New retailers in Thailand should focus on this shopping mall

This mall’s daily footfall exceeds 150,000 people. 

A recent report by Savills notes that from a low base in 2020, the Bangkok retail sales index continued to rise through 2021, followed by another 8% YoY increase in Q1/2022 to 279 points, higher than the 264 points recorded back in Q1/2019 in pre-covid times. 

According to the report, the retail market has continued to recover after the government has gradually relaxed lockdown restrictions and curfew measures as well as selectively reopened to fully vaccinated tourists since Q4/2021 through various entry schemes. Thailand was one of the first countries in the Asia Pacific to reopen, and the influx of returning international tourists has brought new impetus to retail sales. 

Here’s more from Savills:

In 2022, the Thai government expects to welcome about 10 million foreign visitors, which is around 25% of 2019’s pre-covid total, with Europe and the United States the two largest sources. Chinese tourists, another key source in the past, are likely to remain absent amid China’s ‘zero-covid’ policy. 

In Bangkok, Central Embassy, EmQuartier, and Gaysorn Village maintain a significantly higher rental average than other prime retail developments, as they typically fill their space with high-end to premium tenants.

In the case of Central World, Emporium, ICONSIAM, Siam Center and Siam Paragon, these shopping malls typically have a more diverse and balanced trade mix and target a wider range of customers. Despite the relatively lower average rent, they also have a high footfall as well as domestic resilience. Among which, Siam Paragon remains the dominant incumbent shopping centre with a strong luxury component. 

The Luxury Lifestyle Awards (LLA) selected Siam Paragon as the Best Luxury Shopping Mall in Thailand this April. Any new entrant to the market would do well to focus on this centre because of its huge drawing power and its footfall of over 150,000 people a day. Under the mall owner and operator Siam Piwat, its other flagship, IconSiam, has also attracted a lot of market attention since its opening. Retail sales at IconSiam soared 43% in Q4/2021, recording the strongest growth in three years.

Aside from the expectation of a stronger economy enjoying pent-up tourist demand, the luxury market may also benefit from the upcoming supply of new shopping outlets, notably the Dusit Central Park (80,000 sq m, NLA) and One Bangkok (80,000 sq m, NLA) projects. Dusit Central Park is a THB46 billion mixed-use redevelopment project on the site of the old Dusit Thai Bangkok Hotel. It will feature a 250-room hotel, a 69-storey luxury residence, an 80,000 sq m shopping complex and a 40-storey office tower upon full completion. The retail portion is slated to open in early 2024 and is expected to draw interest from many luxury retailers thanks to the strength of its prime location and the reputation of veteran developer, Dusit International. Similarly, One Bangkok is also a large-scale mixed-use project with office, retail, residential and hotel components, scheduled to open in Q4/2023.

In terms of rental performance, prime retail rents in Bangkok have continued to trend downwards since 2019. The average rent fell from THB2,141 in Q1/2019 to Q3/2020 at THB1,999 per month per sq m, resulting in an average drop of 1.7% QoQ. Since then, prime retail rents have seen a mild recovery, stabilising at THB2,087 per sq m per month in Q4/2021, with an average occupancy rate of 97.2%. 

Looking forward, retail market conditions should continue to improve as the country further eases border restrictions, granting quarantine-free entry to tourists from May 2022. Nonetheless, we anticipate a soft recovery ahead until the city’s international visitor arrivals return to pre-covid levels.