Bangkok--Feb 22--CB Richard Ellis
Grade A office rents rose by 16.2% in Bangkok’s Central Business
District (CBD) over 2004 according to the latest office market survey from
international property consultants CB Richard Ellis.
The overall vacancy rate for the office market was 17.3% compared
to 18.9% in the third quarter of 2004. The CBD grade A vacancy rate was
12.9% at the end of 2004 but this is expected to full rapidly during 2005 as
much of the vacant space has been leased with companies expected to take
occupancy during the first six months of 2005. The take up of grade A CBD
office space increased by 12.3% compared to 2003.
CB Richard Ellis estimates that less than 300,000 square metres of
office space will be completed in the next two years mainly in buildings where
construction was halted after the 1997 crisis but are now being completed.
Demand is expected to be at least 300,000 square metres per year for the next
two years. This difference between supply and demand will further reduce
vacancy rates and fuel rent increases.
Mr. Nithipat Tongpun, Director Head of Office Services at CB Richard
Ellis, believes that CDB grade A vacancy levels could fall as low as 5% and
rent will surpass their previous 1992 peak.
“There is very limited space available in the CBD grade A market
and few buildings coming on line over the next two years.”
“Tenants will see landlords looking for substantial rent increases
when leases come up for renewal and need to plan ahead.”
Average CBD grade A rents were 550 baht per square metre per month
for 200 square metre lettings at the end of 2004.
“We have already seen transactions at significantly higher levels
than this in the first two months of 2005” said Mr. Nithipat.
Non CBD grade A vacancy rates are even lower at 6.8% with rents not
significantly lower than the Central Business District.
Proximity to mass transit systems is proving to be a significant
factor in determining rental levels. CB Richard Ellis has seen that buildings
located close to BTS or MRTA systems achieve higher occupancy rates and rents.
The difference between Grade A and Grade B rents is between 30-40%
and opportunities exist for landlords of grade B buildings to implement
refurbishment programmes to improve rentals.
CB Richard Ellis believes that grade A rents will have to rise to
800 baht or more per square metre for before we see developers break ground
to construct new buildings.
Although rents are approaching their previous 1992 peaks in Baht
terms, they are still lower than 1992 levels in US Dollar terms.
For the first time since 1997, Bangkok has moved out of the bottom
ten office locations in the world now ranking 146 out of a total of 159 cities
surveyed.
In US$ terms, Manila is the cheapest place in Asia while London’s
West End is the most expensive in the world. London is still twelve times more
expensive than Bangkok.
CB Richard Ellis Global Market Rents - As at January 2005
20 Most Expensive Cities for Office Space 20 Cheapest Cities for Office Space
City Occupancy Cost Rank City Occupancy Cost
in US$ per sq.m per annum in US$ per sq.m per annum
1 London (West End), England 2,062.58 140 Bogota, Colombia 179.99
2 London (City), England 1,354.22 141 Panama City, Panama 179.99
3 Tokyo (Inner Central), Japan 1,338.69 142 Milwaukee (sub) 179.67
4 Tokyo (Outer Central), Japan 1,286.53 143 Indianapolis (sub) 177.62
5 Paris, France 1,037.32 144 Salt Lake City (sub) 174.5
6 Birmingham, England 843.78 145 Christchurch, New Zealand 173.9
7 Manchester, England 807.32 146 Bangkok, Thailand 168.59
8 Dublin, Ireland 804.59 147 Quito, Ecuador 159.64
9 Edinburgh, Scotland 765.65 148 Durban, South Africa 157.39
10 Moscow, Russia 753.02 149 Oklahoma City (sub) 156.85
11 Luxembourg City, Luxembourg 708.55 150 Cape Town (Claremont), South Africa 155.32
12 Glasgow, Scotland 708.36 151 Johannesburg (Sandton), South Africa 155.32
13 Zurich, Switzerland 706.91 152 Albuquerque (sub) 153.83
14 Milan, Italy 684.61 153 Edmonton, Canada 150.71
15 Frankfurt, Germany 675.59 154 Greenville (sub) 150.71
16 Geneva, Switzerland 646.56 155 Tulsa (sub) 149.96
17 Hong Kong 634.13 156 El Paso (sub) 141.88
18 Seoul, South Korea 630.28 157 Jakarta, Indonesia 138.13
19 Munich, Germany 604.79 158 Manila, Philippines 117.1
20 Stockholm, Sweden 598.96 159 Harare, Zimbabwe 65.88
CB Richard Ellis is seeing office rents rise in many cities across the
world, US locations are looking cheaper because of a falling dollar.
The Bangkok office market will see higher rents, falling vacancy rates
and limited new supply. Demand is expected to grow along with the economy but
rising rents will force tenants to think carefully about location and to plan ahead.
About CB Richard Ellis
Headquarter in Los Angeles, CB Richard Ellis is a leading global real
estate services firm. With more than 17,000* employees, the company serves real
estate owners, investors and occupiers throughout 300 principal offices worldwide.
The company’s core services include property sales, leasing and management;
corporate services; facilities and project management; mortgage banking;
investment management; capital markets; appraisal and valuation; research and
consulting. CB Richard Ellis is a public company, listed on the New York Stock
Exchange under the symbol CBG.
CB Richard Ellis established an office in Bangkok in 1988 and in Phuket
in 2004. CB Richard Ellis (Thailand) Co., Ltd. has grown to be a leading real
estate services provider, offering a full range of services including sales and
leasing for all types of property, property and facilities management, valuation
and advisory, and research and consulting. For more information, visit the
company's website at www.cbre.co.th.
* Includes partner offices
For further information:
Mr. James Pitchon
Executive Director
02 654 1111
Mr. Nithipat Tongpun
Director — Head of Office Services
02 654 1111 Ext. 218
Ms. Ngamjai Jearrajarat
Corporate Communications Manager
02 654 1111 Ext. 522 End.