Bangkok’s prime retail occupancy rates nearly hit pre-pandemic levels

Average occupancy rate was 98.7% in Q2 2021, almost the same level of 99.1% in Q1 2020.

Between 2016 and 2020, Savills reveals that Bangkok’s retail supply increased by almost 1.1 million sq m, with total retail supply reaching 8.22 million sq m (NLA) with an average annual growth rate of 1% YoY. 2.16 million sq m of the supply is considered to be prime retail, distributed over the CBD, downtown, midtown and suburban areas. 

There were no retail developments launched in 1H/2021, though there is 300,000 sq m of new retail supply expected to complete by 2024. Compared to the previous five years, the overall future retail supply is growing at a similar rate of approximately 1% per annum on average, though the rate may continue to reduce as developments are delayed/ postponed. 

Here’s more from Savills:

The impact of COVID-19 has led to some developments delaying their construction phases, the most notable being Bangkok Mall, a large mixed-use scheme on Bangna-Trad Road, and One Bangkok, a large mixed-use scheme on Rama 4 Road, which have delayed their final phases from 2020 to 2023 and 2024 to 2027, respectively. Both developers, The Mall Group and Fraser Property, have announced that further delays would be considered if market conditions continue to deteriorate. It is likely that other developers will follow this trend, especially in cases where construction has not started yet.

Average occupancy rate across Bangkok’s prime retail in Q2/2021 was 98.7%, maintaining the same rate from Q1/2021. This high rate is thanks to landlords continuing to support tenants with rental deductions, which are usually made on a case-by-case basis. Some malls saw a recovery from the previous quarter thanks to the continuing expansion of popular F&B brands including BreadTalk and Laem Charoen, while the online fashion retailer Pomelo has also continued their bricks-and-mortar expansion. Occupancy rates have almost recovered to the same level as in Q1/2020 which recorded an average of 99.1% demonstrating continued demand for prime retail locations.

Rental rates have remained stable within CBD and Downtown, at THB2,550 per sq m and THB1,713 per sq m, respectively. Savills observes that some landlord’s plan to continue raising prices in the most popular prime malls in the city; we therefore anticipate a slight upward rental trend over the last half of the year. Nonetheless, Tenants who remain affected by the pandemic and the government’s trade restrictions still have bargaining power to negotiate for temporary rental reductions.

Get the full report here.