Golden Ventures Leasehold Real Estate Investment Trust (GVREIT) is set to invest 200 million baht in renovating two of its office buildings to enhance their competitiveness and retain tenants amid a surge in office supply in Bangkok.
Key Takeaways
- GVREIT will invest 200 million baht in renovating two office buildings.
- The renovation aims to enhance competitiveness and retain tenants.
- Office demand remains strong, but new supply is significant.
- The renovation will include technology upgrades, energy-efficient systems, and design refreshes.
Investment Details
GVREIT, managed by Frasers Property (Thailand) (FPT), will allocate 200 million baht for the renovation of Sathorn Square on Sathon Road and Park Ventures on Phloenchit Road. Both buildings are 14 years old and are the oldest assets in GVREIT’s portfolio. The primary goal of this investment is to retain existing tenants and enhance the buildings’ competitiveness in the market.
Market Context
According to property consultants JLL Thailand and CBRE Thailand, the office supply in Bangkok reached approximately 9.61 million square meters as of the first quarter of 2024. The occupancy rate during this period was 82.2%, showing a decline of 2.3% year-on-year and 1.3% quarter-on-quarter. The average rents for Grades A+, A, and B offices in the central business district (CBD) were 1,125 baht, 915 baht, and 721 baht per square meter per month, respectively.
Future Projections
Over the next three years, at least 1.6 million square meters of office space is expected to be completed. This includes the office space in the super-luxury mixed-use project One Bangkok, developed by Fraser Property Limited, whose major shareholder is also a key stakeholder in FPT.
Renovation Plans
The renovation of Sathorn Square and Park Ventures will include technology upgrades to enhance safety and convenience, energy-efficient management systems, features to promote the health and well-being of tenants, improved workplace experiences, and refreshed design elements. Sathorn Square currently has an occupancy rate of 90%, while Park Ventures boasts a 95% occupancy rate.
Financial Performance
FPT reported a net profit of 339 million baht in the second quarter of 2024, up from 169 million baht in the same period last year, on revenue of 3.8 billion baht, marking a 9% increase. Of this amount, 2.73 billion baht came from residential development, 769 million baht from industrial and commercial properties, and 327 million baht from other sources.
Conclusion
As one of the largest office landlords in Bangkok’s CBD, GVREIT’s investment in renovating its older assets is a strategic move to stay competitive in a market with increasing office supply. The 200 million baht renovation budget is expected to break even in seven years, with the primary focus on retaining existing tenants and enhancing the overall tenant experience.
Sources
- Bangkok Post – GVREIT ploughs B200m into offices, Bangkok Post.
