Bangkok Office Market Report Q4 2010
Upcoming SlideShare
Loading in...5
×
 

Like this? Share it with your network

Share

Bangkok Office Market Report Q4 2010

on

  • 806 views

Bangkok Office Market Report Q4 2010 - Analysis os demand, supply, occupancy, rentals plus what is driving the market.

Bangkok Office Market Report Q4 2010 - Analysis os demand, supply, occupancy, rentals plus what is driving the market.

Statistics

Views

Total Views
806
Views on SlideShare
804
Embed Views
2

Actions

Likes
0
Downloads
6
Comments
0

1 Embed 2

http://www.linkedin.com 2

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Bangkok Office Market Report Q4 2010 Document Transcript

  • 1. year end 2010 | OFFICethailandBangkok office MarketrePort Bangkok Office Market executive Summary Limited new office supply came onto the market in Q4 2010 but Q1 2011 will see an influx in supply with the scheduled opening of Sathorn Square. However over the course of the next three years less than 2% of supply will be added to the market and this is likely to have a favourable effect on occupancy levels going forward. there was minimal relocation activity in Q4 2010 reflecting the ongoing political impasse and global financial concerns that are still deterring companies from making long term plans. market indicatOrS occupancy rates remained the same as in Q3 2010 albeit with variances by zone. the outer cBD 2009 - 2010 and the outer city east recorded gains of around 4% and 1% whilst eastern fringe, outer city north and outer city north registered small falls. Supply demand rental rates increased somewhat in the cBD and northern fringe for Q4, although a fall in rates was more pronounced in the outer cBD. this was likely to be a correction to the steep rise in rentalS 2009. indications are that landlords are offering steeper discounts and incentives to maintain large floorplate tenants. Occupancy indications from the Board of investment regarding incentives for the service sector have not come to fruition as of 2010, apart from looser criteria for regional operating Headquarters. the service sector is seen by many observers as the weak link as thailand moves to 2015 and the liberalization of trade in services in aSean. the lag directly affects demand for office space. as of December 31st, no discernable impact on the office market has come about from the ongoing demonstrations. However if these become protracted and affect the cBD area, especially the rajaprasong intersection, this could have a negative impact over time as leasing contracts expire. Back offices or split locations could be a future trend but it is likely to take further disruptions for tenants to take this seriously. the election year could also spell trouble for companies operating and overall business sentiment remains cautious until at least after the election is contested.www.colliers.co.th
  • 2. BangkOk OFFICe Market rePOrt | Q4 2010Office ZOningthe general lack of zoning restrictions in Bangkok has led to the existence While Sukhumvit road up to asoke is primarily perceived as anof significant office supply in a wide range of locations in the city and entertainment and residential area, a large number of grade a buildingshow the market has perceived the cBD has evolved over the past 20 sprung up in the nineties and also in the past few years. it is thereforeyears. the original cBD was located in the Silom and Surawongse roads, considered as part of the cBD. as a working definition the cBD, for thehome to the vibrant gold market and other trading businesses. the purposes of office classification, is where a significant number of gradedevelopment of modern office buildings in the nineties, with a larger a office buildings are located. as such the old cBD is now consideredfloor plate could not be accommodated in this area and the cBD began the outer cBD as well as Petchburi road where more grade B offices areto take shape in the eastern section of Sathorn road. located. over time this structure could evolve.COLLIERS INTERNATIONAL | P. 2
  • 3. BangkOk OFFICe Market rePOrt | Q4 2010hiStOrical Supply tOtal Supply added fOr each five year periOd Source : colliers international thailand researchMore than 70% of existing office buildings were added to the market inthe 1990’s which represented a period of economic growth on the backof a surge in manufacturing exports. this is in stark contrast to only twopercent added in the five years following the effects of the asian financialcrisis (afc). even with the pick up in the second half of the decade, only13% of supply came from the first decade of the century. cumulative Supply in BangkOk Source : colliers international thailand researchthe Bangkok landscape even today is a result of a five year boom during half of the decade that growth in supply picked up with over four and athe period 1992 to 1999 which ended due to launches coming to a halt half times more supply being added in the last five years compared to theas a result of the afc. even after the crisis projects continued to be first five.completed culminating in the 140,000 sq m empire tower in 1999, whicheven today is the largest office building in the centre of Bangkok. the no new supply came to the market during Q1 – Q3 of 2010. However infollowing five years were a fallow period for the office market as a total Q4 2010 one new office building was completed in the outer cBD areaof only around 186,000 sq m was completed. it was only in the second with a total area of around 5,600 sq m. COLLIERS INTERNATIONAL | P. 3
  • 4. BangkOk OFFICe Market rePOrt | Q4 2010 additiOnal Supply fOr each year Source : colliers international thailand researchthe chart shows how supply has fared since the effects of the afc. the crisis (gfc) has led to a reduction in new supply. one office buildingpick up began in 2004 and culminated in over 250,000 sq m of additional was opened in 2010, in the outer cBD area. the total office space areasupply in 2008 on the back of renewed confidence in the middle of the has risen by nearly 6,000 sq m representing a very modest increase ofdecade. However political uncertainty along with the global financial less than 0.1% of current supply. Supply By lOcatiOn, Q4 2010 Source : colliers international thailand researchthe cBD area represents the biggest share of office building market on area and outer cBD area with 19% and 15% respectively.Bangkok with around 35% of total supply, followed by northern fringeCOLLIERS INTERNATIONAL | P. 4
  • 5. BangkOk OFFICe Market rePOrt | Q4 2010future Supply future Supply By lOcatiOn Source : colliers international thailand researchSathorn Square, scheduled to open in Q1 2011, will represent the largest over the next three years will represent a less than 2% increase in totaloffice tower in the cBD since empire tower in 1999. three office supply. this represents very little additional space for the market tobuildings are scheduled to be completed in the northern fringe area absorb.during the 2011 – 2013 periods. overall expected additional new supplydemand – take up Occupancy rate By lOcatiOn, Q4 2010 Source : colliers international thailand researchthe outer cBD area still commands the highest occupancy rate for Q4 northern fringe occupancy rate recorded the second lowest figure.2010, and the outer city north has the lowest occupancy rates. the COLLIERS INTERNATIONAL | P. 5
  • 6. BangkOk OFFICe Market rePOrt | Q4 2010 Occupancy rate in 3 lOcatiOnS, Q1 2009 – Q4 2010 Occupancy rate in 3 lOcatiOnS, Q1 2009 – Q4 2010 Source : colliers international thailand researchthe occupancy rate in the cBD area made a slight improvement from the around 1%. the outer cBD increased by just less than 1% although atprevious quarter with a nearly 1% move upwards q/q, although this is this point in time the airport Link would have no real effect on thislikely to be adversely affected by the advent of Sathorn Square, due in Q1 change.2010. the northern fringe occupancy fell 1% q/q and outer city east bydemand driverS newly regiStered firmS during January 2009 - nOvemBer 2010 Source: Department of Business Development and colliers international thailand researchJanuary 2010 recorded a surge in company registrations though the number of company registrations in 2010 for the whole thailand is theapril /May events led to a downturn, but after that period registrations highest in 99 years, which represents a positive signal for the officepicked up and november has shown a highest number in last two years. building market.from figures released by the Department of Business Development theCOLLIERS INTERNATIONAL | P. 6
  • 7. BangkOk OFFICe Market rePOrt | Q4 2010 expOrtS frOm thailand On a mOnthly BaSiS Source: Bank of thailand and colliers international thailand researchindustrial growth is the main driver that powers the office market as it 2009 with a steady pattern of growth despite setbacks from politicalleads to the need for trading, financial, legal and insurance services, disturbances. in october export value fell in September by just less thanamongst others, to support it. exports started to recover from the gfc in 8% and then remained stable in the last two months of 2010.rental rate, Q4 2010 rental rate By ZOne Source: colliers international thailand researchUnsurprisingly the cBD commands the highest rental rates due to the the fact that a significant number of offices are located close to both thelocation and number of grade a buildings. rents in the eastern fringe BtS and Mrt while most offices in the outer cBD are located somedropped as in the outer city east while increases were recorded in the distance from mass transit lines and many are relatively old.Western fringe and northern fringe areas. this could be explained by COLLIERS INTERNATIONAL | P. 7
  • 8. BangkOk OFFICe Market rePOrt | Q4 2010 rental rate By grade Q4 2010 Source : colliers international thailand researchgrade a buildings command higher rentals than grade B buildings. thereis also some distinction between B & c grade offices. hiStOrical rental rate in three main lOcatiOnS, Q1 2009 – Q4 2010 Source: colliers international thailand researchin Q4 2010, rental rates for office buildings in the cBD area remained fallen the outer cBD has risen slightly and has now overtaken themore or less the same when compared to Q4 2009. overall rental rates northern fringe.have remained stable, but in this quarter while the northern fringe hasCOLLIERS INTERNATIONAL | P. 8
  • 9. BangkOk OFFICe Market rePOrt | Q4 2010 hiStOrical rental rate By grade Source: colliers international thailand researchrental rates of grade a office buildings have remained stable since 2007 and this has likely adversely affected grade c rentals. the increasing agewhile grade B office buildings recorded a drop of approximately 5 – 6%. of grade c buildings is also likely to become noticeable as image andcolliers international thailand has noticed that some landlords have facilities may be increasingly unfavourable to tenants, and owners couldoffered more favourable terms and incentives for tenants to maintain be considering significant renovations in the same fashion as the retailoccupancy during difficult economic times, especially for small businesses sector in order to maintain competitiveness. rental rate Of Office Building in BangkOk By diStance frOm BtS / mrt (metreS) Source: colliers international thailand researchoffices located close to mass transit stations command a premium with around a 40% difference being registered. Mass transit only explainsalthough many are newer buildings that would there for be usually more part of an office building’s appeal. access to expressways may be equallyexpensive to rent. the sharpest difference occurs in grade c buildings or even more important for tenants. COLLIERS INTERNATIONAL | P. 9
  • 10. BangkOk OFFICe Market rePOrt | Q4 2010Office ZOning the average Occupancy rate Of Office Building On phetchaBuri and rama 9 rOad alOng the line Of airpOrt rail link By Quarter. Source : colliers international thailand researchthe average occupancy rate of office Building along the airport rail Link day and future growth is foreseen in the future. Businesses where staffincreased in Q3 of 2010 which is likely to result of the opening of the often travel abroad may find an office location close to the line convenientlatest mass transit line in the area. the airport Link was official opened for their operations.on 23 august 2010 from the statistics of State railway of thailand nowcity Line of the airport Link registers more than 42,000 passengers per the average rental rate Of Office BuildingS On phetchaBuri and rama 9 rOad alOng the line Of airpOrt rail link By Quarter. Source : colliers international thailand researchrental rates were stable in Q4 2010 but still lower than the rental rates area and some areas on Phetchaburi road.in the second quarter by approximately 2% due to the protest in the cBDCOLLIERS INTERNATIONAL | P. 10
  • 11. BangkOk OFFICe Market rePOrt | Q4 2010fOrecaStat the end of 2010, offices@Sivatel, a mixed use building in the outer More than 87 % of office space in Bangkok were completed before thecBD area, provided more than 5,600 sq m to the market. this represents year 2000 and 14% are over 20 years old, therefore many buildingthe only supply to the office market in 2010. However, in Q1 2011, Sathorn owners are considering basic refurbishment. for buildings older than 20Square will add more than 70,000 sq m in the cBD. this will affect years the case for more extensive renovation becomes more pronounceddemand, supply and rental rates in the cBD area and due to its large floor involving significant changes to the façade/curtain wall and evenplate, widen the discount provided to large size office users to either retrofitting of elevator and air conditioning systems. these changes canrenew leasehold contracts or encourage them to relocate. have important cost savings for tenants due to greater efficiency. as a result of this factor and an improved image, such makeovers can lead toHowever the Bangkok market in general over the next few years is likely an upgrade and higher rentals. However the floorplate of the existingto witness only a very limited amount of new supply and with take up building and location should be taken into account and it will harder foreven at modest level this is likely be a positive for occupancy rates over multi-owner buildings to have such a change affected.time.the trend in thailand is for the economy to recover, as seen from itsincreasing gDP and exports, and limited action has been taken to boostthe service sector such as regional operating Headquarters. as thailandmoves toward a more integrated service sector within aSean there aremany concerns that the country may miss out on a potential windfall ofopportunity due to a poor education system, limited foreign languageskills, lack of competition and few tangible incentives for fDi in theservices sector. COLLIERS INTERNATIONAL | P. 11
  • 12. BangkOk OFFICe Market rePOrt | Q4 2010cOllierS internatiOnal thailandmanagement team 480 offices in 61 countries on 6 continentsoffice & inDUStriaL SerViceS United States: 135 • the third largest commercialnarumon rodsiravoraphat | Senior Manager real estate services company in canada: 39 the world Latin america: 17retaiL SerViceS • the second most recognised asia Pacific: 194asharawan Wachananont | Senior Manager commercial real estate brand eMea: 95 globallyreSiDentiaL SaLeS & LeaSing • US$2 billion in annual revenuenuttaya Junhasavasdikul | Manager • over 2 billion square feet under managementProJect SaLeS & Marketing • over 15,000 professionalsWasan rattanakijjanukul | ManageraDViSorY SerViceSnapatr tienchutima | ManagerreaL eState ManageMent SerViceS COLLIerS InternatIOnaL thaILand:Bandid chayintu | associate Director Bangkok Office 17/f Ploenchit center,aDViSorY SerViceS | HoSPitaLitY 2 Sukhumvit road, klongtoey,Jean Marc garret | Director Bangkok 10110 thailand tel +662 656 7000inVeStMent SerViceS fax +662 656 7111nukarn Suwatikul | Senior Manager email info.th@colliers.com Pattaya OfficereSearcH 519/4-5, Pattaya Second road (opposite central festivalantony Picon | Senior Manager Pattaya Beach), nongprue, Banglamung, chonburi 20150Surachet kongcheep | Manager tel +6638 427 771 fax +6638 427 772VaLUation & aDViSorY SerViceS email info.pattaya@colliers.comnicholas Brown | associate DirectorPhachsanun Phormthananunta | ManagerPattaYa officeMark Bowling | Sales ManagerSupannee Starojitski | Business Development Manager reSearcher: reSearcher: thailand thailand antony Picon Surachet kongcheep Senior Manager | research Manager | research email antony.picon@colliers.com email surachet.kongcheep@colliers.com this report and other research materials may be found on our website at www.colliers.co.th. Questions related to information herein should be directed to the research Department at the number indicated above. this document has been prepared by colliers international for advertising and general information only. colliers international makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. any interested party should undertake their own inquiries as to the accuracy of the information. colliers international excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. colliers international is a worldwide affiliation of independently owned and operated companies. accelerating success.www.colliers.co.th