The Bhutanese Leading the way.
Not long ago it would have been unthinkable in Thimphu for prime commercial spaces to go unoccupied., but this is what is happening in Thimphu these days even as rents are reduced or other offers are made.
Currently, the real estate trend has shifted to more sellers than buyers. There has been an increase in the number of commercial spaces for rent than people actually leasing it.
Hotel Osel had tried to lease its downstairs café for more than two months however, with no one taking it, the owner has now decided to renovate it into an office space.
Currently, City Mall, a complex with a cinema, shopping stores and cafes is also emptying out as retailers are not able to pay the rent. Almost 3-4 stores have emptied out for months with no new retailers taking up the spaces.
The owner of the City Mall verified the information stating that the stores are on lease but people are not taking it due to the current situation, with businesses being unable to pay the rent.
The retailers shared that they are facing difficulties paying the rent with branded showrooms sharing that they only make enough to pay the rent.
Its main shopping space whose occupant moved to a different location more than a year ago still stands empty.
In a sign of the times a new building opposite the NPPF office has been trying to lease out some prime commercial space for months. The initial rent was Nu 160,000 per month but nobody turned up and it was reduced to Nu 120,000 and then 80,000 and still nobody has come.
The current trend has given rise to more openings for commercial leasing with less people taking up on it.
The main reason for the above is that the economy is not doing well, and the business environment has also become very gloomy.
With a major construction boom and several offerings about to enter the market for commercial space the problem is only set to get worse if the economy does not improve.
Even retailers in prime locations share that they are currently facing rental pressures with some having to run on a loss. Some have also closed their businesses which has led to an increase in commercial space for leasing or even for sale.
Going with the current trend, retailers share a common opinion that businesses are down with less customers than ever. Many share that with less customers, it is impossible to generate enough profit and are facing difficulty to meet the high commercial rents in Thimphu.
Bisnu, running a small business (pan shop) in Norzin lam shared that rental is eating a large proportion of her income as the income generated is itself very less. “Sometimes, it is very hard to even earn Nu.1000 in a day and there are more months when we are running on loss than making profits. As income generated is less, we have a lot of pressure on the rent front.”
Similarly, Jigme who runs a fast-food restaurant share that he is facing increased rents with business down. “We are already down by 30-40% in number of customers, and our rent has recently increased. As income generation is less, I am only able to make enough money to pay the rent. At the moment, I make enough to just survive, there is no profits as such.”
A popular cosmetics shop, the Korean House in the core town shares that with the business down, they have pressure in terms of paying the staffs salary and the rent. “Sometimes, we make less than the rent and with about 50% decrease in the number of customers, it has hampered our income generation. We face difficulties in terms of paying the rent and staff salary.”
Tenzin Wangmo, one of the oldest businesswomen in town, who operates a business that deals with traditional garments and clothes shares that she would face troubles if she was leasing a commercial space. “I own the shop but if I was renting this space, I would not be able to pay the rent with how business has been currently. It would be nearly impossible to pay the rent.”
According to Kesang Tshering, the chair of Business Development Committee (BDC) of Bhutan Chamber of Commerce and Industry (BCCI), the rental here in Thimphu is on the higher side. “In my opinion, I believe that the commercial leasing is on the higher side, so retailers face rental pressure. People say businesses are down because of lack of population however, I feel that it is because of less spending as people’s income are low and the expenditure is high. As such, with no income generation, there is a high pressure with almost 50% of the retailers running on loss these days, unable to pay the rent.
Renuka, running a business in the clock tower area shared, “I nearly sold the business recently because there was no income generation, however, I held on because the business will be renovated soon. Last two months, March and April, I did not make any money to pay the rent, thankfully, I had some savings and my husband helped. These days it is really hard to generate enough income to pay the rent.”
She also added that there are many retailers selling their businesses as the rental is high and businesses are not earning enough profit.
