International brand expansions reaches record high

• The Bangkok prime retail market experienced a positive net absorption of 1,100 sqm, representing a 101.8% q-o-q increase. This was driven by the inflow of tenants in new centres that opened in early 2024 and top-performing centres located in the CBA.
• In H1 2024, a total of 235 international leasing deals were recorded across the prime centres, half of which were in Q2 2024. This figure surpassed the full-year tally for the record established in 1997.

Vacancy rates stabilise with no new supply entering the market

• Prime retail stock remained unchanged in the quarter, with movements limited to within the same centre. Initiatives, such as renovations and tenant reshuffling, were made to enhance competitiveness amidst the anticipation of supply pressure.
• Although several premium centres that entered the market in the past quarters experienced a healthy inflow of tenants, some malls witnessed tenant losses due to ongoing renovations. As a result, the vacancy rate stabilised at 4.7%.

High capital values stabilised yields despite growing rents

• Rents in the Bangkok retail market continued to show positive growth, with a 2.7% q-o-q increase in prime gross rent. Developers’ efforts to control costs and stabilise operating expenses also led to a 2.4% q-o-q growth in net effective rent.
• The ongoing recovery in rents led to a 12.7% y-o-y increase in capital values, surpassing pre-pandemic records. However, concerns over supply pressure counterbalanced the positive sentiment, leading to a stabilised market yield of 8.9%.

Outlook: Recovery in tourism drives growth in retail

• The recovery in tourism is expected to be a key driver behind the growth of the retail sector, both directly by attracting additional footfall to centres that target tourists, and indirectly by contributing to the overall economic recovery.
• The fiercely competitive market is expected to continue, with an additional 218,000 sqm of new supply expected by end-2025. This will force existing centres to continue improving their offerings and implementing fresh ideas to remain competitive.