Investing in Condos and Offices: A Bright Future

The economic center of Bangkok is undergoing a transformation due to the development of large-scale projects and an increasingly efficient transportation network. The prime area known as the CBD (Central Business District) will continue to encompass Silom, Sathorn, Witthayu, Phloen Chit, and the early part of Sukhumvit, expanding towards Rama 4 as several large mixed-use projects worth over 200 billion baht, such as One Bangkok, Dusit Central Park, Samyan Mitrtown, and The Park, gradually complete and open for service.

With the enhanced connectivity of the electric train network extending into central and suburban areas, new commercial potential is emerging. We can see a new CBD developing in the Ratchada-Phraram 9 area, spurred by the MRT connection, becoming a major employment hub and a densely populated residential area. Additionally, the revitalization of Vibhavadi Road is benefiting from the Phahonyothin Transportation Center, also known as Bang Sue Central Station, which serves as a new transportation hub for Bangkok and Southeast Asia, making the areas around Mo Chit, Lat Phrao Intersection, and Vibhavadi Rangsit more attractive and valuable than ever before.

Why Choose 'Vibhavadi Rangsit' for Business?

Vibhavadi Rangsit Road is considered a superhighway and a gateway to the northern and northeastern provinces. It is a strategic area for trade with CLMV countries (Cambodia, Laos, Myanmar, Vietnam) via road, dual-track rail, and future high-speed rail connections. It also links to all regions within the country and Southeast Asia through flights from Don Mueang Airport. Importantly, it connects to significant future economic zones such as the Eastern Economic Corridor (EEC) via high-speed rail linking three airports (Don Mueang, Suvarnabhumi, and U-Tapao).

Thus, the Vibhavadi Rangsit area is becoming an important hub for trade and investment in Bangkok, and it is not surprising that Vibhavadi Rangsit Road is elevating to a new business avenue.

Land prices along both sides of Vibhavadi Rangsit Road are expected to rise significantly in the future, especially once the transportation infrastructure is completed and the Phahonyothin Transportation Center opens. According to the Department of Public Works and Town & Country Planning, land prices in the Huai Khwang, Phaya Thai, and Din Daeng areas were around 220,000 baht/sq.w. in 2016-2019, while prices in the Chatuchak area ranged from 150,000 to 260,000 baht/sq.w., and in Don Mueang, around 120,000 baht/sq.w.

Increasing Demand for Offices and Condos

Given the potential of the area to become a gateway for trade and investment, the demand for office spaces and residential condominiums is expected to rise. According to Jones Lang LaSalle (JLL), Bangkok has a total office space of 8.9 million sq.m., with less than 9% vacancy, and rental prices have been steadily increasing over the past seven years.

In the Vibhavadi area, there are about 24 office buildings offering around 580,000 sq.m. of space, with an occupancy rate of over 90% and an average rent of 750 baht/sq.m./month, indicating a strong demand for office space with limited competition in the market.

According to a survey by LPN Research (LPN Wisdom), the increasing demand for office space has led to more office development projects, primarily large buildings with floor areas of around 1,000 sq.m. or more.

However, one of the fastest-growing types of office space since 2013 has been co-working spaces and serviced offices, which have increased from 20 locations to over 100, aligning with the trend of more online work and the growth of small and micro businesses, especially in E-commerce and Trading, as well as professional services.

Therefore, office buildings with smaller unit sizes (not exceeding 300 sq.m.) located along convenient transportation routes, close to residential areas and business centers, at reasonable rental rates, can meet the demand for office space that still has market gaps.

Condo Offices: An Investment Alternative

Traditionally, we are familiar with office buildings or offices for rent on a monthly basis, with rental rates calculated per sq.m./month. Currently, the rental price for Grade A offices in the city center exceeds 1,000 baht per sq.m. per month, while offices outside the CBD average around 500-700 baht per sq.m. per month.

However, there is another type of office developed for sale as condominium offices. In simple terms, these are freehold offices managed by a condominium juristic person. The advantage of this type of office is that buyers own the office and have a say in the management of the project as co-owners, with payment terms similar to monthly rent.

For example, renting a 50 sq.m. office at a rate of 750 baht/sq.m./month would cost 37,500 baht per month. In contrast, purchasing a 50 sq.m. condo office at 100,000 baht/sq.m. would total 5 million baht. If financed over 20 years at a 7% interest rate, the monthly payment would be around 42,000 baht. The difference is minimal, but owning the office as an asset is more valuable in the long run.

Additionally, condo offices are cheaper than home offices, which are currently selling for over 10 million baht, or those located in less convenient business areas. Building one’s own office would require an investment of 5-10 million baht, making condo offices an attractive option for medium-sized business owners wanting their own office or investors looking to rent out. Preliminary studies indicate rental returns of about 7% per year.

Meeting the Needs of Both Business and Living

In mid-2018, L.P.N. Development Public Company Limited (LPN) launched the Lumpini Park Vibhavadi Chatuchak project, a 21-story residential building with 736 units, valued at 5 billion baht, with an average selling price of 110,000 baht per sq.m. and sizes starting at 24 sq.m., which received an excellent response with over 90% sales.

In the same area, the company is preparing to develop the Lumpini Tower Vibhavadi Chatuchak project (A and B), targeting SMEs and investors looking to buy for rental purposes, turning the entire area into a mixed-use project with both condominiums and office buildings. The office building will soon be available for rent and sale, with Building A being 21 stories high and approximately 16,000 sq.m. of space, with an average selling price of 125,000 baht per sq.m. The initial average rental rate will be 800-850 baht per sq.m. Building B, an 18-story office building in the form of a condo office, will have units starting from 60 sq.m. available for freehold sale at an average price of 100,000 baht per sq.m.

In addition to being located in a highly potential area, the project design adheres to green building standards that consider energy conservation and environmental protection, promoting efficiency and well-being for building users through design, low-pollution materials, and high-standard construction, enhancing safety, efficiency, comfort in work, and helping to reduce energy costs, thus saving business costs in another way.

Thank you for the information from www.lpn.co.th