Bangkok has been highlighted as a city to watch, “and with good reason”, as companies are increasingly looking towards so-called new locations and chief among their concerns is convenient access to mass transit, according to a new report by property agency Knight Frank.
“The Global Cities: The 2016 Report” examines the market performance of 20 cities across the world, of which 10 are in the Asia-Pacific region.
The United Nations is forecasting the world’s cities to increase in population by 380 million in the next five years. Consequently, the planet will need to build the equivalent of five cities the size of Los Angeles every year between now and 2020 – and all the supporting infrastructure.
This increased urbanisation, combined with greater demand driven by economic growth, will cause office rents to rise in the key global cities.
Knight Frank forecasts that Madrid will top rental growth at 22.2 per cent by 2018, followed closely by Mumbai (21.3 per cent) and San Francisco (20.2 per cent).
Nicholas Holt, head of research at Knight Frank Asia-Pacific, said that despite the slowdown in China and its impact on the region’s economies, this region would still see relatively strong economic growth over the coming years.
Coupled with the huge forces of urbanisation in India and China, the next three years are still very much a growth story for Asian cities, he said.
“Three of the top five global cities for office-rental growth over the next three years are forecast to be in Asia-Pacific, with the Indian cities of Mumbai and [Bangalore] benefiting from a strengthening economy, in second and fifth place respectively.”
Marcus Burtenshaw, executive director and head of commercial for Knight Frank Thailand, commented that Bangkok had been highlighted as a city to watch, “and with good reason”.
New investment incentives targeting the software industry and the digital economy, coupled with initiatives such as improved benefits for regional operating headquarters, should help to support demand, he said.
Yet as occupancies in the capital’s high-rise office towers climb past 90 per cent and rents reach record levels, companies are increasingly looking towards “new” locations, and chief among their concerns is convenient access to mass transit, Burtenshaw said.
Therefore, with more than 240 kilometres of new mass-transit routes currently under construction, “we expect that these new lines will breathe new life into the districts that they serve, making them more desirable locations to live, work and play”.
Looking at the total real-estate transaction volumes within each market in the first half of this year, India has emerged as the market with the highest percentage of foreign investment at 67 per cent, followed by Malaysia (59 per cent) and Singapore (43 per cent), according to the property agency’s report.