Q4 2012 | RETAIL THAILAND BANGKOK RETAIL MARKET REPORT Bangkok Retail Market EXECUTIVE SUMMARY Retail is booming in Thailand, and operators with approximately 128,000 sq m in community are modernising their business by going online malls and the rest in shopping malls. and developing new shopping locations outside of central Bangkok. Other cities in Thailand are also increasingly attractive to retailers, especially in border Consumer confidence was at a six-year high in provinces where consumers from neighbouring the last quarter of 2012, thanks to a stable countries can easily cross in to Thailand to political situation and a year free from floods. shop. MARKET INDICators The growth of residential projects in suburban Online shopping is not yet as popular in 2011 - 2012 Bangkok has prompted retail developers to Thailand as it is in other Asian countries, but it build new shopping malls and community malls is the fastest-growing retail sector and every NEW SUPPLY to serve them. Around 662,000 sq m of retail major retailer is expanding their business space was completed in Bangkok in 2012, the online. RENTALS highest figure for the past six years. OCCUPANCY More than 204,700 sq m of retail space is scheduled to be completed in Bangkok in 2013, www.colliers.co.th BANGKOK RETAIL MARKET REPORT | Q4 2012 SUPPLY HIstorICAL SUPPLY BY YEAR, Q4 2012 Source: Colliers International Thailand Research Approximately 89,698sq m of retail space was completed in Q42012, 6,494,000 sq m. More than 77% of the total new supply added in 2012 while the total new supply completed in 2012 in Bangkok and surrounding is in shopping malls and approximately 19%, or 125,800 sq m, is in areas was more than 662,000 sq m, the highest in the past six years. community malls. The total retail supply in Bangkok and surrounding areas is approximately BREAKDOWN OF REtaIL SPACE IN BaNGKOK BY LOCatION, Q4 2012 Source: Colliers International Thailand Research Approximately 52% of the total retail space in Bangkok is located outside abundant supply of land is still available for large-scale retail projects the urban area. As Suburban Bangkok is very residential, developers there. The Eastern Area in Suburban Bangkok now has the second- tend to focus on retail projects in this area. Many large shopping malls largest share of the city’s total retail space, with approximately 1,514,900 and hypermarkets are located in Suburban Bangkok and the neighbouring sq m, as a result of the opening of Mega Bangna in 2012. areas in Nonthabui, Pathum Thani and Samut Prakarn provinces, as an COLLIERS INTERNATIONAL | P. 2 BANGKOK RETAIL MARKET REPORT | Q4 2012 FUTURE SUPPLY CUMULatIVE FUTURE SUPPLY IN BaNGKOK AND SUrroUNDING AREAS BY YEAR AND CatEGORY, Q4 2012 Source: Colliers International Thailand Research The future supply scheduled for completion in 2013 totals over 204,700 few years, there is still room for growth. The success of community sq m, with approximately 128,000 sq m in community malls and the malls depends on the project’s concept, design, sizing, location and remainder in shopping malls. A number of projects under construction tenants. Some projects are not successful because the developer has were postponed from the last quarter of 2012, due to a shortage of not paid sufficient attention to one or more of these factors, resulting in construction workers. Community malls are still fashionable in 2013 - some community malls failing to attract enough customers to be viable. 2014; although many projects have opened their doors during the past CUMULatIVE FUTURE SUPPLY IN BaNGKOK AND SUrroUNDING AREAS BY YEAR AND LOCatION, Q4 2012 Source: Colliers International Thailand Research More than 204,700 sq m of retail space is scheduled to be completed in scheduled to be completed in 2013 in the Suburban area and all of the 2013, with approximately 135,600 sq m located in the City and Outer City future supply in this area is in community malls. areas, all of which is in shopping malls. Approximately 69,100 sq m is COLLIERS INTERNATIONAL | P. 3 BANGKOK RETAIL MARKET REPORT | Q4 2012 DEMAnd – OcCUPANCY RatE BREAKDOWN OF HIstorICAL taKE-UP ratE OF REtaIL SPACE BY LOCatION, Q1 2010 - Q4 2012 Source: Colliers International Thailand Research The take-up rate for retail in Q4 in Bangkok was similar to that of the increased from 2011, but the average occupancy rate in 2013 will possibly previous quarter, although small increases were registered in all zones be higher than in 2012. during Q3 2012.The average occupancy rate of all zones in 2012 slightly OCCUPANCY ratE OF CUrrENT SUPPLY BY CatEGORY, Q4 2012 Source: Colliers International Thailand Research The average take-up rate in all categories is high, except for supporting supports. In addition, supporting retail space in some office buildings in retail. Supporting retail commands only 87% and can be explained by the the City area has been converted to office space or used for other reliance on custom from workers in the offices that the retail component purposes, such as educational and training centres. COLLIERS INTERNATIONAL | P. 4 BANGKOK RETAIL MARKET REPORT | Q4 2012 DEMAND DRIVErs FOCUS CoNSUMER CoNFIDENCE INDEX (CCI) Source: Bureau of Trade and Economic Indices, Colliers International Thailand Research Since the floods in Q4 2011, the CCI has risen continuously. In Q4 2012, affecting confidence in 2012. it was in fact at its highest for over six years, due to no negative factors REtaIL SALES REtaIL saLES INDEX BY QUartER Source: Bank of Thailand, Colliers International Thailand Research Note: 1. Year 2002 = 100 2. The figure for Q3 2012 is only from July 2012. Since the last quarter of 2010, the retail sales index has been higher than was badly affected by floods; it then continued to rise through Q3 2012. it was for the preceding five years, due to increasing political stability All retail developers and operators believe that the index in the last and retail developers launching new marketing campaigns to promote quarter of 2012 will be higher than in the third quarter and possibly the their centres. However, it significantly increased in the first quarter of highest for many years, due to a busy festive season in December. 2012, compared to its lowest level, in the last quarter of 2011, when it COLLIERS INTERNATIONAL | P. 5 BANGKOK RETAIL MARKET REPORT | Q4 2012 RENtaL RatES RENtaL ratES FroM Q1 2010 - Q4 2012 Source: Colliers International Thailand Research Note: The average rental rate is based on the rental rate for the ground floor of the building or the BTS access area. Rental rates in all areas in 2012 were similar to the previous year, except Although many local and foreign brands opening new stores in high-end in the City Area which increased by around 2% compared to 2011, due to shopping malls in the City area require large spaces, they receive special some shopping malls in the City Area increasing their rental rates. rental rates. COLLIERS INTERNATIONAL | P. 6 BANGKOK RETAIL MARKET REPORT | Q4 2012 TRENDS 1. REtaIL SPACE EXPANDED to SUBURBAN BaNGKOK AREA AND NEIGHBOURING ProVINCES The retail market in suburban Bangkok has expanded to the area around Bangkok, and other provinces connected to Bangkok, are becoming new Bangkok during recent years. Some areas in the boundary area of popular locations for shopping or recreation. Many residential projects have expanded to suburban areas around reason, the areas can attract all types of retail developers and retailers Bangkok and neighbouring provinces over a period of many years, are utilising developments as retail centres. Retail developers and especially along the main roads. Numerous roads, such as Rama 2, retailers also need to develop their retail centres so that they are Srinakarin, Bangna, Ratchaphruek, Phahonyothin and Rangsit- physically near their clients in these areas; for this reason, many retail Nakornnayok Road in Pathum Thani province, now connect these projects centres have opened along the main roads in the areas bordering to neighbouring provinces. The population in the areas along these roads, Bangkok. The four locations that are the most fashionable areas for retail as well as the surrounding areas, has increased steadily over the last development are as follows: several years and continued growth is expected in the future. For this COLLIERS INTERNATIONAL | P. 7 BANGKOK RETAIL MARKET REPORT | Q4 2012 1.1 PHAHONYotHIN AND RANGSIT-NAKORNNAYOK RoaD In addition, Home Pro and Homeworks also opened stores on this road, and some housing developers have planned to develop a community mall The area along the Rangsit-Nakornnayok Road, and another small road in front of their housing projects, similar to Pure Place Ratchaphruek, connected to it, is a popular area for residential projects. Although many which opened in May 2012. The retail centres along Ratchaphruek Road residential projects were started in the area over ten years ago, room tend to consist of a greater number of high-end shops compared to other still exists for growth in the future. suburban areas, reflecting the relative affluence of residents in this area. Future Park Rangsit is the biggest shopping mall in the area and is located at the Phahonyothin and Rangsit-Nakornnayok Road intersection. During the past few years, the mall has shown continuous growth and 1.3 RAMA 2 RoaD has become the most attractive shopping mall in the area. Another The other residential area in suburban Bangkok is the area along Rama Future Park Rangsit shopping mall development is planned in the same 2 Road, an 18-lane road that connects Bangkok and the southern part of area, with a total investment budget of approximately THB3 billion and a Thailand.