APPD Market Report Article

Bangkok

December 1, 2021

-5.4%

THB 2,245.2

Rents
Stable

New leasing activity still observed amid uncertainty

  • Despite not being able to track prime grade net absorption due to the COVID-19 lockdown in 3Q21, our specific survey on almost half of the prime retail stock in the first two weeks following the end of the lockdown indicated that most prime grade retail centres were faced with negative absorption. Moreover, around 2%-10% of total tenants in each centre were still temporarily closing their stores.
  • However, the movement of some brands can still be seen. At least 12 brands have opened new branches and 2 brands have expanded their stores in existing centres. F&B and household tenants took the majority share of recent occupied space in 3Q21. The notable brands in 3Q21 were included MUJI, Saemuel, GWM Experience Center, SUSHIRO, Maison Kitsune x Café Kitsune and Bang & Olufsen.

Lockdown responsible for the delay of new completions

  • In 3Q21, prime grade retail stock remain unchanged at 3,537,517 sqm due to the postponed construction completion caused by lockdown restrictions. The Mall Lifestore Thaphra Renovation, which was scheduled to open some renovated sections in 3Q21, was postponed and is now planned to open fully renovated in 4Q21.
  • Prime grade vacancy rate was unchanged at 4.5% in 3Q21, as field surveys were made impossible due to the lockdown restrictions in between July and August. Meanwhile, the specific survey on almost half of Bangkok’s prime grade stock found an increase in vacancy rate of most surveyed centres. A number of brands were noticed to have closed down a number of their branches.

Rental pressure driven by the lockdown sent yields below 2-digits

  • In 3Q21, prime grade gross rent stood at THB 2,245 per sqm, but net effective rent decreased to THB 1,482 per sqm due to the lockdown restrictions. As a result, gross rent decreased by -5.4% y-o-y, and net effective rent was down -12.5% q-o-q and -18% y-o-y. The enforced lockdown in 3Q21 was the main contributing factor leading to the decrease in rental value.
  • Capital values rose slightly by 0.2% q-o-q and 3.5% y-o-y to THB 198,015 per sqm. Despite there being 1.5 months of lockdown restriction in 3Q21, capital value growth was positive due to the asset enhancement and expansion in several retail centres, including The Mall Lifestore Thaphra Renovation, Central Rama 2 expansion and Siam Paragon rezoning on ground floor.

Outlook: Easing of COVID-19 lockdown to boost footfall

  • Although the number of COVID-19 cases is considerably higher compared to the same period last year, the foot traffic in retail centres is expected to return by the end of lockdown in September. However, retailers will still face poor retail sales mainly due to the economic slowdown and the uncertain situation caused by the pandemic.
  • New supply over the next 12-months will come from four projects including The Mall Thapra renovation, an expansion of CentralPlaza Rama II, Central Village Phase 2 and Terminal 21 Rama 3. If all four projects are completed as scheduled, a total 166,000 sqm will be added to prime grade stock by the first half of 2022.

Note: Bangkok Retail refers to Bangkok's prime retail market.

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