Bangkok retail rents rose in prime downtown locations in the second quarter, yet there was a decline in midtown locations, despite retailers migrating there.
According to research from real estate specialist Edmund Tie & Company, occupancy rates in both downtown and midtown remain strong as supply in the downtown area was limited. While tenants started to take space in newly launched retail malls in midtown areas, rents dropped to THB1610 (US$47.82) per square metre per month in the midtown area. They remained stable downtown, up 1.15 per cent year on year at THB2630 per sqm (US$78.60).
However, retail occupancy rates decreased to 94 per cent in downtown and 89.8 per cent in midtown during the quarter.
Three upcoming retail developments are scheduled for completion in midtown this year: IconSiam (51,500sqm), the adjacent Takashimaya Department Store (36,000sqm) and Ari Hills on Pahonyothin Road, (1500sqm).
Edmund Tie & Company said developers have been more cautious in recent years in the downtown market, partly because many Thais have put spending on hold in light of household debt.
“Tourism continues not to be a significant source of customers for many retailers beyond prime downtown locations. Although several downtown developments have been delayed previously, there has been some progress recently. EmSphere established a projected deadline of 2020 as the site has been cleared for construction.”
EmSphere is adjacent to the Emporium and EmQuartier shopping centres on Sukhumvit Road, interlinked with the Phrom Phong Skytrain station.
“The downtown retail market in Bangkok is dominated by a small number of landlords but with a growing number of mixed-use developments with key retail components, the number of retail landlords will increase,” concluded the report. “Food and beverage tenants remain keen to expand in the Thailand market and there is increasing competition for choice units in new mixed-use developments.”