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Bangkok Retail Space – High Occupancy Rate in City

By on Dec 18, 2013 in Property News, Retail

Thailand’s retail property market has showed strong growth, with Bangkok continuing to experience an occupancy rate of 95.4 per cent and a number of international brands opening branches this year and next, according to a survey by CBRE Thailand.

The company’s research shows that international brands expanding their business lines in the Thai market in the third quarter included the fourth store of Christian Dior, at Siam Paragon; the second outlet of Tory Burch, at The Emporium; and the first store of Miu Miu, located at Siam Paragon.H&M also opened its flagship store at CentralWorld.The report also shows that the overall occupancy rate for Bangkok retail space stayed at 95.4 per cent as of the third quarter. The total supply was 6.28 million square metres, a 2.6-per-cent increase year on year.On top of that, a total of about 120,000 square metres of space in shopping malls and department stores is expected to be completed during the current quarter, bringing the total retail supply to 6.39 million square metres by year-end.Jariya Thumtrongkitkul, CBRE Thailand‘s senior manager for retail services, said that looking at the overall Asia-Pacific markets, retailer demand for leases in the third quarter continued to be led by fast-fashion retailers, as groups in this sector entered new markets and introduced sister brands to locations where they already have a presence.Japanese and South Korean groups in the fast-fashion and cosmetics sectors in particular were hungry for cross-border expansion, while department stores also became more active.

Likewise, for the luxury sector high-end brands continued to add new stores in Beijing and Shanghai, but were more focused on core areas in top cities as opposed to expanding elsewhere.

Entry of high-end retailers

In particular, in Southeast Asia, rising demand for new trends and styles from the emerging middle class continued to spur the entry of fast-fashion retailers into key markets.

In the third quarter, H&M launched its first store in Jakarta in early October, after the opening of its new flagship store in Bangkok. Zara opened its first store in Hanoi and its sister brands Bershka and Stradivarius established their first outlets in Manila.

Retailer demand is expected to remain firm overall, and will continue to be led by bridge brands and mid-range fashion groups, with many retailers in these categories focusing on key markets in China and Southeast Asia for new-market entry and expansion.

In markets where they are already established, retail groups are looking for brand extension opportunities to launch their related brands in premium locations, said Sebastian Skiff, executive director, CBRE Retail Asia.

“We expect core luxury retailers will remain active, although most groups already established in key markets such as Beijing, Hong Kong, Shanghai and Tokyo are now focusing the upgrading and repositioning of existing stores to improve customer experience.

“The relatively newer-to-market category now actively opening stores in the luxury segment are the creative or affordable luxury brands that will continue to build their presence across core markets like Shanghai, Beijing, Chengdu, Hangzhou and other key Chinese cities,” he said.

CBRE expects overall retail rents in the region will most likely continue to experience slight growth over the next three to six months.

In key markets such as Hong Kong, Shanghai and Singapore, slightly more subdued demand combined with a lack of space in core locations and high rents will continue to restrain retailer expansion and limit further rental growth.

Retailers in these markets will continue to focus on key requirements in core areas, a trend that will impact rents in secondary locations, said Jonathan Hsu, director, CBRE Research, Asia-Pacific.

Despite weaker consumer sentiment in emerging Southeast Asian markets in the third quarter, the likes of Bangkok, Manila and Jakarta should continue to see steady rental growth. All these markets continue to see robust leasing demand and strong competition for space.

Nora has been in the Corporate Communications arena for a number of years. Nora's role is to communicate all newsworthy items that are of a PR nature.

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