Bangkok prime retail rents rise by 5.2% in Q3

This indicates that rents are finally stabilising.

Prime gross rent in Bangkok’s retail segment increased slightly by 2.4% q-o-q and 5.2% y-o-y to THB 2,193 per sqm, per month, reflecting the recovery in footfall and rent stabilisation following the pandemic, according to JLL. 

Furthermore, the introduction of new high-quality supply and asset enhancement programmes is anticipated to drive the upward trend in rents. 

Here’s more from JLL:

Capital values also experienced a rise of 2.1% q-o-q and 3.4% y-o-y to THB 193,678 per sqm. Positive changes are expected due to asset enhancements in existing malls, while market yield is anticipated to compress as rents and capital values increase.

Emergence of new demand presents opportunities for landlords

In 3Q23, the market saw sustained demand from F&B, fashion and household tenants in the formats of new flagship stores and branch expansions. This emerging demand reflects the ongoing popularity and growth potential of new retail centres.

Prime malls have been on an upward trend as approximately 6,000 sqm was absorbed, driven by trendy F&B tenants that filled vacant units, which also created opportunities for landlords by attracting more foot traffic. This trend reflects the ongoing demand for unique and experiential retail experiences, driving strong leasing performance across the market.

No new supply, while tourist arrivals drive foot traffic

In the quarter, the Prime grade retail stock remained at approximately 3,493,700 sqm, as there were no new completions. However, several ageing retail centres in Bangkok are currently undergoing partial renovations, and are scheduled to be completed in 2024.

Prime grade vacancy rate declined to 3.9% in 3Q23, almost reaching pre-pandemic levels thanks to the increase in international tenants. Despite declining consumer sentiment influenced by political uncertainties, significantly higher tourist arrivals were recorded, contributing to the improvement of foot traffic, especially in centrally located shopping destinations.

Outlook: Tenants adapt strategies for improved competitiveness

Existing tenants are adapting their strategies to enhance competitiveness and optimise spaces for efficiency, alongside the introduction of new brands. Meanwhile, landlords are leveraging gross-profit rental agreements to secure high-performing brands.

Tenants are reassessing their business models and leveraging rebranding and portfolio expansion strategies to attract a larger customer base, primarily focusing on prime centre locations. This continuous drive for improvement both benefits tenants and contributes to the growth of the overall retail market.

Note: Bangkok Retail refers to Bangkok's prime retail market.