Q2 2015 Bangkok Office Market - Knight Frank · 2015. 8. 6. · 2 Q2 2015 Bangkok Office Market...

Q2 2015 Bangkok Office Market

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• Bangkok’sofficesupplyincreasedto4,661,188squaremetres.Duringthefirsthalf of2015,theofficesupplyincreasedby86,000squaremetres.• Overfouryears,thenettake-upofofficespacerecordedanewhighinthefirsthalfof 2015atapproximately133,359squaremetres.Weanticipatewitnessingthenettake-up ofofficespaceexceed200,000squaremetresforthewholeof2015.• Thelatestoccupancyratewasat92.6%,anall-timehighinmanyyears.• TheoverallaveragerentalrateincreasedfromTHB630inQ22014toTHB674persquaremetre, orapproximately7.0%perannum.

highlights

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Q2 2015 Bangkok Office Market

Source: Knight Frank Thailand Research

Note: These figures exclude multi-owner occupied premises and office buildings smaller than 5,000 sq.m.

SUpply Thecumulativeofficesupplystoodat4,661,188squaremetres,increasingby80,600squaremetresfrom2014,duetothecompletionofAIASathornTowerandBhirajToweratEmQuartier.Thetotalsupplyincreasedby1.5%fromtheendof2014.AIASathornTowerislocatedonthemainSathornRoadintheCBDareawithinwalkingdistancefromBTSSurasakstation,whileBhirajToweratEmQuartierislocatedonthemainSukhumvitRoadwithdirectaccesstoPrompongBTSstation.Theofficesupplyinthenon-CBDareascomprisedapproximately52%ofthetotalsupply,whileofficespaceintheCBDmadeuparound48%.Inaddition,thepro-portionofnon-CBDsupplytendstoincreasegraduallyasscarcityoflandforofficedevelop-mentintheCBDhasincreased.

Figure1Bangkok Office Supply & New Supply Q1 2011 to Q2 2015

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Source: Knight Frank Thailand Research

Inthesecondhalfof2015,103,035squaremetresofthefuturesupplyareexpectedtobecomplete,74%ofwhicharelocatedinnon-CBDareas.In2016,itisanticipatedthat119,210squaremetresofnewsupplywillenterthemarket,100%ofwhichwillbelocatedoutsidetheCBD.

Future SUpply Figure2Future Supply

Building Name Lettable Space

(sq.m.)

Completion Location Zone

G-Land Tower 65,630 Q4 2015 Rama 9 Non-CBD

Major Tower 10,405 Q3 2015 Thonglor 10 Non-CBD

Bhiraj Tower at Sathorn 27,000 2015 Sathorn CBD

The Metropolis 13,540 Q1 2016 Sukhumvit 39 Non-CBD

Bhiraj Tower at BITEC 31,880 Q2 2016 Sukhumvit-Bangna

Non-CBD

FYI Center 48,095 Q4 2016 Ratchadapisek - Rama IV

Non-CBD

M Tower 9,990 Q4 2016 Sukhumvit 62 Non-CBD

Rungrojthanakul 4 15,705 Q4 2016 Ratchadapisek Non-CBD

Shinnawat 4 13,060 Q1 2017 Paholyothin Non-CBD

Singha Complex 36,000 Q1 2017 Asok-Petchaburi Non-CBD

Gaysorn Office Tower 19,500 Q2 2017 Rajdamri CBD

Whizdom 101 30,000 2018 Sukhumvit 101 Non-CBD

Super Tower 94,000 2020 Rama 9 Non-CBD

SJ Infinite II Business Complex 30,000 N/A Bangna Km.7 Non-CBD

The Bangkok Mall 100,000 N/A Sukhumvit-Bangna

Non-CBD

Rama IV Project (Formerly Suan Lum Night Bazaar)

137,500 N/A Rama IV - Wireless

CBD

Block H Siam Square 30,000 N/A Rama I CBD

Mhon 21-22 Chula Property 45,000 N/A Rama IV CBD

Source: Knight Frank Thailand Research

Demand

Source: Knight Frank Thailand Research

Table1Future Supply

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Demand

Source: Knight Frank Thailand Research

Note: These figures exclude owner occupied premises and office buildings smaller than 5,000 sq.m.

Source: Knight Frank Thailand Research

Q2 2015 Bangkok Office Market

Thetotaloccupiedspacestoodat4,318,382squaremetres,increasingfromthesameperiodin2014by2.3%.

Inthefirsthalfof2015,Bangkokofficemarketsetthehighestnewoccupancyraterecordamongthepreviousyears.Theaverageoccupancyratewasat92.6%,increasingfromthatofthelastyearby2.0%.

ThemostgrowthwasseenintheGradeAofficeinthenon–CBDcategory,butthehighestoccupancyrate,of94.9%,wasfoundintheGradeAofficeintheCBDcategory.Overall,occupancyroseinalltiers,especiallythoseofGradeAofficesinthenon–CBD,withoutstanding4.4%annualgrowth.

Quarter CBD Non-CBD

Overall Grade A Grade B Grade A Grade B

Q2 2014 93.0% 91.3% 82.3% 90.0% 90.6% Q3 2014 93.8% 91.6% 82.5% 90.4% 91.1% Q4 2014 93.9% 92.5% 84.1% 90.6% 91.5% Q1 2015 95.1% 92.6% 81.2% 91.0% 91.7% Q2 2015 94.9% 93.2% 86.7% 92.0% 92.6% Q-o-Q -0.2% 0.5% 5.5% 1.0% 0.9%

Y-o-Y 1.9% 1.9% 4.4% 1.9% 2.0%

Source: Knight Frank Thailand Research

Source: Knight Frank Thailand Research

In Q2 2015, the net take-up of office space peaked at 133,359 square metres. Also, the total net take-up was even more than new supply, which was 80,600 square metres. The net take-up of office space has risen every year since 2011. We anticipate witnessing the net take-up of office space exceed 200,000 square metres for the whole of 2015.

If we compare the net take-up space with the future supply on an annual basis, we expect that, going forth, the future supply will be lower while the net take-up continues to grow, thereby implying that there will be an office supply shortage in the near future.

Rental Rates

80,864

114,315 123,447 125,692

133,359

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2011 2012 2013 2014 Q2 2015

sq.m

.

Net Take Up of Office Space 2011 to Q2 2015

Table2Occupancy Rate

Figure3Bangkok Office Demand & Occupancy Rate Q1 2011-Q4 2015

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Source: Knight Frank Thailand Research

InQ22015,thenettake-upofofficespacepeakedat133,359squaremetres.Also,thetotalnettake-upwasevenmorethannewsupply,whichwas80,600squaremetres.Thenettake-upofofficespacehasriseneveryyearsince2011.Weanticipatewitnessingthenettake-upofofficespaceexceed200,000squaremetresforthewholeof2015.

Ifwecomparethenettake-upspacewiththefuturesupplyonanannualbasis,weexpectthat,goingforth,thefuturesupplywillbelowerwhilethenettake-upcontinuestogrow,therebyimplyingthattherewillbeanofficesupplyshortageinthenearfuture.

Figure4Net Take Up of Office Space 2011 - Q2 2015

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Q2 2015 Bangkok Office Market

Rental Rates

Source: Knight Frank Thailand Research

Source: Knight Frank Thailand Research

TheoverallaveragerentalratewasTHB630inQ22014.ItrosetoTHB674persquaremetre,increasingbyapproximately7.0%perannum.Therentalrateincreasedinallsegments,withthehighestrentalrateshownintheGradeA-CBDgroup,whichcommandedapproximatelyTHB905persquaremetre,anincreaseof10.0%annually.ThatoftheGradeANon-CBDgroupwasTHB699persquaremetre,increasingby8.5%year-on-year.Withequalgrowthat3.8%year-on-year,theaveragerentalratesofGradeB-CBDandGradeBNon-CBDgroupswasTHB624and469persquaremetrerespectively.

Figure6Asking Rent by Major Roads

Figure6Bangkok Office Asking Rent

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ThesituationoflandscarcityinBangkok’sofficemarketisbecomingmoreobviouswithstrongdemandbutlesssupply,andtheachievementofconsistentlynewandhighoccupancyraterecords.Theexistingvacantspaceandthree-yearforecastareonly342,806squaremetresand250,148squaremetresrespectively.Over130,000squaremetresofnewdemandwaswitnessedduringthesinglehalfof2015,andthusweanticipatewitnessingthenettake-upofofficespaceexceed200,000squaremetresforthewholeof2015.Lookingforward,highoccupancyratesandlimiteddemandtendstoputpressureonthetenantsideintermsofrentalrates,owingtohigherbargainingpowerofthepropertyowner.

Outlook in the Latter Half of 2015

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Q2 2015 Bangkok Office Market

•CBD DefinedastheareacoveringSilom,Sathorn,RamaIV,Ploenchit,Wireless, andSukhumvitRoadbetweenSoi1andSoi21tothenorthandSoi2 andSoi16tothesouth.

•Non-CBD DefinedastheareasoutsidetheCBDarea.

•Net Take-Up Thenetchangeinoccupiedspacebetweenthecurrentperiodandthe previousperiod.

•Grade A Classification •Afloorplateshouldhavenetspaceofmorethan1,000squaremetres, witharegularshape,andwithoutstructuralencumbrances. • Thebuildingshouldhaveanimpressivedesignandhigh-quality decoration. • Thebuildingshouldincludeanair-conditioningsystemwitha centralchillerandvariableairvolume. • Thebuildingshouldhaveefficientandsufficientcarparkingspace. • Ceilingheightsshouldbeatleast2.7metres. • Thebuildingshouldhavewell-known,professionalpropertymanagers.

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