Bangkok scores well in fit-out survey
Bangkok ranked the seventh most affordable office market to fit out in Asia-Pacific at US$713 or 21,390 baht per square metre, 170% less expensive than Tokyo, the most expensive, according to property consultant JLL Thailand.
Stephen Taylor, managing director of project and development services, said fit-out costs in Bangkok were relatively stable despite price competition among construction service providers and contractors.
"However, reinstatement costs have increased because of rising material costs in this traditionally low-margin segment," he said.
Many tenants were renewing leases, downsizing and partially returning leased space that required reinstatement work to be done outside normal working hours, another factor in higher reinstatement costs.
"We expect these trends to continue in 2021," Mr Taylor said. "Fitting out offices in most key office markets in Asia-Pacific will cost more in 2021."
According to "Asia-Pacific Fit-Out Cost Guide 2020/2021" by JLL, Tokyo was the most expensive office market to fit out at $1,927 per sq m for the fourth consecutive year, compared with the regional average of $1,001.
Bangkok's fit-out costs were only 13.4% more expensive than the lowest rate, found in Ahmedabad, India ($617).
The report revealed the average fit-out cost rose 4.7% year-on-year across the region, following labour shortages, health and safety considerations, material availability and higher delivery costs.
Martin Hinge, executive managing director for project development services at JLL Asia Pacific, said cities that relied heavily on foreign labour struggled with shortages.
"Governments imposed stringent measures, including enhanced inspection routines, and enforced health and safety protocols in order for construction sites to reopen," he said.
These were important and necessary precautions. However, the impact on productivity and extended project timelines was driving costs up.
Despite overall rising costs, JLL believed this would not deter companies from investing in safe and productive work environments.
Firms may re-examine their real estate footprint, as workspaces still play an integral role in preserving a company's corporate culture as well as recruiting and retaining talent.
Many companies were modifying their offices to accommodate social distancing measures and incorporating more technologies to facilitate both in-office collaboration and remote working, said Mr Hinge.
Price increments were also expected in Brisbane, Singapore, Beijing, Shanghai and Guangzhou in 2021, as constraints like access to labour, reliance on imported materials and delayed completion dates continued to pose challenges.
Meanwhile, Auckland, Bangkok, Manila, Seoul and Taipei might see fit-out costs stabilising or even dipping slightly, as many construction service providers and contractors had resorted to reducing overall margins.
Though fit-out costs varied in the region, the overall upward trend would likely remain in 2021. Workplaces would continue evolving, and there remained a strong motivation for companies to invest in areas such as technology, health and wellness, said JLL.