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Retail rent increases in Bangkok despite downward pressure

By on Dec 16, 2009 in Research, Retail

Bangkok Retail MarketView Q3 09

Bangkok retail rents are positiveAlthough there is still downward pressure on rents, retail rents slightly increased in line with the economic recovery. The Consumer Confidence Index (CCI) and retail sales both saw an increase in Q3. Overall, there are signs of improvement in the retail sector, however continued improvement will depend on the speed of global and local economic recovery coupled with a stabilized political environment.

Bangkok’s total retail space stood at 5.26 million sqm. Supply increased in both downtown and suburban areas, while there was no new supply in the midtown area during the quarter. The shopping mall format accounted for the highest percentage of total supply, with 53.3% of total retail space. There were three new retail centers completed in this quarter, with a total area of 36,604 sqm. Only Digital Gateway was located in the downtown area. Retail occupancy increased slightly to 92.4%, with suburban areas recorded the highest take-up.

Outlook

Bangkok Retail MarketView Q3 09New shopping experiences and new formats are also being introduced into the market. These things force the key players to constantly reassess their approaches in order to stay strong in the ever-changing environment. Several new mixed-use projects with retail podiums are also planned; maximizing rentals may prove difficult without the presence of an anchor tenant.

Developers continue planning to build community centres, which rely on having a supermarket as an anchor tenant. The problem is that some of the main supermarket operators, such as Tops and Tesco Lotus, are also developers themselves. Therefore, they normally choose to anchor on their own developments rather than leasing from third party developers.
Retail Rates – Q3 – 2009 (full report)

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