Despite the economic slowdown and diminishing consumer confidence, Bangkok’s retail property sector is still surging according to new research.
The current economic situation in Thailand has not met the government’s expectations and most Thais have reduced their expenses, which has directly impacted all shops and retail centres.
In spite of these facts Colliers International Thailand has noted that nearly 724,920 sqm of new retail space is expected to open in the second half of 2015 – most of which will be located in Bangkok’s suburban areas.
Some large-scale retail projects are under construction and scheduled to open in the next six months, and big retail players still dominate and have the largest share in the retail business according to the real estate agency.
Some large-scale shopping malls have postponed their completion dates and some projects have been rescheduled to 2016. Colliers also reported that some large-scale shopping malls located in the Bangkok suburbs have cancelled their projects entirely and may convert to smaller retail projects.
Occupancy rates in all areas during Q2 were nearly the same as those seen in the previous quarter, according to Colliers. The average occupancy rate in the city area was around 97 percent although the suburban area had the highest occupancy rates with many superstores and shopping malls in the area being almost fully occupied.
Many retail experts forecast that total retail sales in 2015 will only grow by 9 percent, the lowest in the past six years.
Average rental rates of all locations in Bangkok and its surrounding areas in Q2 were still similar to those of the previous quarter however many international brands and shops are still more focused on increasing the number of their stores, since Thailand still has room to grow in the long-term.
The city zrea has the highest rental rates, which Colliers said are probably higher than THB 3,000 to THB 4,000 per sqm/month at some shopping malls in prime locations, or those with direct access to BTS stations. The rents in the Bangkok’s suburbs were around THB 800 to THB 3,500 per sqm/month, but the average rental rate was approximately THB 1,270 per sqm/month according to the real estate firm.
Looking ahead, Colliers said consumer confidence and retail sales indexes will likely be similar to what they were during the first half of the year. Community malls will grow, but with a declining trend in the future due to the fact that many of these projects have been unsuccessful in the past.
Some major retailers in Thailand have planned to renovate their retail centres after more than 10 years in operation and add some new brands and shops to increase the appeal of these centres, as well as relocating some of the tenants.
All the big players in the retail business will continue to increase the number of their shopping malls in Thailand, especially in the suburban area around Bangkok and in some of the major Thai cities.
