Longlom Bunnag, chairman of the Thailand arm of the real-estate services and investment management firm, said that activity was particularly strong in the office sector, where the market outlook was brightest due to limited supply and rising rentals.

According to a survey conducted by Jones Lang LaSalle, seven major office buildings in Bangkok, with a total value of about Bt7.5 billion, were sold or changed ownership in 2005. These included both completed buildings and projects under construction totalling more than 186,000 square metres.

The transaction value was significantly higher than in 2004 when five office buildings with a combined value of less than Bt5 billion were sold.

"During the crisis period, we saw many office development projects on sale at heavily discounted prices because landlords were facing financial problems and the market was oversupplied," Longlom said. "Between 1997 and 2000, vacancy rates were over 30 per cent and the cost of Grade A space in the Central Business District (CBD) was as low as less than Bt400 per square metre. But today conditions are different."

With rising rentals and low vacancies, Longlom added that some building owners are looking to dispose of their office properties to capitalise on the asset value appreciation.

From an investor's point of view, the Bangkok office market is currently one of the most promising property sectors. Investment grade buildings are offering yields of between 5.5 and 7 per cent and, equally importantly, are considered low-risk due to favourable market conditions.

Supply is very limited, vacancies are falling, demand is strong and rents are rising rapidly, said Longlom. The trend is set to continue in the short to medium term, he said.

Longlom's comments are backed by Jones Lang LaSalle's latest study, which shows that the average vacancy rate for office space across Bangkok dropped to 13.2 per cent in January from 18.3 per cent in January 2005.

In the CBD, the average rate is 11.8 per cent, although most of the prime grade buildings are enjoying full occupancy.

Caroline Murphy, head of commercial markets at Jones Lang LaSalle, said the average vacancy rate for office space across Bangkok is likely to drop further in the short to medium term, as new supply exceeds demand.

According to the study, there are currently 463,000 sqm of space under construction and planned for completion by the end of 2008, while the average annual take-up rate over the past three years has been about 300,000 sqm.

The study also shows that the average rental for office space across Bangkok - now about Bt365 per sqm per month - is up almost 25 per cent higher than last year. The average rate for Grade A space in the CBD is more than Bt610 per sqm per month.

Conditions have continued to support landlords' in commanding higher rental rates. In some prime Grade A buildings in the CBD, rents top Bt900 sqm per month, Murphy said.

She said she expected the average rental for office space in Bangkok to rise by 15 to 20 per cent this year.