaremetresof

space in commercial buildingswill be vacated by governmententities,asindicatedbelow:

DeManD TRenDs

Demandfor theprimespace inBangkok’sCBDremainedfirmin the first half of 2008, however during the third and fourth

quartersoftheyear,theabsorptionratedeclinedduetotheglobaleconomiccrisisaswellasthepoliticaluncertaintyinThailand.


occUPancY anD RenTal RaTes

The overall occupancy rate of the Bangkok officemarket hasremained relatively stableataround89.07%atyear-end2008.ThehighestoccupancyratewasintheOuterCBD,(91.42%),

followed by the Eastern Corridor (91.29%) and East Zone(91.29%).

Theannualnetabsorptionofofficespacehasbeenonadownwardtrend since 2004, decreasing by an average of 10% annually.Despite the weakening economy, however, further declinein2009will be countered to someextentby somemajornewabsorption,headedbythe61,500squaremetremoveofDTAC,

adealcompletedin2008buttobeimplementedinthenewyear.However,newmajordealsandexpansionsareunlikelytofeaturemuchinthemarketin2009astheeconomiccrisisplaysoutandcompanies lookmore todownsizingandrenegotiatingexistingleasesthanexpansionorrelocation.


TaBle 9 : TaKe-UP anD occUPancY RaTes, Q4 2008

LOcaTiOnTOTaL Office SuPPLy

(SQ M)

TOTaL OccuPied

SPace (SQ M)OccuPancy RaTe (%)

inner cBD 2,922,535 2,590,929 88.65%

outer cBD 820,700 750,245 91.42%

east Zone 590,418 538,981 91.29%

south Zone 443,789 356,543 80.34%

north Zone 237,211 196,846 82.98%

West Zone 266,264 256,253 96.24%

northern corridor 1,591,849 1,413,054 88.77%

eastern corridor 836,481 763,592 91.29%

Overall 7,709,247 6,866,443 89.07%


FiGURe 5 : annUal aBsoRPTion oF oFFice sPace, 2004-2008



TherentalrateofGradeAofficespaceintheInnerCBDrangedfromTHB580 – 750 per squaremetre permonth at the endof2008,althoughdealsaroundTHB600-650persquaremetrewere more typical towards year-end. The average rental rateofGradeA in theCBDareawasTHB700per squaremetre.ThroughoutAsia,ongoingglobalfinancialturmoilcontinuestoerodeinvestmentandbusinessconfidence,causingprimeoffice

leasing activity to slow dramatically. The stormy conditionsin the secondhalf of 2008have already influenced the rentalrateinthefourthquarterof2008,withlandlordsstrugglingtomaintainrentsatcurrent levels. Newprojects startedtoofferlarge discounts to fill space, while renewals were increasinglycompletedatpriorrentsorevensome10%lower.

RentalratesforGradeBofficespaceintheInnerCBDrangedfromTHB300-700persquaremetrepermonth.Abroad-basedreductioninofficerentalshasbeenseenaslandlordshavemadetenantretentionatoppriority.

However,theaveragerentalrateofGradeBofficeintheInnerCBDwas THB 590 per squaremetre permonth. The stormy

conditions in the secondhalfof2008havealready influencedtherentalrateinthefourthquarterof2008,withsimilarimpactasinGradeArents.


FiGURe 6 : RenTal RaTes FoR GRaDe a oFFice sPace, Q4 2008


FiGURe 7 : RenTal RaTes FoR GRaDe B oFFice sPace, Q4 2008



Outlook:

The twin effects of the global economic recession and political instability inThailandwillmaketheoverallofficemarketslowdownin2009.Thetopendof officemarket will be one of the first sectors to rebound. Office landlordsareplanningtoforgoupwards-onlyrentrenewalclausesthisyeartohelptheircustomerstomaintaintheirbusinesses.Whilethecostofrelocationwilldetermany tenants from moving out of existing premises, many tenants can beexpected topush for lower rentals at renewal,whilenewprojects are alreadyofferingsubstantialdiscountstosecuremajortenantsandensureoccupancyratesthroughwhatcouldbeaprolongeddownturn.Overall,wewouldexpectrentstodeclinebyatleast5%in2009.

ApartfromsubstantialnewGovernment-ownedspacecomingontothemarket,private sector landlordsareadding relatively little space. Asa result, even ifnetabsorptionremainsstaticin2009,overalloccupancyratesareunlikelytobegreatlyaffectedthisyear.

conTacT inFoRMaTion

THailanD: Patima Jeerapaet Managing Director Colliers International17/F Ploenchit CenterKlongtoeyBangkok 10110Tel: 662 656 7000Fax: 662 656 7111

Risinee Sarikaputra Director | Research

This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by colliers international for advertising and general information only. colliers international makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. any interested party should undertake their own inquiries as to the accuracy of the information. colliers international excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. colliers international is a worldwide affiliation of independently owned and operated companies.

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293 oFFices in 61 coUnTRies on 6 conTinenTs

Usa 99 canaDa 19laTin aMeRica 18 asia PaciFic 62 eMea 95

Us$ 2 Billion in annUal ReVenUe 868 Million sQUaRe FeeT UnDeR ManaGeMenT 11,048 PRoFessionals


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This report and other research materials may be found on our website at www.colliers.co.th questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.

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