Bangkok’s retail market is now “the most competitive it has ever been” – yet there is another 1.1 million sqm of retail space under construction.
When complete, by the end of 2017, that will bring the total completed supply of mall space in the Thai capital to nearly 8 million sqm – all in a market currently characterised by weak consumer sentiment and slow retail sales growth.
But despite the intense competition, a leading property expert says Bangkok retail rents – in malls, anyway – are holding firm.
In a column (which you can read in full here) written for the Bangkok Post Spectrum magazine CBRE Thailand MD Aliwassa Pathnadabutr, says the proliferation of new brands setting up shop in Bangkok, and the expansion of existing branded chains is fuelling unprecedented competition in the city.
“In the upcoming festive season, we expect to see major retail developers competing with heavy promotions and retail events in a bid draw consumers and capture their holiday spending,” Pathnadabutr asserted.
“The expansion by retail developers in the CBD and suburban areas, entry of new local and international retailers, combined with a challenging economic outlook and weak consumer sentiment is all adding up to the mix.”
Pathnadabutr says the recent openings of EmQuartier and Central Embassy have intensified competition for existing CBD malls like the high-end Gaysorn, and the giant CentralWorld and Paragon centres.
“As the major retail centres are chasing after the same group of consumers, retail events and promotions have become ubiquitous leading to a cut-throat competition and heightened promotion campaigns, particularly gearing up to the festive season where consumer spending typically peaks.”
Expansion and development of suburban centres – like the Future Park Rangsit expansion which marked its soft opening in the last fortnight – may draw customers away from the CBD malls, although Pathnadabutr expects their impact to be limited and growing tourist base will keep the numbers up in the larger centres.
Despite the competition, retail rents have held their own in Bangkok, according to Pathnadabutr.
“It is often difficult to measure retail rents as there is a big range even within a single development. Prime retail rents in Grade-A downtown shopping centres range from THB1800 to 4500 (US$50 – $125) per sqm per month for ground floor spaces and THB1200 to 2380 (US$33 – $66) per sqm per month for suburban malls.
“This level has been maintained throughout 2015 despite the growing competition.”
- Read Pathnadabutr’s full analysis (in English) here on the CBRE website.