This information comes in at a pivotal time for Bangkok regarding its potential for development. With the introduction of the ASEAN Economic Community, projected to begin in either late 2015 or sometime in 2016, offices around the globe and particularly in Asia Pacific will be seeking locations for new headquarter offices. Timing-wise, it couldn’t be better for commercial property developers, especially considering that the current supply of office space in Bangkok is aging and could use not only an update but some new spaces as well.
Despite the fact that office prices are low and demand will soon be high, CBRE predicts that there will not be many new commercial office buildings being developed. Condominium developers are also on high alert for office space in burgeoning Bangkok and are often able to outbid commercial building developers, as the return on condominium sales will be higher. For office developments to match the returns currently being achieved by condominium developments, rents will need to rise by 30 to 50 per cent.
The rents in Bangkok are much closer to those of Durban, South Africa (the least expensive city for office rents) than they are to the most expensive places, which includes London’s West End, Central Hong Kong and Beijing’s Finance Street. Despite having risen by up to 7%, Bangkok’s office rents are only 900-1000 baht per square meter. The three aforementioned most expensive cities have occupation costs reaching between 5,500 baht and 8,000 baht per square meter.