An Overview of Bangkok Office Market
Throughout the third quarter of 2017, the office real estate market in Bangkok picked up the pace quite nicely. Construction was completed on a number of new properties, and many of them found tenants fairly quickly. Overall, office space still outstrips demand, as there are currently more offices on the market than there are companies to fill them. With that said, the vacancy rates are still low, meaning that new companies are opening their doors or moving to the city and filling these spaces.
In the third quarter of 2017, the occupancy rates for Bangkok real estate remained steady. The vacancy rate has remained at less than ten percent for some years now, and predictions show that it’s trending downwards. By the year 2020, there will be a vacancy rate of less than five percent. What does this mean? It means that as available space is leased and removed from the market, the prices will go up. The laws of supply and demand state that when something is in short supply, it becomes a precious commodity. Expect to see prices rise per square foot in the coming years.
Construction of New Office Space
Although over 100,000 square meters of office space was added to the market in the third quarter of 2017, there isn’t much else going on, construction wise. According to the number of projects currently either planned or taking place, only 288,300 more square meters will be completed between 2018 and 2020. If any companies are planning on expanding or moving to Bangkok, then they should plan their moves now, because there may be a lack of available office space in the coming years. Currently, the amount of office space available in Bangkok is hovering near 8.78 million square meters.
Tenants Moving From One Space to Another
Many local businesses took advantage of the new properties on offer and move to different locations. In most cases, they expanded their operations in the process. This led to the record low vacancy rates. They took advantage of not only getting a bigger space but also more modern amenities. Some of the new buildings in Bangkok, Thailand are designed with modern technology in mind. They have things like fiber optic cables and high speed networking lines that will make it easy to set up computer systems. Plenty of them offer new environmentally friendly lighting options and more, which will shrink the cost of these companies’ utilities. In the long run, they win by upgrading to the newer spaces.
Plenty of businesses have moved into Bangkok from other places in Thailand as well. These companies are taking advantage of the same modernized benefits as the other ones. They also end up in a modern city with plenty of workers to choose from. Look for more businesses to move into the area soon, as the real estate prices are at advantageous levels.
Occupancy per CBD-Grade
According to a study showing the vacancy rates per CBD (central business district) grade properties, those that fall into CBD grade A and non-CBD grade A have the highest possible occupancy rates. The remaining two – CBD grade B and non-CBD grade are at the lowest heights, respectively. This means that many Bangkok companies prefer to be in the central business district, and barring that, want a class A property, not one at a lower grade. Any available class A CBD properties will be snapped up quickly, as they are in demand.
Properties near Mass Transit
A study took place that showed that many of the new office construction projects – both the completed ones, the ones underway, and even the ones in the preliminary stages – are located near mass transit stations. This is a good thing to note, since the location matters. People prefer to take mass transit rather than deal with the mass amount of Bangkok traffic, and the results show this. Look for even more real estate to be developed in these areas, and for mass transit to end up getting expanded upon as more and more people prefer to live in and work in downtown Bangkok.
Potential New Properties to Begin Construction
There are currently a number of plans being put into place for new office towers. Although none of them will be completed by 2020, hence the potential shortage for a number of years, once these proposed buildings are finished, they will add over two million square feet of office space to the area. Bangkok will become a hotbed of industry, and the real estate prices will adjust accordingly.
As you can see, the office real estate market in Bangkok, Thailand has hit a boom period. There are a number of new projects on the horizon, even if they are only in the planning stages. The current amount of office spaces are being filled, leading to low vacancy rates.
Author Bio : This guest post is written by John Parker in support of property investment in Thailand.