Caroline Murphy, head of markets at Jones Lang LaSalle, said demand for retail space in Bangkok from both local and international retailers had been strong over the past years, but it might now slow due to the proposed amendments.

As of January, the total stock of retail space across Bangkok stood at 4.79 million square metres. This includes 313,000 square metres completed in 2006. The average vacancy rate of retail space across the capital stands at around 12 per cent, with prime retail centres enjoying single-digit rates.

The average net rental for ground-floor space in prime retail centres in central Bangkok has now risen for seven consecutive years, off a base of Bt1,190 per square metre per month in 1999 to the current level of some Bt1,910. However, it has not yet reached the previous peak of Bt2,310, recorded in 1996.

Jones Lang Lasalle said that with limited future supply planned for completion between 2007 and 2008, the average rental was likely to rise further, but at a much slower pace this year due to a weaker economic outlook and increased competition.

"Under current conditions, the outlook for community/neighbourhood malls looks particularly promising as these centres penetrate residential neighbourhoods and serve consumers' everyday goods and services requirements locally. Siam Future Development represents a prime example of retail developers in this category. Last year, the firm opened three new community/neighbourhood malls and is planning to invest in four new malls in Bangkok this year," Murphy added.

Jones Lang Lasalle also commented that despite many challenges - weak economic growth and slowing demand - sentiment towards the Bangkok retail sector had improved relatively quickly after the bombings on New Year's Eve, with visitor numbers recovering to pre-bombing levels. However, a number of challenges remain for both retail-centre developers and retailers. These include a weaker economic outlook, heightened competition among retail centres, and concerns over the proposed new Foreign Business Act.

Suphin Mechuchep, managing director of the company, said the duration of the impact from the bombings on New Year's eve that hurt the Bangkok retail sector was shorter than many had expected.

In the wake of the incidents, major retailers reported a 30-per-cent drop in visitor numbers over the first few weeks of January, but in less than two months since the incidents, visitor numbers at all retail centres have recovered to pre-bombing levels.