Office rental rates in Bangkok remain some of the cheapest in the Asia-Pacific region, although even with the economy looking to have bottomed price rate growth is still predicted to grow.
According the real estate firm Knight Frank in its Asia-Pacific Prime Rental Office Index research report, office rates in Bangkok were recorded as THB 811.60 per sqm per month,
During the last 12 months Knight Frank has recorded a 7 percent rise in office rental rates in Bangkok, but during the last three months that rise had dropped dramatically to 0.2 percent.
In its summary of the whole office rental sector throughout Asia-Pacific, Knight Frank said the construction boom inspired by past rental appreciation will deliver a barrage of new supply in a number of markets in Asia-Pacific. It said this presents opportunities for tenants to upgrade their workspace in order to attract and retain talent.
Guangzhou and Shanghai both experienced a significant addition of office space during Q3 2015, however robust demand, most notably from the financial and technology sectors, has helped to cushion its impact with the latter even enjoying rental growth.
Going forward Knight Frank expects a sustained influx of new supply amid an economic slowdown to exert downward pressure on rents in Guangzhou as well as Beijing
Similarly, across the strait, a record increase in stock lifted the vacancy rate in Taipei by 2.6 percentage points. Hong Kong benefitted from the continued demand by Mainland Chinese financial institutions for prime space in Central, their choice location, causing rents there to jump by 4.3 percent quarter-on-quarter.
Elsewhere in Northeast Asia, no new space was added in Tokyo and Seoul. With demand remaining firm, landlords in Tokyo became more aggressive; as a result, rents surged by 6.8 percent quarter-on-quarter. Seoul, on the other hand, saw marginal rental improvement.
In India, ample new stock entered the Bengaluru and Delhi markets during Q3 2015. In addition, the supply pipeline in the former will continue to be strong in the next few years however the slack will be taken up very quickly on the back of improving business sentiment, supporting rental growth. The agency said that is expects rents in Mumbai to rise as well.
A challenging external trade environment and strong future supply are conspiring to weigh on rents in Jakarta, Kuala Lumpur and Singapore. Having the worst performing currency in Asia as a result of capital outflow triggered by a political scandal also dampened business sentiment in Malaysia. Meanwhile, escalating costs compounded by an appreciating currency in trade-weighted terms led businesses in Singapore to be more prudent in spending and seek cheaper office space outside the central business district (CBD).
Knight Frank said that although Bangkok will also witness significant construction completions, the new buildings are mostly located outside the CBD. As the Thai economy looks to have bottomed out, rents are expected to continue to grow.
Despite intensifying competition from Grade ‘B office buildings, rents for prime space in Phnom Penh increased by 1.2 percent from the previous quarter, underpinned by a healthy pick-up in net absorption.
Rental trends in the four Australian cities tracked by Knight Frank continued to diverge, especially on net effective basis after taking incentives into account, with Melbourne and Sydney seeing improving leasing demand drive down vacancy rates. Although there will be considerable construction completion in the near future, there is also substantial withdrawal of stock, either for conversion or refurbishment, particularly in Melbourne and Sydney.
To read Knight Frank’s Prime Office Rental Index research report click here.
