Jones Lang LaSalle does not see political uncertainty significantly affecting the market for office space in Bangkok, either before or after the September 19 coup that deposed Thaksin Shinawatra as prime minister.

The coup created very little disruption to the economy and business activity in general.

Dan Tantisunthorn, head of Research at Jones Lang LaSalle in Thailand, said the underlying demand in Bangkok was strong, with organic growth from both local and foreign tenants.

Dan said the market saw 26,000 square metres of grade-A space in the Central Business District (CBD) absorbed in the first three quarters the year, soft growth compared with the 65,000 square metres absorbed last year but partially a function of limited supply in the CBD.

On the other hand, the company still expects roughly 100,000 square metres to be occupied in and around central Bangkok for all of this year, given completions in the Asoke-Sukhumvit area earlier this year. So demand remains steady, with take-up driven by both local and multinational firms trying to gain better access to a buoyant Bangkok and Thai economy.

Dan added that the coup did not cause widespread disruption to everyday business for most Thais. However, there has been an impact through a drop in the confidence of potential new occupiers, as evidenced by a 22 per-cent drop year on year in the investment value of Board of Investment applications for the first eight months.

 Caroline Murphy, head of markets

at Jones Lang LaSalle, said anecdotal evidence indicated that occupiers, especially international grade-A customers, were awaiting the outcome of political developments before making decisions about investments in Thailand. This

fall in confidence, however, is occurring at a key time in both the economic

and property cycles around Thailand generally. With rents rising and robust economic conditions overall, potential new occupiers might be missing opportunities by adopting a "wait and see" policy.

The Thai economy has seen sustained economic growth in recent years, with a record trade surplus reported for last month by the Bank of Thailand. The value of exports increased 14.5 per cent over the previous year. The Economist Intelligence Unit has indicated in its most recent forecasts that the service sector, the key driver for office space demand, will likely expand at a rate in excess of 5 per cent per annum through next year and 2008. As such, the economic news remains healthy, with the outlook for key sectors affecting office space also pointing to continued expansion.

With demand for office space likely to remain strong, there is an expectation that landlords will continue to see rental growth through the medium term. Justin Kean, associate director of occupier research at Jones Lang LaSalle Asia, said this was clearly bad news for occupiers, and he suggested they act sooner rather than later to commit to space in the Bangkok office market.

International firms making investment decisions will often have a number of criteria that need to be met before they will commit to an investment and sign new leases in an emerging market. If any one of these criteria are in question - and political stability is often a key criterion - then the deal is often postponed.

There are several key occupiers

holding back from commitment until there is political certainty cemented around new elections and a new Parliament.

Kean said this created a short-term opportunity for occupiers to sign competitively priced leases in an otherwise rising market backed by strong economic fundamentals.

Jones Lang LaSalle is expecting nearly 7-per-cent appreciation in effective rents by the end of next year. To avoid exposure to this rental upside, the firm's advice to occupiers is to commit to leases early and take advantage of possible incentives and rent-free periods that may be offered by landlords who have also had their confidence lowered.

The company believes this is prudent in a market were the mantra seems very much to be business as usual. If the demand is there, rental growth will follow. It is a matter of simple economics, and occupiers are likely to suffer higher rentals should they choose to delay at this time.