Bangkok Increasing Retail Market

The total supply of retail space in Bangkok has shown the biggest quarterly increase since 1997. This trend is likely to continue throughout 2006-2007 as supply is expected to increase further. On the other hand, the rentals have generally remained stable and expected to continue the trend at least for the next 6 months, according to international property consultants CB Richard Ellis.

The supply of retail space increases most notably as a result of the opening of seven new retail centres.

These include two in downtown, namely Siam Paragon, and Platinum Fashion Mall; two in the midtown area, namely SF Ekkamai and Century The Movie Plaza and another two in the city's suburbs, namely SF Petchkasem and Home Pro Village, Bangna plus one superstore in the midtown area; Carrefour Baan Kaek.

According to CB Richard Ellis' research, one interesting finding is that over the last 10 years, the supply of department stores has shrunk from its 1997 peak as weakened operators have closed and their properties have been converted to superstores. Conversely, the amount of shopping mall space has doubled, while space in superstores has increased by a massive 1,000%.

Despite this large increase in retail space quarter-on-quarter, most of the new retail centres have achieved high occupancy levels between 80% to 100%. Rentals have generally remained stable as there is an affordability ceiling for tenants. We expect that the rentals will continue to be steady for the next 6 months.

The current retail supply stands at 4.35 million square meters. We expect new supply to total 314,066 square meters in 2006 and further increase at a slower rate of 100,000 square meters in 2007. The increases will likely be focused more on the midtown and suburban areas since there is less competition and more potential for expansion, with the demand still high.