Bangkok office rents reached a new high in the first half of 2014 despite a slowdown in demand, according to JLL, a professional services firm specialising in real estate.
JLL managing director Suphin Mechuchep said political tensions up until May 2014 dampened economic and business sentiment over the first half of 2014.
However, fundamentals in most of the property sector in Bangkok remained strong with a generally fair balance of demand and supply, helping prevent market crashes.
As at the end of June 2014, average monthly gross office rents reached 475 baht per square metre across Bangkok and 739 baht per sq m in prime grade buildings in the central business district, representing all-time highs. Some prime grade buildings are asking much higher rents ranging between 900 and T1,300 baht per sq m.
JLL’s latest Bangkok property outlook report revealed that net absorption of office space in Bangkok declined from 87,600 square metres recorded in the first half of 2013 to 60,000 sq m in the first half of 2014.
Despite softer demand, average market-wide gross rents registered a 2.8% increase during the first half and a 17.3% increase from the previous peak in 2007. Rents in prime grade buildings in the central business district saw a 1.2% increase in the first half of 2014, and a 9% increase from the previous peak in 2007.
Bangkok’s total office stock currently stands at 8.18 million sq m. The market-wide vacancy rate dropped to 9.7% at the end of June 2014, a record low level since JLL began tracking office vacancy in 1995.
“The Bangkok office sector is a prime example. The market has fared better than expected so far, with demand continuing to grow, though at a slower pace compared to the same period in 2013, and low vacancies still allowing for room for rental growth,” Ms Suphin said.