South-east Asia office renovation costs stayed low in 2020

THE cost of renovations in South-east Asia generally stayed cheaper than in the rest of the Asia-Pacific in 2020, although prices are still expected to grow in the year ahead.

Bangkok overtook Ho Chi Minh City as the cheapest urban centre for office fit-outs in the Asean region, while Singapore, the most expensive city, saw costs fall year on year.

That's even as the average fit-out cost rose by 4.7 per cent to a regional average of US$93 per square foot (psf), according to JLL's latest Asia Pacific Fit-Out Cost Guide.

But almost all of South-east Asia's major cities stayed below this average - even though renovation expenses grew faster in some markets than others.

The cost in Bangkok for an open-floor plan office, with upgraded lighting, cabling and design, was unchanged on the year before, at US$66 psf.

Vietnam's Ho Chi Minh City was second-cheapest, despite a 11.1 per cent jump in costs to US$70 psf, followed by Hanoi, which was up by 7.5 per cent to US$72 psf.

Jakarta office redesigns cost 8.5 per cent more, at US$77psf, while Kuala Lumpur costs increased by 3.9 per cent to US$80 psf and Manila by 5.1 per cent to US$83 psf.

In Singapore, the average fit-out cost slid by 9.8 per cent year on year to US$101 psf, with JLL noting that "a recession in 2020 is denting demand for office space".

To be sure, the real estate firm projected regional prices to climb in 2021, on challenges such as labour shortages, the availability of materials and higher delivery costs.

Martin Hinge, executive managing director of project development services at JLL Asia Pacific, said that many organisations are modifying their offices in response to the Covid-19 pandemic.

Changes on the table are set to include "de-densification measures" and technology to allow more in-office collaboration and remote working.

"Though fit-out costs vary from market to market around the region, we believe the overall upward trend will likely remain in 2021," he added in a statement.

But markets such as Bangkok and Manila could see fit-out costs hold steady or dip, JLL added, noting that construction service providers and contractors are cutting prices.

For example, contractors' stiff competition for work in Manila could offset cost increases in areas such as health and safety in the near to medium term, the report said.