Bangkok office market transactions top THB10 billion during 2009,

Capital transactions in the Bangkok office market totalled almost THB10 billion during 2009, despite both local and global difficulties.

According to professional services firm Jones Lang LaSalle the sector witnessed a number of major capital transactions during 2009. Five office buildings were reportedly sold with a combined value of more than THB9.98 billion, and more capital transactions are likely this year, This is because a significant number of companies are putting surplus assets up for sale, while investors are show higher levels of interest in acquiring office buildings, according to company.

Two of the five transactions were concluded by property funds. CPN Retail Growth Leasehold Property Fund acquired two office towers and the retail component of Central Pinklao for THB5.68 billion, representing the largest office-related capital transaction in the Bangkok office market last year. Sala@Sathorn, a newly completed Grade A office building on Sathorn Road, was acquired by Sala@Sathorn Property Fund for THB1.65 billion. The fund was set up by Primavest, which was later taken over by Ayudhya Fund Management.

Phayathai Property Fund sold TMB Bank’s former head office premises on Phayathai Road, including a 14-storey building and two low-rise buildings. CP Plaza acquired the property for THB805 million and aims to renovate the asset before releasing space back into the market for rent. Another former bank headquarters building sold last year was located on Sathorn Road with a transacted value of slightly more than THB1 billion.

TCC Land acquired an office building on Surawongse Road for THB800 million which will house the firm’s affiliate companies.

At the beginning of 2010, Jones Lang LaSalle successfully acted on behalf of an investor to dispose a portfolio of strata title units at Serm-Mit Tower on Asoke Road with combined space of 34,000 square metres. The portfolio was transacted for THB 1.5 billion.

Longlom Bunnag, Chairman of Jones Lang LaSalle in Thailand, said: “Historically, the volume of capital transactions in the Bangkok office market was relatively low, due mainly to limited supply available for sale. In 2009 many corporations restructured their asset portfolio in response to the changing economic environment, and some decided to dispose of non-core assets. This trend is likely to continue in 2010 as there is a growing need for companies to manage the cost, efficiency and performance of the real estate they own and occupy.”

From an investment perspective, Mr. Longlom says there are a number of cash-rich Thai families looking at office buildings as alternative investments.

He said: “Office buildings are one of the low-risk investment asset types. Buildings, particularly those that are well located and well managed, generate consistent income streams. They also offer higher investment returns in a range between 5 per cent and 7 per cent, compared to bank deposits and government bonds that offer returns on investment ranging between 1 per cent and 4 per cent.”

He adds that buyers could also anticipate higher returns on investments in the near term as conditions in the market are likely to pick up in 2011, in line with the overall economic trends expected in Thailand and across Asia Pacific.

SOURCE: Property-Report