Despite weak economic performance in the first half of 2015 and dim prospects for Thailand’s macro-economy for the remainder of the year, compounded by the recent fatal bombing, the Bangkok office market has remained healthy thanks to a balance between demand and supply.

In a new report from professional services and investment management firm JLL Bangkok rents continued to hit new highs, with the average market-wide rental rate in July 2015 rising 25% from the previous peak in 2007.

Mrs. Suphin Mechuchep, Managing Director of JLL, said, “Over the first half of 2015, the Thai economy was exposed to high uncertainty following a number of negative internal and external factors such as continuing high levels of household debt, declining domestic exports, and the global economic uncertainty following problems in Greece and China. At this stage, these unfavorable factors have not yet had any concrete impact on Thailand’s business sector. This is reflected by continued demand for office space in Bangkok in the first half of the year.”

JLL’s Thailand Property Intelligence Centre revealed that the Bangkok office market witnessed net absorption of 98,000 sqm of space in the first half of 2015, which exceeded the average first-half-year take-up level of 81,000 sqm recorded between 2010 and 2014.  The majority of space secured in the first half of this year was from the expansion of companies in the finance, insurance, logistics, and e-commerce sectors.

Vacancies Declining

An additional 113,000 sqm of new space was added to the Bangkok office market in the first half of 2015, bringing the total stock to 8.4 million sqm. Of this total stock, only 9.2% remained vacant. This represents a significant improvement in vacancy levels comparing to 2009 when market-wide vacancy rate reached over 17%, mainly driven by a sharp drop in demand following the global financial crisis.

Rents Hit New Highs

As of July 2015, the average monthly gross office rent across Bangkok hit all-time high, reaching THB 506 per square metre, a 25% increase from the previous peak in 2007. At the same time, average Grade A rents in Bangkok’s central business areas (CBA), reached THB 787 per square metre, a 16% increase from the previous peak in 2007.