Strong domestic consumer demand and astute positioning by the Thai tourism board have made Bangkok a hip shopping destination. Brand hungry shoppers from home and abroad jump on the Skytrain and head for the city centre’s sleek malls like Siam Paragon, CentralWorld Central Embassy and Siam Square One, or take a more leisurely stroll around Asiatique the Riverfront mall and night bazaar beside the Chao Phraya River. Bangkok’s retail landscape continues to diversify, with the opening of HaHa Market and renovations at Central Plaza Bangna, and three high-profile malls scheduled to open in 2015.
Retail sales growth
Current retail stock
New supply forecast
MALL RENOVATIONS IMPROVE COMPETITIVENESS
Demand for prime retail space remained strong, and only a handful of shopping centres performed poorly in 2Q15. International brands continued to show a strong interest in opening new stores, with 41 high-profile retailers opening at EmQuartier, and six brand retailers opening at the newly renovated The Emporium.
RENTS RISE AMID STRONG INTERNATIONAL LEASING DEMAND
As international retailers expanded their presence in Bangkok and domestic demand remained robust, average prime rents increased by 1.7% q-q, to THB 2,418 per sqm per month. Capital values rose slightly less than rents, at 1.6% q-o-q, causing market yields to expand marginally
SIAM DISCOVERY CLOSES FOR RENOVATION
Siam Discovery closed for renovation, resulting in the temporary withdrawal of 26,500 sqm of leasable space. The pre-commitment rate at recently opened centres was high, but the prime vacancy rate increased to 6.3% due to the ongoing renovation of Central Plaza Pinklao and a handful of poor-performing malls.
OUTLOOK: PRIME NEW SUPPLY WITH HIGH PRE-COMMITMENTS
Three prime projects, Central Plaza Westgate, Central Festival East Ville and Zpell, plus three centres under refurbishment should be completed by Q116, adding 305,000 sqm of retail space. Vacancy rates may fluctuate, but strong leasing activity plus high pre-commitment rates in the new and refurbished malls should push rents and capital values higher. Market yields should remain fairly stable.