Bangkok among world’s most affordable premium office locations
Though office rents in Bangkok’s central business areas has grown for eight consecutive years since 2011, the city has remained one of the world’s most affordable premium office locations
Though office rents in Bangkok's central business areas has grown for eight consecutive years since 2011, the city has remained one of the world's most affordable premium office locations, according to data from the latest Premium Office Rent Tracker by global real estate consultant JLL.
Bangkok is the seventh most affordable premium office location in the world. The city offers annual premium occupancy costs (including rent, taxes and service charges) averaging USD 42 per square foot which is are eight times cheaper than Hong Kong's Central, the world's most expensive premium office location. It is also one of the most affordable premium office locations in Asia Pacific, ranking fourth after Chendu, Manila and Kuala Lumpur.
JLL's Premium Office Rent Tracker (PORT), now in its fourth edition, crunches data on the achievable rent in the highest quality building in the premier office districts of 61 cities.
While African hubs of Johannesburg and Nairobi are currently the most affordable markets, Hong Kong's Central has the world's most expensive rent for premium offices for the fourth year running. The submarket boasts occupancy costs – including– that are 60 per cent more expensive than New York's Midtown and nearly 75 per cent more expensive than London's West End.
According to JLL, the high occupancy costs of Hong Kong's Central are driven by Chinese firms snapping up Grade A office space, although this demand has decreased in the last quarter. This has led some companies to search for more affordable office locations in decentralised locations.
"Hong Kong is a key financial hub in Asia, and Central is still the most important financial district. But vacancies are low in Central, which has pushed office rents up. Companies are now looking beyond Hong Kong's traditional core office markets with more than half of all new lettings in the third quarter of 2018 taking place in decentralised locations. Hong Kong East and Kowloon East have emerged as favoured alternatives. Notable tenants who have shifted to Hong Kong East recently include Ernst & Young and Baker McKenzie," says Denis Ma, Head of Research, JLL Hong Kong.
Districts in cities in Greater China (Hong Kong, Beijing, Shenzhen and Shanghai) now represent six of the top 10 most expensive premium office markets in Asia. As a result, decentralisation is taking place in many Chinese cities as companies look to make savings, with premium occupancy costs averaging US$338 per square foot in Hong Kong's Central, US$189 per square foot in Beijing's Finance Street, and US$131 per square foot in Shanghai's Pudong district. Meanwhile Singapore made its way into the top 10 for Asian cities, up from 14th place in 2017.
The banking and financial services industry are the top occupiers of premium office space globally, as the leading sector in more than half of the 72 markets covered.
"High-value, high-margin businesses in financial services such as private, corporate and investment banking firms, rent premium office space in Beijing, Shanghai, Tokyo and Singapore. While cost remains a key factor, these companies prioritise access to talent and the need for amenities when selecting their next office location. They target premium quality buildings to attract and retain top talent, which also helps to enhance their brand image," says Jeremy Sheldon, Managing Director, Markets and Integrated Portfolio Services, JLL Asia Pacific.
Corporate occupiers across all industries are seeking to consolidate and streamline their portfolios in strategic locations. There is growing recognition of the role that real estate plays in talent attraction and retention. Hong Kong's Central is a prime example for its excellent transport connectivity, local amenities, and the quality of digital infrastructure – factors that organisations consider when choosing their next office location.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of over 91,000 as of March 31, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.
About JLL Thailand
The firm’s operation in Thailand began in 1990 and today is the country’s largest international property service provider with 1,600 employees and more than five million square metres of property and corporate facilities managed. In Euromoney Real Estate Survey 2018, JLL was voted as Thailand’s number one overall real estate advisor for the 8th consecutive year and also won top votes for agency/letting, research and valuation in the same survey. The firm was also named Thailand’s five-star winner in the commercial property consultancy and commercial real estate agency categories at the International Property Awards Asia Pacific 2019/2020. For more information, visit jll.co.th.