Coworking Space No longer just targeting startups companies

Advances in technology, a more mobile workforce, and unpredictable economic growth are starting to reshape the business environment and transform occupiers’ approach to office space decisions. 

In the Bangkok office market, a traditional three-year lease with options to renew and the tenant fitting out the space remains the typical way of leasing office premises for most occupiers. Multinational firms, however, with offices in different countries, are increasingly looking for flexible lease terms as real estate costs continue to be one of their major concerns.

Companies are also looking at agile working where staff no longer have allocated desks and, in some cases, it is easier to get third parties to design, build, and operate this space rather than companies doing it themselves.

Some of the current pricing being offered by coworking space operators is very competitive and the cost combined with flexibility is making leasing from thi…

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Thailand Property News Of The Week

The top residential and commercial real estate news of the week – 24 June 2019

NCC counts on stopgap events hallBangkok PostNCC Management & Development, the venue management firm and operator of Queen Sirikit National Convention Center, expects a new convention hall at Samyan Mitrtown to offset income lost while rebuilding QSNCC.

Property Perfect sells over 50% of YU KiroroBangkok PostProperty Perfect showcases the sale of its first condominium project in Japan, “Yu Kiroro”, marking the milestone sales of 1.8 billion baht, or over 50% of available units.

Building for a rapidly changing society

The NationHomebuyers are changing their purchase behaviour, demanding that residential buildings be designed with the facilities to serve people of multiple generations, especially innovations…

Building to a slowdownBangkok PostThe Thai property market is expected to continue slowing in the remaining months o…

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Profound Transformations await Retailers and Developers in Bangkok

The retail industry is undergoing one of the most profound periods of technological transformation in history.

The evolving retail landscape and consumers’ changing behaviour has led to the emergence of new retail formats and adoption of new technologies. Traditional retailers are continuously being forced to evolve and invest in digital transformation. 

The growing future supply in Bangkok will put more pressure on older centres to renovate and upgrade in order to remain competitive

As of Q1 2019, the total retail supply in Bangkok was almost 7.8 million square metres according to CBRE Thailand, increasing by 3.70% Y-o-Y. The total new retail supply in the whole year 2019 will be one third higher than total new supply last year.

And by the end of 2021, we expect that the total retail supply will exceed 8 million square metres, with the majority of the increase being in large mixed-use developments in the downtown area. 

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Real Estate Transparency: Southeast Asia moving in the right direction

We recently launched the 10th edition of our Global Real Estate Transparency Index, a leading publication that has been charting the progression of transparency across the world for two decades.

The 2018 Index builds upon the strong track record of our previous surveys, evolving to meet ever-changing demands, and now covering 100 countries and 158 city markets.

We have observed a lot of change in the last 20 years and transparency has become ever more paramount.

We have experienced a global financial crisis that put a spotlight on debt and regulation, witnessed the emergence of new technologies that have the potential to disrupt our industry, and here in Asia Pacific, we have seen more than 700 million new people living in cities which necessitated the need for higher quality real estate and supporting services.

Emerging markets in South and Southeast Asia that led the way in transparency gains in the 2018 Index

Encouragingly…

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The meteoric rise of flexible space in Asia Pacific

The rise of flexible space in Asia Pacific has been meteoric. JLL research indicates major operators grew their footprint at an annualized rate of 35% over the 2014-2017 period and that pace of growth has carried over into 2018 (Figure 1).

Figure 1: Flexible space stock*Source: JLL Research

A number of factors have driven the growth of this industry, and the co-working segment in particular, including the flexible terms offered to members, the plug and play ease of setting up, the sense of community and ready access to social and professional networks.

Initially co-working appealed to startups who found it more affordable than opening a traditional office.

To date the most popular flexible space model has been rent arbitrage.

But increasingly large corporates have started including co-working in their real estate strategy. And to accommodate corporates, operators have increased the size of their centres – our latest resea…

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Asian real estate and US interest rates

Economic conditions in the US continue along a path of steady improvement, with the latest GDP growth rate of 4.1% (annualized), signifying the strongest rate of growth in four years.

Robust economic growth teamed with strong employment data and upward pressure on inflation suggest the likelihood of further rate hikes over the course of the year.

US interest rate futures indicate traders are pricing in a 94% probability of a rate hike in September to 2.00%-2.25%, with a further 68% probability of an additional hike in December to 2.25%-2.50%.

Emerging markets currencies are becoming more volatile

Continued upward movements of US interest rates are starting to impact Asian real estate markets in a number of ways. With monetary policy positions in the Asia Pacific region sitting across a wide spectrum, the impact has been quite market specific.

Firstly, some of the emerging markets (EMs) are experiencing more volatility a…

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Self-storage industry in Asia on the rise

The self-storage industry in Asia is evolving as the notion of storing personal belongings outside the home catches on.

Outside of Japan and Australia, Hong Kong remains the most established Asian market with an estimated 418 facilities, a number that compares closely to China’s total facilities.

However, there is potential for further market growth.

Per capita stock of self-storage facilities in eight logistics markets in Asia (Hong Kong, China, Japan, Taiwan, Singapore, Malaysia, Philippines and Thailand) currently averages less than 0.01 sqm, significantly below the 0.1-0.2 sqm in the U.K. and Australia, and one sqm per capita in the U.S.

Self-storage operators have a potentially very viable product

The average occupancy rate in more established Asian markets as well as the U.S. stood above 80% during 2018, although China, Taiwan and Southeast Asia saw slightly lower levels.

Moreover, a good customer mix (on aver…

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First-home stimulus measure may have limited impact on Thailand’s housing market

The Thai government has released a housing stimulus measure which grants personal income tax allowance for buyers of first homes worth up to 5 million baht during April 30-December 31, 2019.

This measure will help reduce housing costs based on the personal income tax rate of each purchaser.

Although houses with the prices under 5 million baht are account for about 80% of the residential properties in the market today, EIC expects the benefits from this measure to be rather insignificant as

(1) the stimulus is limited to the first home buyers,

(2) the latest tax privilege being granted has lower degree and shorter runtime than the measures in the past,

(3) housing loans from financial institutions are becoming more strict especially with the new LTV criteria, and

(4) the household debt is still high while household income expands poorly. Nevertheless, residential developers may take this opportunity to o…

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Drivers of Asia Pacific office space demand in 2019 remain strong

Office occupational demand was robust across Asia Pacific in 2018, with overall leasing activity up an impressive 20% for the whole year.

Financial, professional services and tech firms stood out as key demand drivers, while flexible space operators are still a notable source of leasing.

Demand for office space remains healthy in 2019

Occupational demand remains healthy entering 2019, despite significant downside risks to the outlook – e.g. China-US trade war, no-deal Brexit, etc. Companies across the region continue to expand to varying degrees, according to the Manpower Group’s Employment Outlook Survey 1Q19.

More employers plan to increase rather than decrease staffing levels in most Asia Pacific countries, with employers in Japan reporting the strongest hiring intentions.

The outlook for the office occupational market in Asia Pacific continues to be bright and JLL holds the view that 2019’s gross leasing volumes will …

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Commercial real estate investment shows Value-add on the rise in Asia Pacific

For FY 2018, direct commercial real estate investment volume for Asia Pacific totalled USD 160 billion, increasing from FY 2017’s figure of USD 149 billion.

Out of this growing allocation of capital to real estate, a clear preference for value-add investment strategies has emerged.

Figure 1 shows that core, core-plus and opportunistic strategies have remained relatively unchanged in terms of their dry powder over the six years ending December 2018. 

Core and core-plus are characterised by lower risk and lower returns; generally Grade A office buildings in core locations of major cities, with diversified tenant mixes and stable occupancy rates.

Opportunistic, on the other hand, is higher risk and higher return, focusing on buildings that generally require significant enhancement or redevelopment.

Figure 1: Changes in dry powder by strategySource: Preqin, JLL

Value-add, however, characterised by medium-to-…

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