The Thai government's initiative to promote Thailand as of the best location for regional operating headquarters (ROHs) in Asia would not only lure new foreign investment but give a boost to the Bangkok real estate market, said Jones Lang LaSalle.

According to the consultancy firm, Thailand has a lot to offer to international companies looking for a home in the country. Infrastructure has seen continued improvement, while the amount of skilled labour has increased dramatically over the past 10 years. The country also offers a favourable living environment for expat families, with an abundance of quality housing, recreational facilities, international standard hospitals and international schools. More importantly, the cost of living and doing business in Thailand remains relatively low, compared to more established regional hubs like Hong Kong and Singapore.

"The government's plan to offer tax incentives to foreign companies establishing their regional operating headquarters in Thailand has been well received by the property industry as it is also expected help boost demand for real estate," said Suphin Mechuchep, managing director.

Dan Tantisunthorn, head of research at Jones Lang LaSalle, noted that Bangkok is among the cheapest office markets in Asia. International companies looking to establish an ROH in the city will enjoy relatively low occupancy costs and a wide variety of office buildings to choose from, in terms of both quality and location.

Bangkok now offers 8 million square metres of office supply. Of this, 2.6 million sqm are classified as Grade A space, with 1.25 million sqm located in the Central Business District (CBD). With 17 per cent vacancy rate, 1.36 million sqm of space remains available. Rentals range between Bt300 and Bt800/sqm/month, depending on locations and quality of the buildings. Jones Lang LaSalle's study indicates that the average rental of office space across Bangkok is Bt398/sqm/month. Grade A office space in the CBD fetches higher rents, averaging Bt635/sqm/month, which remains relatively low, compared to other office markets in Asia.

Table: Average Grade A rentals (Source: Jones Lang LaSalle)
City	US$ per sqm per month
Hong Kong	131.3
Tokyo	98.0
Singapore	61.0
Shanghai	53.0
Beijing	46.2
Bangkok	20.6
Kuala Lumpur	20.2
Manila	20.2
Jakarta	17.5

Meanwhile, the cost of fitting out ranges between Bt23,000 and Bt28,000 per sqm for a Grade A to B level, which is 15-40 per cent cheaper than in Hong Kong and Singapore.

Asides from low occupancy costs, international companies establishing offices in Bangkok would also benefit from low rents on residential accommodation. According to Dan, luxury houses are available for rent in different sizes and on various locations across the city. For instance, single houses with four bedrooms and 600 sqm of usable space in prime residential locations fetch monthly rentals ranging between Bt170,000 and Bt250,000, depending the quality of construction and design, and facilities provided. The expatriates can also choose from a vast range of apartments, serviced apartments and condominiums. Fully furnished prime Grade apartments with three bedrooms located in the CBD are asking rentals ranging between Bt100,000 and Bt150,000/month, depending mainly on the age of the building, location, quality of furnishings, and facilities provided.

Expat executives are also entitled to own residential condominiums under the Condominium Act. Brand-new condo units in newly finished projects in the CBD are on offer at prices ranging between Bt90,000 and Bt200,000/sqm, while second-hand units are asking lower prices.

The firm highlighted that transportation is one of the disadvantages for ROHs, despite the skytrain and subway as well as rapid bus BRT as their coverage is limited compared to more developed cities like Hong Kong and Singapore. Depending on the industry, the supply of skilled labour and qualified employees can be inadequate. For example, many multinational companies still find difficulty recruiting staff proficient in English. While this condition has gradually improved over the past decade, the country will require some more time to solve the issue as its educational structure will not change overnight.

"Tax measures alone may not be sufficient to attract international companies into the country. Asides from rebuilding confidence in the country's political stability, the government also needs to emphasise the characteristics of Thailand that make the country an attractive location for ROHs, while minimising the challenges multi-national companies may encounter," said Suphin.