Retail rental rates in Bangkok rose by 7.8 percent in the 12 months ending June 30, 2015, although the increases appears to be slowing because the rise between Q2 and Q1 of this year stood at just 1.8 percent.
Prices for retail space in Bangkok still remain among the cheapest in Asia, according to the latest research from real estate firm JLL. Hong Kong topped the list of most expensive retail locations with prices standing at US$ 15,642 per sqm per annum. This compared to US$ 667 per sqm per annum in Bangkok.
JLL noted that during the second quarter of 2015, retail rents for the most expensive locations in shopping centres remained relatively stable. Of the 18 surveyed markets only two (Manila and Guangzhou) saw a quarterly rental increase of 2 percent or more for the most expensive locations, while the remainder mostly recorded small increases or flat rents.
The aggregate Asia-Pacific Retail Rental Index increased 0.6 percent quarter-on-quarter, slightly lower than the 0.8 percent in 1Q15.
JLL reported that during the survey period, international retailers continued to show great interest in opening stores in Bangkok, and a total of 41 internationally recognised brand-name retailers opened at the recently completed EmQuartier. Six more international brand-name retailers opened stores at The Emporium, which was recently renovated
Elsewhere, steady demand in China was underpinned by mid-tier fashion brands and F&B. Child-related retailers showed continued strength while luxury brands remained cautious. Quality mature malls continued to outperform and supported rent growth (0.8 percent to 2.8 percent q-o-q) in Tier 1 markets.
Weak retail trading conditions in Hong Kong continued to see retailers adopt a cautious stance. Retailers showed a greater preference towards shopping centres owing to the more favourable rental and marketing packages being offered.
In Beijing, discrepancies between strong and weak projects were becoming more apparent as competition heightens. Recent completions in prime locations have experienced slow leasing as they try to match nearby established competitors’ high rents.
Mid-market fashion and F&B drove demand with support from the kids’ sector. Cath Kidston debuted in Beijing at Taikoo Li South, while iconic American department store brand Macy’s quietly entered under a discount scheme nearby.
Flat to modest rental growth (-0.1 percent to 3.0 percent q-o-q) was recorded in Southeast Asia.
Retail sales in Singapore increased y-o-y in April and May and helped boost retailers’ confidence. Malls in good locations and that consistently have high foot traffic, such as Ngee Ann City, Suntec City Mall, VivoCity and Capitol Piazza, continue to attract new brands.
In Manila, the expansionary trend of local and foreign brands continued. Fashion brands such as Longchamp, Herschel, Old Navy and Staccato opened new branches. New-to-market entrants included Spanish fashion brands Aita and Tous, and British brand Joseph.
The above table shows average net face rents for prime level locations in the best prime shopping centres, and on a net lettable area basis. Net face rents are calculated excluding the tenant outgoing costs and landlord incentives are not taken into account.
JLL said the most expensive locations in shopping centres can garner rents in excess of three or four times that of the average mall level. Limited available space due to strong demand and a lack of new additions in the most expensive and central locations contribute greatly to the rental gap. A higher level of sales activity and increased brand exposure are core reasons retailers seek these locations.
