Bangkok Office Market Q2 2024

Highlight

Flight to quality, with evolving definitions of quality that emphasize flexibility, technology, and sustainability, becomes even more prominent. Older buildings face increased competition from newer, more adaptable properties, especially as 1.2 million square meters of new supply is expected in the next 2.5 years. The Silom-Sathorn-Rama IV area is projected to become a key leasing hotspot with the opening of One Bangkok phase 1 in the latter half of 2024, amid mounting pressure on occupancies and rents.

Economic Overview

The Office of the National Economic and Social Development Council (NESDC) revealed that the Thai economy expanded by 2.3% YoY in Q2, increasing from 1.6% recorded in the previous quarter. However, growth was unevenly distributed. Tourism remained the primary growth engine, driving activity in the service sector and contributing to increases in employment and private consumption. Merchandise exports, excluding gold, rose in tandem with improved manufacturing production. However, some industries faced challenges in exports and production due to high inventory levels and structural issues related to declining competitiveness. Private investment in machinery and equipment grew, while government spending saw a significant boost following the enactment of the 2024 Budget Act. On the economic stability front, headline inflation was recorded at 0.62%, driven by higher energy prices as government subsidies were gradually lifted, along with reduced supply of vegetables and pork. Core inflation, however, eased to 0.36% due to lower prices of prepared foods and personal care products. The labor market continued to improve, primarily due to stronger employment in the service sector.

In June, the Business Sentiment Index (BSI) rose but stayed below 50, indicating an uncertain business recovery, with a gradual improvement in manufacturing but a decline in non-manufacturing. Despite the 3-month expected BSI remaining above 50, overall confidence has decreased since last year, driven by lower confidence in the non-manufacturing sector, while manufacturing confidence remained stable.

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