Demand slowdown accompanied by selective international leasing focused on operationally efficient space formats

• In Q2 2026, Bangkok’s prime retail market experienced weakened consumer sentiment due to elevated household debt and rising energy price, though government stimulus measures provided partial support for consumer spending, maintaining relatively stable demand.
• International leasing remained robust, led by F&B expansions from Asian chains, alongside continued growth in the household goods sector. Average new lease sizes declined significantly as tenants adopted selective expansions and efficient store formats.

Modest vacancy rise amid diverging absorption trends across the market

• Prime retail stock remained stable at 3,863,200 sqm in 2Q26 with no new supply additions. Vacancy increased marginally by 14 bps q-o-q to 4.7%, align with Q2 2025 levels. Over half of prime centres experienced tenant departures, with no distinctive pattern observed.
• This relative stability reflected gradual absorption in retail centres opened in previous years, the absence of new competitive supply in H1 2026, successful reopenings of renovated malls, and strong leasing momentum carried forward from year-end 2025 through Q2 2026.

Developers prioritising cost control measures amid rising operational expenses

• Bangkok’s prime retail gross rents increased 1.0% q-o-q in Q2 2026. Excluding adjustments for prime supply reclassification, the quarterly growth showed modest improvement only by 0.6%.
• Ongoing macroeconomic headwinds including heightened energy costs, weak consumer sentiment, and subdued tourism constrained rental growth as developers focused on preserving margins. Transaction volumes remained subdued, keeping yields broadly stable.

Outlook: Tourism headwinds and energy cost pressures drive cautious developer sentiment throughout 2026

• Tourist-oriented malls face continued footfall pressure as Middle East conflicts delay tourism recovery, particularly from high-spending regional visitors. Prolonged uncertainty fuels inflation hike and slows economic recovery, further weakening domestic sentiment.
• Rising energy costs continue to pressure margins, prompting a more cautious investment approach. As a result, major developers have delayed under-construction projects by quarters and pushed back proposed pipeline projects by several years.