Bookmark & Share
Thailand’s retail sector has been impacted hard by the weak economy and a drop in consumer confidence, according to new research which stated both supply and competition are increasing in tandem.
Real estate firm CBRE noted that Thailand’s Consumer Confidence Index was lower during Q1 2015 than Q1 2014, and that the Retail Sales Index has fallen by 4.8 percent year-on-year.
According to CBRE, provincial retail markets appear to have been hardest hit as consumers in these areas have less disposable income as a result of poor agricultural prices, fewer handouts from the Thai government and high personal debt levels.
It said the only bright spot was the 24 percent year-on-year increase in tourist arrivals during the first three months of this year, driven by a stunning 96 percent rise in tourists from China who now make up one in four of all tourists to the kingdom.
Retail take-up continued to grow with an additional 25,000 sqm occupied during the quarter. It said that some developers have been able to increase retail rentals for a few central Bangkok properties, partly due to discounts given during the first half of 2014 at the height of the kingdom’s political protests.
CBRE said that overall it will be difficult for my retail developers to raise rents while consumer demand is weak, except in the best-performing shopping centres.
It added that the performance of Community Malls, many developed by private investors on family land, is very mixed.
Highlighting the late March opening of the 50,000 sqm EmQuartier shopping centre, it said that even though all units have not been occupied it appears to be attracting customers due to its tenant mix.
Construction has continued on many new malls that will add 1,000,000 sqm of supply to Bangkok’s modern retail property stock over the coming three years, which amounts to a 15 percent increase on current levels.
“New developments are going to put pressure on older developments, especially if total spending power does not significantly increase. New shopping centres may cannibalise customers from existing shopping centres, so not every new mall will be a winner and some older malls will suffer,” it concluded.
This story first appeared on DDproperty.com.
Edited by Nikki De Guzman for CommercialGuru.
Related Articles: