Sathorn Square:
Bangkok's first large office tower development in years
By Jon Fernquest
The Bangkok office market was the hardest
hit Thai real estate market during the 1997 Asian financial
crisis. The vacancy rate reached 40%. There were
several years of very high vacancy rate after that.
Over the last two to three years the market has recovered to the point where the market is tight (vacancy tighter) and there are fewer and fewer vacancies and possibly even a shortage of downtown office space. Supply has become a limiting factor. Statistics back this up:
The net take-up rate of additional office space from 2000 to 2005 averaged 310,000 square metres per year. Although the situation has been difficult over the last two years, Bangkok has still seen take-up averaging 180,000 sq m a year.
Supply has become the limiting factor in Bangkok's market for office space because only one office tower has been built in Bangkok since the Asian financial crash.
Those office towers already built are almost never available for sale. Owners are unwilling to sell their properties because this could be seen as a sign of financial difficulties.
Compared to other popular locations in Asia for corporate headquarters such as Singapore and Hong Kong, Bangkok's office rental rates are among the lowest and most affordable. Bangkok is still an attractive location for institutional property investors looking for international-standard office buildings.
An additional new regulatory factor may make building new office buildings even less likely in the future. Rumours suggest Environmental Impact Assessment (EIA) regulations will change to require all buildings of more than 10,000 square meters to get EIA approval. This will likely lengthen the development for any new office building.
The new Sathorn Square office tower
Sathorn Square, scheduled for completion in 2010, is the only office tower that has been built recently (See artist's impression of the completed building on the right).
The target rent for the Sathorn Square building, with a net space of 72,000 sq m, starts in the range of 800 baht per square meter per month and will rise as the building fills up.
The office tower will also have large floors of 2,000 sq m, something many large companies prefer for consolidating operations over fewer floors.
To keep the height of the development down, the five story car park is located underground.
The design uses sweeping curves to "draw your eye upward" and prevent the building from looking fat or big and blocky.
The Sathorn Square mixed use development
The Sathorn Square office building is part of a larger mixed-use development.
A condominium complex, Infinity Condominium, has been already finished with transfers currently 25% completed.
In another corner the West Bangkok hotel is being built in a joint venture with Dubai's Nakheel Hotels and is expected to be completed in 2011.
The company building Sathorn Square, Golden Land, also plans to build two office buildings on a large plot of land opposite the Stock Exchange of Thailand.
Property market funds
The property market fund is a legal arrangement for owning real estate (vehicle for holding property). In Bangkok, property funds are now only in their early stages of development but will become much more important in the future as international buyers enter the market.
In the past there was a very good reason not to sell the office buildings that a company owned. If you sold an office building, your competitor would buy it.
In a property fund, the ownership of the office building is spread over several owners, including foreign investors with large capital and funds behind them. When a property fund acquires a building, the seller also usually keeps one third of the shares, remaining a part-owner of the property.
(Source: Bangkok Post, business, 01-09-08, NINA SUEBSUKCHAROEN, temp-link)
Vocabulary:
the hardest hit
- received the most damage, harmed the most ที่ได้รับผลกระทบที่สุด
the vacancy rate
- the percentage of the building that no one is currently renting out
อัตราห้องว่าง
the market has recovered - demand has returned to
the market (to offset the supply and increase asset prices)
ตลาดได้ปรับตัวดีขึ้น
the market is tight - low supply compared to demand
in the market มีปริมาณสินค้าไม่พอต่อความต้องการ
back this up - prove, provide evidence of truth
เป็นเครื่องยืนยัน
the take-up rate - the amount of additional office
space being rented per year อัตราพื้นที่สำนักงานที่มีการเช่าไปในแต่ละปี
the limiting
factor - the thing that limits developments
ปัจจัยที่จำกัดการขยายตัวของการพัฒนา
office space - square meters of office to be rented
out by companies พื้นที่ให้เช่าทำสำนักงาน
institutional investors - companies with large
amounts of funds to invest as part of their business สถาบันการลงทุน
institutional property investors ผู้ลงทุนทางตลาดอสังหาริมทรัพย์
Environmental Impact Assessment (EIA) - a report
that the government requires that gives details on how the real estate
development will impact the surrounding area
รายงานการประเมิณผลกระทบทางสิ่งแวดล้อม
consolidating
operations - bringing together the operations of a business
to one place การรวมกลุ่มธุรกิจไว้ในที่เดียวกัน
sweeping curves - long curves, that bend very slowly
mixed-use development - a real estate development
that combines many uses (office space, residential condo space, retail
space, hotel space, etc.)
อสังหาริมทรัพย์ที่ออกแบบมาเพื่อประโยชน์ใช้สอยหลายประเภท
transfers - transfers of ownership, purchases of
condominuium from the developer โอนย้ายกรรมสิทธิ์
a vehicle for Y - a legal arrangement for
doing Y การเตรียมการทางกฎหมายสำหรับ
holding property - owning property
การครอบครองกรรมสิทธิ์