Bangkok Retail Q2: Post Lockdown, What Happens Next?
Measuring the impact of COVID-19 on Bangkok’s retail market and discussing the opportunities and threats in a post-lockdown market
Jeremy O’Sullivan MRICS 15 July 2020 What we’re discussing today
To understand the likely future The current situation direction & how retailers can prepare faced by retailers, both landlord and tenant
Explore how they have each Recommend how tenants and landlords should act to minimize threat and survived…… or thrived maximise the opportunities ahead COVID-19: Thailand’s Current Situation
New daily cases - total deaths Malls Close 3,197 Cases. 250
Malls Reopen 58 Deaths. 200
WHO declare Pandemic 150
100
50
0 2020-01-13 2020-02-12 2020-03-20 2020-04-19 2020-05-19 2020-06-18 COVID-19: Economy
GDP Growth (%) Tourist Arrivals THB:USD
6 5 4 3 2 1 0 Currently hoping -1 Peaked 2 Jan ’20 (0.033) -2 -3 for 10 million -4 -5 -6 0.0330000 -7 -8 0.0325000 -9 -10 0.0320000 -11 -12 45 39.8 -13 38.3 0.0315000 -14 40 35.4 -15 32.6 0.0310000
-16 35 29.9
Q1 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 30 24.8 0.0305000 Bottomed out 25 0.0300000 2 Apr ’20 (0.030) 20
2014 2015 2016 2017 2018 2019 0.0295000
25 Sep 2019 25Sep 01 Oct 2018 Oct 01 2018 Dec 28 2019 Mar 27 2019 Jun 28 2019 Dec 24 2020 Mar 20 2020 Jun 19 Q4’19 CCI lowest in over 5 years. 2020, likely to be lowest since Asian Financial Crisis
4 COVID-19: Measures Taken
Lockdown
• Alcohol sales restrictions • Emergency Decree • Stores & malls closed • International travel ban • Curfew • No inter-provincial travel • Citywide work from home
Present
• Emergency Decree • Limited trading hours • Limited international arrivals
5 Bangkok Retail – Fundamentals
Retail Sales Index Type Q1’20
310.00 Shopping Mall 5,462,280 290.00 270.00 8.8 million Community Mall 1,296,576 250.00 230.00 sqm of retail space Hypermarket 844,953 210.00 190.00 in Bangkok, as of Q1’20 Specialty Store 479,247 170.00 150.00 Department Store 322,442 APR OCT APR OCT APR OCT APR OCT APR OCT APR 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 On Site Retail 297,903 e Of which Entertainment Complex 121,765 Distribution of retail
734,404
1,049,900 1,267,000 3.1 million is considered to be ‘Prime’ Over 1.2 million sqm of luxury focused retail
1,162,000
6 Bangkok Retail – CBD Prime malls distribution
Suburban
Midtown Suburban
Downtown Midtown CBD
CBD
Downtown
7 Bangkok Retail – Key Pipeline
Key Pipeline Prime area forecast (sqm)
37.7% additional space to open in Bangkok by 2024
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
- 2020F 2021F 2022F 2023F 2024F
8 Bangkok Retail – The Lockdown
Turn to Online Platforms Malls & Stores Closed Other than the essentials Foodpanda, Grab, Instagram, Facebook Marketplace, Lazada, LINE Last Mile Shopping, Shopee Delivery Logistics
Courier services, Were staff paid? Rental discounts offered by the major landlords Grab, Lalamove etc. Big mall groups provided 100% if unable to trade; if essential, approx. 50% discount - Landlords – some operational staff salary reduced to 30% Some small landlords offered discounts, others, none. - Retailers – Varied. Big brands-maintained salaries
9 Bangkok Retail – The Emergence
10 Bangkok Retail – The Emergence
Q2, Apparent footfall compared to Q1 (pre-Covid)
MBK 30% ICON SIAM 25%
SIAM DISCOVERY 75% SAMYAN MITRTOWN 95%
SIAM CENTER 80% CENTRAL RAMA9 90%
SIAM SQ.1 95% THE STREET RATCH. 50%
SIAM PARAGON 85% CENTRAL EAST V. 90%
CNTRL WORLD 70% CRYSTAL PARK 90%
CNTRL EMBASSY 95% FUTURE PARK RANG. 95%
TERMINAL 21 75% CENTRAL VILLAGE 10%
EMPORIUM 30% MEGA BANGNA 100%
EMQUARTIER 80% ICON SIAM 25%
11 Bangkok Retail – Casualties & Success
12 Bangkok Retail – Prime occupancy & rent
Occupancy Rental Rates
99.0%
97.0% -2%
95.0% Occupancy -2.8%
93.0% Q2’20
91.0% Rental rate deduction across
89.0% CBD and downtown malls
87.0% Suburban 85.0% Midtown Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Downtown Av. 2,109THB CBD
13 Bangkok Retail – Recovery
Historical GDP
Current
Recovery?
14 Bangkok Retail – Localised Recovery
15 Bangkok Retail – From Our Clients
Tenants
Tim Hortons JD Sport
Landlords
▪ New tenants still signing, though more interest in smaller units ▪ Tourists are key customers, eagerly awaiting their return ▪ Tenant discounts still in place (case by case) ▪ B-Quick Automotive performing particularly well ▪ Foot traffic remains down 40%, was 50% until schools reopened ▪ New tenants enquiring again ▪ Foot traffic returning, they believe due to open & spacious design
16 Historical – Spanish Flu (1918-1919)
‘Those offering remedies will thrive’ Disinfectants, face masks and therapies
• Midst of WW1 • 1/3rd of global population (1.5bil) infected, 500 mil, 50 mil died, • 3-year recovery once flu receded • High unemployment, 1.4% to 11.7%, 3 years to then reach 4% ‘Fresh Air’ became the focus of future design • ‘Pent-up capital’ & technology helped economies to emerge Alleviate density, avoid queues, create more open spaces
17 Bangkok Retail – Threats
Second Wave Lagging economic recovery
Slow recovery of tourism
Global supply chain issues
18 Bangkok Retail – Opportunities
E-Commerce / E-Payments
Omni-channel retail Contactless Retail Drive-thru, pick-up options, dine at home
Health / Well-being/ Hygiene
Discount & Outlets
Loyalty Shock Home Entertainment
19 Bangkok Retail – Future Trends
Flight to Quality “ Bad retail is dead ”
New stock, slow up-take? Landlords to focus on tenant retention
Downward rental pressure Experience & Concept stores
Lifestyle Retail Continued emergence of F&B?
20 Bangkok Retail – Steps to Take
Alleviate density, ensure space
Omni-Channel marketing
Target Thai’s, don’t count on tourism revenue
Maintain good tenant-landlord relationships
Review your current location
21 From the team at Savills Thailand Chadathorn Sornvai Jeremy O’Sullivan MRICS Associate Director Associate Director Commercial Agency Head of Research & Consultancy and Valuation
T: +66 2636 0300 T: +66 2636 0300 E: [email protected] E: [email protected]