Average retail rents in downtown Bangkok locations increased by 3.1 percent quarter-on-quarter (q-o-q) and 12.9 percent year-on-year (y-o-y) during Q2 to stand at THB 2,630 per sqm per month, but in contrast rates in midtown locations remained unchanged at THB 1,560 per sqm per month.
The supply of retail property space in downtown Bangkok continued to expand during Q2 2015, with the main newcomer being The Mall Group’s new ‘The EmQuartier’ on Sukhumvit Road boasting 50,000 sqm of retail space.
According to real estate firm DTZ in its latest research report, the total retail stock in midtown Bangkok as of Q2 2015 was 1,322,493 sqm, an increase of 3.9 percent q-o-q and 6.2% percent y-o-y.
The completion of EmQuartier was the only supply addition during Q2 in the downtown area and there are no further developments expected to complete during the rest of the year, however there is a large amount of new supply set for 2016, with an additional 260,000 sqm of new retail space in the pipeline. A large proportion of this supply will be Emsphere which is set to have a gross floor area of 200,000 sqm.
The midtown area of Bangkok also saw an expansion of stock this quarter. Total retail stock increased to 723,456 sqm, an increase of 2.5 percent q-o-q and 14.2 perent y-o-y. This was driven by the launch of Suan Lum Night Bazaar on Ratchada Road with 17,820 sqm of retail space.
Occupancy rates increase in downtown but decrease in midtown locations
The average occupancy rate in the downtown Bangkok retail market in during Q2 marginally increased to 91.5 percent from 91.4 percent in Q1, according to DTZ. The increase in the occupancy rate was largely due to the movement of tenants into The EmQuartier shopping mall. DTZ expects occupancy rates will remain stable during the next quarter.
The midtown area has witnessed average occupied retail space decline to 92.5 percent during Q2, from 93.1 percent in Q1. The retail market in the midtown area is highly competitive with a number of landlords trying to assert their dominance, and with a large amount of stock scheduled for completion during the next three years.
DTZ noted that at present, most tenants are continuing to expand their businesses in newly launched retail projects. Among the upcoming new retail developments this year are 72 Courtyard on Sukhumvit 55 (Thonglor) and Habito community retail project on Sukhumvit 77.
Developers in the midtown market will continue to launch new retail projects for the rest of 2015, and approximately 127,553 sqm of retail space is expected to be completed in the midtown area of Bangkok this year.
Retail space rents increase in downtown locations
The average rent in downtown locations during Q2 2015 was THB 2,630 per sqm per month, increasing by 3.1 percent q-o-q and 12.9 percent y-o-y. In contrast average rents in midtown locations remained unchanged at THB 1,560 per sqm per month despite the completion of new stock.
DTZ said it expects retail rents in downtown locations to stay at a similar level for the remainder of the year. For midtown locations it expects to see a steady increase in rents.
The increase in rents will be due to the upcoming completions of new midtown community malls and on site retail spaces.
