Several developers continue to postpone retail projects planned for Bangkok, CBRE Thailand’s Retail Marketview Q1 report revealed. Massive shopping complexes including EmSphere, Mega Rangsit, Bangkok Mall and Central M. are among the projects that have been delayed due to unfavorable economic conditions as well as increased competition in Bangkok’s retail market.
The report added that developers are focused on renovating and repositioning existing malls along with selectively expanding in provinces upcountry. This has caused newly built retail supply in Bangkok to slow down. Only nine new retail developments opened in the first quarter of 2016 and none of this new supply was large-scale.
There has been a significant increase in competition in Bangkok’s retail market during the past few years with several large-scale projects being completed. However, the report noted that not all shopping centers will perform and occupancy rates have already dropped in some of the old or poorly managed malls. The occupancy rate in the first quarter of this year checked in at 92.9 percent, dropping by 0.3 percent q-o-q.
There are still no signs of recovery in the retail sector and domestic demand remained weak during the first quarter. Unless this demand starts turning around, CBRE Thailand stated that they do not expect the delayed projects to begin construction anytime soon. The consultancy also believes that the retail occupancy rate will bottom out this year due to the combination of low future supply and the completion of refurbishment at major retail centers. Rental growth in the long term, however, is expected to be limited as competition for space remains high.
Physical retailers will face more competition from e-commerce which remains a rapidly expanding sector. Growth in online shopping is expected to continue this year and retailers will have to create more attractions and give consumers a reason to visit their physical store. Other retailers including the Central Group could also look to expand their e-commerce offerings to keep pace.
