Bangkok – 4 June 2009 – Tokyo’s Inner Central District overtook London’s West End to become the most expensive office location in the World according to the CB Richard Ellis global office cost survey. Moscow, Hong Kong’s central business district and Tokyo’s outer central district were in third, fourth and fifth position.
Financial centres around the world have been hit by declining occupier demand. In many cases office occupancy costs have dropped by 20% or more over the last 12 months.
Across the 173 cities surveyed by CB Richard Ellis office, occupancy costs fell by 2.8% over the last 12 months (on an unweighted average basis). Singapore had the largest year-on-year decrease with office occupancy costs falling 34% in the 12 months upto 31 March 2009.
The total occupation cost in Tokyo is THB 5,581 per square metre per month.
Rents for grade A central business district (CBD) offices in Bangkok have hardly moved for the last three years while rents in other markets had doubled. In Q1 2009, grade A rents fell for the first time since 1998, dropping by 4.4% in the first quarter.
“Demand continues to weak but we have only seen a limited number of companies contracting” commented Mr. Nithipat Tongpun, Executive Director and head of Office and Retail Services at CB Richard Ellis in Bangkok.
“There are very few office buildings under construction with only one new grade A CBD office building, Sathorn Sqaure scheduled for completion in 2010 and Park Ventures in 2011.”
In 1998, Bangkok saw the effect of the closure of finance companies resulting a contraction of 250,000 square metres in the amount of occupied office space combined with a 378,331 square metres increase in the amount of new office stock. This resulted in vacancy rates increasing to 37% in 1998. The overall vacancy rate for the whole Bangkok office market is now only 14.2%.
“CB Richard Ellis does not expect the occupancy or rental rates to fall to the levels of Thailand’s 1997/1998 financial crisis,” added Mr. Nithipat.
Bangkok still has some of the lowest office occupation costs in the world, ranked at 148th out of 173 cities surveyed. CB Richard Ellis reported that average grade A Bangkok office rents in the CBD for a 200-300 metre tenant are 710 baht per square metre per month. In the Asia Pacific Region, only Jakarta has lower office rents.