The market for shopping malls in Thailand will remain robust this year, according to a new research report from Nomura. The Japanese bank’s findings tap into a broader trend with the rise of Southeast Asia as a hot destination for fashion brands and retailers. The region has seen a spate of recent store openings, which industry watchers expect to continue.

The growth of domestic demand for retail rental space will continue to outpace supply growth in Thailand, while the Southeast Asian country’s physical retail structures are better placed to withstand the e-commerce threat relative to those in other markets, wrote Nomura analyst Peerawat Dentananan.

“We anticipate a rise in shopping mall-related investments driving near-term growth, and environmental improvements set in motion to boost longer-term growth,” Dentananan said, reiterating a positive outlook and “Buy” rating on Central Pattana, Thailand’s largest shopping mall developer, and initiating a “Buy” rating on wholesale specialist mall developer Platinum Group.

Nomura said it believes occupancy rates in Thailand and other key markets will remain resilient despite a consistent growth in the retail space on offer. The bank estimates that Bangkok’s retail occupancy rate will stay above 97 percent — it has held steady at that level since the start of 2011. Meanwhile, the supply of retail space in Bangkok has registered 6 percent compound annual growth between 2007 and 2015.

Malls provide a special type of environment for Thai consumers — an aspect worth noting when thinking about the potential impact of e-commerce in the country, Nomura said.

“Despite rapid growth, we believe e-commerce in Thailand is unlikely to overtake malls as reversing the trend in China, the [U.S.] and Singapore, given that malls in Bangkok are better developed and are usually located close to home,” Dentananan wrote. “We see shopping malls as a choice for [socializing] and/or taking care of personal lifestyle needs for Thai people, due to year-round hot weather (driving the demand for air conditioning) and the lack of nature parks.”

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