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News Release


Capital Transactions in Bangkok Office Market Total Almost THB10 Billion in 2009

Despite softening conditions, the Bangkok office market witnessed a number of major capital transactions concluded in 2009. Five office buildings were reportedly sold last year with a combined value of over THB9.98 billion. More capital transactions are likely to take place this year as there are a number of companies putting up surplus assets for sale while investors show higher interest in acquiring office buildings, according to Jones Lang LaSalle, a professional services firm specializing in real estate.
Two of the five transactions were concluded by property funds. CPN Retail Growth Leasehold Property Fund acquired two office towers and the retail component of Central Pinklao for THB5.68 billion, representing the largest office-related capital transaction in the Bangkok office market last year.  Sala @ Sathorn, a newly completed Grade A office building on Sathorn Road, was acquired by Sala @ Sathorn Property Fund for THB1.65 billion. The fund was set up by Primavest which was later on taken over by Ayudhya Fund Management.
Phayathai Property Fund sold TMB Bank’s former head office premises on Phayathai Road, including a 14-storey building and two low-rise buildings. CP Plaza acquired the property for THB805 million, aiming to renovate the asset before releasing space back into the market for rent. Another former bank headquarters building that was sold last year was located on Sathorn Road with a transacted value of slightly over THB1 billion.
TCC Land acquired an office building on Surawongse Road for THB800 million, which will house the firm’s affiliate companies.
At the beginning of 2010, Jones Lang LaSalle successfully acted on behalf of an investor to dispose a portfolio of strata title units at Serm-Mit Tower on Asoke Road with combined space of 34,000 sqm. The portfolio was transacted for THB 1.5 billion.
Mr. Longlom Bunnag, Chairman of Jones Lang LaSalle in Thailand, says “Historically, the volume of capital transactions in the Bangkok office market was relatively low, due mainly to limited supply available for sale. However, in 2009, many corporations restructured their asset portfolio in response to the changing economic environment, and some decided to dispose non-core assets. This trend is likely to continue in 2010 as there is a growing need for companies to manage the cost, efficiency and performance of the real estate they own and occupy.”
From an investment perspective, Mr. Longlom says there are a number of cash-rich Thai families looking at office buildings as alternative investments.
“Office buildings are one of the low-risk investment asset types. Buildings, particularly those that are well located and well managed, generate consistent income streams. They also offer higher investment returns in a range between 5% and 7%, compared to bank deposits and government bonds that offer returns on investment ranging between 1% and 4%,” Mr. Longlom explains.
He adds that buyers could also anticipate higher return on investment in the near term as conditions in the market are likely to pick up in 2011 in line with the overall economic trend in Thailand and across Asia Pacific.
Office rents expected to bottom by the year end
Ms. Yupa Sathienpabayut, Head of Markets at Jones Lang LaSalle, overseeing the firm’s office leasing business, says “The Bangkok office market in 2009 was characterized by weak demand, mainly driven by corporate downsizing and consolidation. Most of the new leasing activities were from business relocations. There was only a small volume of new take-up and expansion activities, most of which were recorded in the final quarter.”
“Last year Jones Lang LaSalle let and secured over 100,000 sqm of office space on behalf of landlords and occupiers. Approximately 70% of this amount was from lease renewals by existing occupiers, 20% from business relocations and10% was from new take-up and expansion activities. This exemplifies the case whereby new demand remains soft,” says Ms. Yupa.
On the rental side, the average gross rent for all Grade office space in Bangkok dropped by 4.7% in 2009, which was lower that expected. In addition, the pace of decline started slowing in the final quarter with the average rental falling by only 0.5% quarter on quarter.
While the magnitude of economic recovery remains uncertain, the impact of the Map Ta Phut industrial development saga and politics in general remain issues. Should the Thai economy grow by 3%-4% as forecasted, demand of office will gradually pick up. In addition, only 77,000 sqm of new supply is planned for completion this year. For these reasons, office rents are expected to reach bottom in late-2010 and start picking up in 2011.
Bangkok Office Market as at the End of 2009
Key Indicators 
CBD (prime Grade)
Total Stock 
8 million sqm 
1.41 million sqm
Net addition of supply*
295,000 sqm 
48,000 sqm
Vacancy Rate 
Average Gross Rent 
THB 398/sqm/month
THB 639/sqm/month
*Including new completions and withdrawal
Source: Jones Lang LaSalle