Bangkok, which topped the Knight Frank Asia-Pacific Prime Office Rental Index last quarter, saw its first rental rate decline quarter during Q2 in close to three years.
Given limited supply, however, rising trends may resume for the remainder of 2017, according to the real estate firm.
The increase in the Index overall was the result of rising rents in 15 of the markets during the quarter, with rental declines experienced in only two (Bangkok and Kuala Lumpur) of the 20 markets tracked.
Phnom Penh topped the Index during Q2 with a 4.2 percent increase quarter-on-quarter, compared with a flat performance during the last quarter. The completion of Exchange Square not only set a new benchmark standard for Grade-A offices, but its strong pre-commitment level also boosted prime rental levels in the Cambodian capital.
Over the next 12 months, Knight Frank expects rents in 15 cities of the 20 tracked to either remain steady or increase, the same as its previous forecast.
Marcus Burtenshaw, Executive Director and Head of Commercial Agency Department, Knight Frank Thailand, pointed out: “The drop in average Grade-A office rents in Bangkok was a reaction to a slight decline in occupancy, however we expect that this will not last.”
He added that demand for office space from e-commerce and finance related sectors remained strong, and as such he suspects that take up, occupancies and rents are likely to rebound over the next quarter.