Office market doing well despite global slide
WHILE the slower global economic growth over the past few years has not dented the Bangkok office market in anyway, the extension of the city’s train lines is bringing in more supply, Nexus Property Consultants’ latest research paper said.
Although global economic growth has been in a range of 2.5 to 2.7% since 2012 with IMF cutting this year’s forecast from 3.2% to 3.1% after Brexit, Bangkok office supply is continuing to increase.
The central business district (CBD) will be getting approximately 25,000 sqm of new space during 2016-2018 while an additional 140,000 sqm being added to non-CBD areas.
“Almost 100,000 sqm of new supply is coming from one of the skyscraper, Super Tower, which is expected to be completed in 2019.”
As of the second quarter of this year, the office supply in CBD stood at 2.29 million sqm, unchanged from the previous quarter.
However supply jumped by 7.6% to 1.78 million sqm in the non-CBD market from the previous quarter taking the city’s total supply to 4.08 million sqm, Nexus said in its in-depth research paper.
Demand was strong in both CBD and non-CBD areas. Despite the addition of new supply vacancy rate actually dropped slightly in non-CBD zones from 4% in the previous quarter to 3.9%. Vacancy rate within CBD stood still at 5% even though no new supply flowed in.
Tenants have had to cope with continual increase in rent with average rental rate of grade A office in CBD being 885.33 baht per sqm a month or an increase of 3.8% year-on-year. In non-CBD area the average rent was 641.94 baht a sqm a month or an increase of 5.8% year-on-year.
Nexus’ research paper mentioned that the Bank of Thailand has said UK’s decision to leave the European Union would trigger currency fluctuation and affect the export sector, but the impact would only be in a limited circle and for a short period of time.
IMF has downgraded its forecasts for UK economic growth from 1.9% to 1.7% for 2016, BBC said this week.
CAPTION:
Bangkok’s central business district looks stunningly beautiful at dusk: Photo: Prachanart Viriyaraks
By Thai Residents reporters
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