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News Release

Bangkok

Older office buildings undergoing renovation


​​Despite higher rents, many high-profile local and international companies in Bangkok prefer offices in quality office buildings that are not only convenient but also can reflect or help lift their corporate image. Realising this trend, some landlords with older buildings have undertaken a renovation of their buildings in efforts to attract those companies and ensure maximum rental rates, says JLL, a professional services firm specialising in real estate.

 

"Over the past recent years, we have seen a number of older office buildings in Bangkok undertaking renovations," says Suphin Mechuchep, Managing Director of JLL.

 

"Renovation is a return-maximising strategy that owners of older buildings can use in current market conditions. With healthy ongoing levels of occupier demand and the lack of new Grade A supply pushing rental rates upwards, landlords with some well located buildings may fully refurbish and re-release their buildings as 're-branded' properties to the market to boost competitiveness and maximise rentals," she adds.

 

Among several renovations completed in 2016, Sindhorn Tower on Witthayu Road saw the biggest overhaul with significant changes in both exteriors and interiors as well as facilities improvement. Other notable renovations but at a smaller scale completed in the same year were for Siam Tower on Rama I Road, GMM Grammy Place on Asoke Road, Regent House on Rajdamri Road, 208 Wireless Road, and Vanit Building on Petchburi Road. Most of these renovations were facelifts.

 

"A facelift can give old buildings a modern look while involving a smaller financial investment outlay and shorter time to complete, comparing to a full refurbishment. We expect to see more landlords giving a facelift to their aged office developments, particularly secondary buildings," says Mrs. Suphin.

 

At the time of this writing, Silom Center on a corner of the Silom-Rama 4 intersection is the only office building that has been publicly announced to undergo a full refurbishment.

 

"As office rents continue to escalate and most of Grade A office buildings in Central Bangkok are fully or nearly fully occupied, many companies have moved to new Grade A buildings in non-central locations with excellent infrastructure support such as Ratchadapisek and Rama 9 areas. Others that prefer the central location are forced to consider secondary office buildings that offer more affordable rents and availability as alternative options. Secondary buildings with a proper renovation have a better chance to attract these tenants," she explains.

 

Data from JLL's Thailand Property Intelligence Centre shows that rental rates of Grade A office space in Central Bangkok are averaging THB 827 per square meter per month, representing an increase of more than 35% from 2011. The secondary segment in the same area sees the lower average rental of THB 623 per square meter per month.

 

"After renovation, some secondary buildings in well located areas could fetch significant rental growth rates ranging between 15% and 20%, depending on the quality of renovation. The new rentals would still be competitive, compared to Grade A buildings in the same area and allow an attractive investment return from refurbishment. More importantly, proper renovation would not only enable older buildings to achieve higher rents and attract new tenants, it would also prevent the buildings from losing existing tenants," says Mrs. Suphin.