Bangkok’s retail growth to depend on government support: report

Activity revived in Thailand’s industry in Q4 2021 but outlook remained muted.

The improvement in Bangkok’s retail market in coming months will mainly depend on how much the Thai government will provide support, especially in facilitating consumer spending in Thailand’s capital city in 2022, according to a report from CBRE.

Thailand’s retail industry started to be active again in Q4 2021 due to the country’s improved sentiment from relaxed COVID measures both domestically and for international tourist arrivals, the report stated.

However, concerns of new COVID variants, such as the surge caused by the Omicron variant early this year, meant that optimism was cautious in Thailand and Bangkok and the expectation was that 2022 will begin without any clear picture of recovery.

As of Q4 2021, 600,000 square metres of net leasable retail area was under construction in Bangkok. The large new retail developments expected to be completed between 2022 and 2023 are such as Terminal 21 Harbour, The EmSphere, and Central Village (Phase 2).

Retail landlords must need to keep focusing on adjusting rental structures and lease clauses relating to flexibility to tackle the uncertainties in the market, the report stated.

“Both landlords and retailers will have to continue evolving together. Landlords will need to collaborate more with tenants to differentiate their experience and bring back traffic to their physical stores,” CBRE said.

The total retail supply in Bangkok climbed 1.3% YoY to 7.9 million square meters in Q4 2021, according to the report. At the same time, overall occupancy rate dropped 0.9 ppt when compared with the same period last year.

Retail sales index jumped 27 points or a 10.9% in November 2021, according to the Bank of Thailand. Thailand’s consumer confidence index (CCI) also rose to 46.2 in December 2021 from a month earlier, but dropped 3.9 points or a 7.7% YoY decline. 

CBRE has estimated that around 1.3 million square meters of retail space are either being planned or under construction as of the quarter.