Short-term dip follows the resumption of tenant reshuffling

• Bangkok’s prime retail sector experienced a slowdown in leasing activities, recording a negative net absorption of 20,000 sqm. This fluctuation was a result of strategic tenant reshuffling and renovation activities, rather than a market downturn.
• Demand from international brands remained robust, with approximately 100 deals recorded in Q1 2025. Luxury brands continued to expand in tourist-centric malls, while mass-market fashion, F&B and household tenants maintained strong growth across the market.

Vacancy rate rises to a three-year high as new large-scale openings struggle

• The prime retail vacancy rate increased by 51 bps q-o-q to 5.2%. This uptick stemmed from resumed tenant reshuffling and the market’s ongoing absorption of new supply from large-scale projects opened at the end of 2024.
• No new supply was recorded in Q1 2025. The market remained dynamic, particularly in decentralised areas, with significant ongoing renovations and a pipeline of large-scale projects, more than half of which were expected to be completed by the end of 2026.

Modest rental increases limit capital value growth

• The market recorded a minimal increase in gross rents of 1.4% q-o-q. This deceleration, compared to the high growth of the past two years, was driven by subsiding post-pandemic recovery tailwinds and the absence of new project completions.
• With minimal supply movement, demand fluctuations and modest rental growth, capital values saw only a marginal increase, while market yields remained stable during the quarter.

Outlook: A challenging year amid high competition and demand uncertainties

• High competition in Bangkok’s retail market is expected to continue, with supply pressure from the introduction of new and refurbished centres across all segments likely to drive innovative retail concepts as developers strive to differentiate their offerings.
• The market is set to face another challenge from a disrupted tourism recovery due to security concerns and earthquake effects. As Thailand’s economy and retail sector are heavily reliant on tourism, this could impact the near-term growth across the prime retail market.