One of the most promising sectors in Thailand’s property market is undeniably retail. At present there are a total of 6.21 million square meters of retail space across 323 developments in Bangkok. With an occupancy rate of up to 96.5%, the retail market offers good growth prospects over the next five years. According to the Thai Shopping Centers Association, up to 120 billion baht worth of additional investment will be pumped into the retail sector.
The Bangkok retail market has been stable with an average occupancy rate above 90% and retail supply has grown steadily at 5% per year over the last 10 years. In the next five years, retail space is expected to grow by a further 15% to 20%.
This year alone, 23 new retail developments are expected to be completed in Bangkok with a total of 441,000 square meters.
There have been many key drivers in this rapid expansion of Thailand’s retail market, both from the demand and supply side.
The first and most obvious supply driver is the expansion of residential domiciles to new and emerging areas, which creates retail opportunities in new locations. Retail trends tend to mirror residential trends in terms of development areas. This has created demand for both large-scale malls and community malls in emerging residential areas.
Demand for large-scale retail is no longer confined to the inner city, as consumers living on the city fringes want the same retail facilities without the need to commute. This has led to the opening of major retail centers such as Mega Bangna. The growth of community malls has also been in part driven by the convenience factor.
Thailand is seeing the benefit from the entry of so many new multinational brands with large space requirements, as well as local retailers looking for a more modern backdrop to set their brand against. Developers seem to have keyed in on these growth prospects and are quick to launch new developments across the market.
Thailand is a market where most of the younger generation lives in condominium style living with relatively small spaces. This has caused many of them to spend more time outside of their homes in shopping malls, restaurants, and entertainment spots, ultimately contributing to higher retail spending.