Spillover demand from 2025 helps mitigate seasonal fluctuation

• In Q1 2026, Bangkok’s prime retail market faced persistent economic pressures from subdued consumer spending, tepid tourist arrivals and geopolitical tensions, which collectively weighed on demand. Despite this, leasing activity held steady on robust tenant inflow.
• The household-goods category emerged as a new key driver with variety store expansion, while Asian F&B chains and mass-market fashion brands sustained momentum from 2025. Total leasing transaction volume remained on par with the preceding quarter.

Vacancy stabilises as new supply inflow stalls

• Prime retail stock declined by 11,400 sqm to 3,863,200 sqm in Q1 2026, following the reclassification of ageing centres whose physical attributes and market positioning no longer meet modern prime standards. No new supply was delivered during the quarter.
• Prime vacancy rate remained resilient, recording marginal upticks. This stability was driven by strong year-end leasing momentum carrying into Q1 2026, gradual absorption in existing centres as supply additions paused and delayed effects from geopolitical tensions.

Slow rental growth keeps yields stable

• Bangkok’s prime retail gross rent rose 1.9% q-o-q to THB 2,722 per sqm per month following asset reclassifications. Excluding this effect, underlying growth softened to 0.6% q-o-q, reaching the lowest level since the post-pandemic period.
• Weakened economic conditions have dampened consumer and tourist sentiment, weighing on rental growth as landlords continue to prioritise occupancy over rent. Market yields remain steady, cushioned by the removal of non-competitive assets from the prime basket.

Outlook: Middle East conflict to pose a significant challenge to the market throughout 2026

• Malls in Bangkok’s CBA are likely to see further declines in footfall as ongoing Middle East conflicts weigh on tourism recovery, particularly as the region has emerged as a key source of high-spending visitors following the slowdown in Chinese arrivals after COVID.
• Prolonged uncertainty will contribute to inflationary pressures and a slower overall economic recovery for Thailand, affecting domestic consumer sentiment and leading to higher energy costs, which will put further strain on developers’ bottom-line performance.