Q4 2011 | RETAIL
thailand
Bangkok RETAIL Market
Bangkok Retail Market highlights Around 238,000 sq m of retail space was completed in 2011. In Q4 2011 two significant
shopping malls plus other types of retail centres came on stream in the City and Outer City areas adding approximately 188,000 sq m of space to Bangkok. The additional supply in this quarter was the highest in the past two years. Community malls are still major players in the retail business, with many projects under construction or planned for development during 2012. market indicators 2010 / 2011 new Supply RENTALS occupancy
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Older retail centres continue to renovate and expand space in order to successfully compete with newer retail or other retail centres in the same area. A small rise in rentals and occupancies was recorded in 2011 despite the dislocations resulting from the floods in the October to December period.
Bangkok RETAIL Market REPORT | Q4 2011 Historical Supply Total retail supply from 2007 - 2011
Source: Colliers International Thailand Research
Approximately 188,800 sq m was completed in Q4 2011 with a total of approximately 238,900 sq m for the whole of 2011. However some projects were delayed to 2012 due to the floods of Q4 2011. The two significant new shopping malls which opened in Q4 2011 are located in the City and the Outer City with a total of approximately 124,000 sq m, or 66% of the new floorspace added. One is the Central
Rama 9 on Ratchadapisek Road which is located in the Outer City area, and the other is Terminal 21, the first shopping mall developed by Land & House Company at BTS Asoke station. Both shopping malls are located in business areas with direct access from the BTS skytrain or from the MRT underground system, giving more convenience to shoppers.
Additional supply in 2011 by quarter
Source: Colliers International Thailand Research
Additional supply for Q4 2011 was the highest for the past two years with a total area of around 188,800 sq m. Central Rama 9 and Terminal 21
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provided more than 66% of the total area, with Terminal 21 being the biggest shopping mall to open since Siam Paragon in 2005.
Bangkok RETAIL Market REPORT | Q4 2011 Breakdown of retail space in Bangkok by location, Q4 2011
Source: Colliers International Thailand Research
From 2007 until the end of 2011, retail space in the Outer City area increased by more than 22% while in the Suburban Bangkok North area it increased by approximately 37%. This was due to Bangkok’s expansion to the north where many residential projects have been launched in the past five years. In addition, land prices are lower in these zones with
retail developers trying to build projects closer to their catchment areas. Most of the retail space in the Suburban Bangkok area comprises shopping malls, hypermarkets, and community malls, with community malls showing a significant increase.
Future Supply Cumulative of future supply in Bangkok by year and category, as of Q4 2011
Source: Colliers International Thailand Research
Future supply scheduled to be completed in 2012 is approximately 365,800 sq m with about 226,000 sq m for shopping malls, community malls and supporting retail space. The Outer City area still remains the most popular location for retail developers. Many shopping malls and community malls are expected to be completed in 2012.
The Pratunam area and the area around the Phetchaburi and Rajaprasong Road intersections are the main centres for wholesale shopping malls. There are still some new wholesale shopping malls under construction which will further emphasise the area’s status as Bangkok’s wholesale clothing market.
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Bangkok RETAIL Market REPORT | Q4 2011 Demand – Take up Breakdown of historical retail space take-up rate by location 2005 – 2011
Source: Colliers International Thailand Research
In 2011 small increases were registered in all zones. There was some activity in the first half of 2011 as many brands and shops planned to expand or find new space, but due to the flooding, there was little
movement during Q3 and Q4 2011. Although only parts of the market were affected, customers’ confidence was down and all brands and shops felt the disruption.
Take up rate of current supply by category, Q4 2011
Source: Colliers International Thailand Research
The take-up rate for all categories in Q4 2011, except for supporting retail, was more than 95%. Most supporting retail space in Bangkok is located in office buildings, so there are not as many people who use the
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various outlets, even though some buildings have large areas of retail space. Recently, much of this space has been converted to office use or educational / language centres.
Bangkok RETAIL Market REPORT | Q4 2011 Demand Drivers Focus Consumer Confidence Index (CCI)
Source : Bureau of Trade and Economic Indices, Colliers International Thailand Research
The slump in consumer confidence for much of 2008 and 2009 was the result of the Global Financial Crisis that caused Thailand’s GDP to shrink. While confidence began to take on a sustained upward path in the latter
periods of 2009/10, it was severely dented by the street protests in April and May. However Q3 2011 witnessed a return to the upward trend with Q4 showing the highest rate in the last four years.
Retail Sales Retail sales index by quarter
Source : Bank of Thailand, Colliers International Thailand Research Remark : Year 2002 = 100, E = Estimated by Colliers International Research
The significant increase in Q3 2011 was caused by people hoarding food and other supplies in case of flooding.
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Bangkok RETAIL Market REPORT | Q4 2011 Trends Loyalty cards are a basic marketing tool used by all business sectors, especially the retail business. All major operators have their own loyalty cards to attract shoppers, and in 2011 major players in the retail business put more emphasis on these cards. The Mall Group, Central Group, Tesco Lotus, and Big C, tried to increase their membership by offering more privileges and promotions. The “M Card” gained more than 2 million members within 2 years, with members being able to collect points or receive other benefits and discounts by shopping in any branch of The Mall, Emporium or Siam Paragon. Meanwhile “The 1 Card” from the Central Group, with over 3 million members in 6 years, enables its members to shop or collect points at any retail centre of the Central Group, Zen Department Store, Robinson, Power Buy, Supersports, B2S, Homeworks, or Office Depot. Hypermarkets also have loyalty cards for all shoppers, the “Club Card” from Tesco Lotus and the “Big Card” from Big C.More than 7 million members hold a “Club Card” and more than 6 million members have the “Big Card”. In fact, loyalty cards not only benefit shoppers but retail owners / operators also. The owners are able to analyse members shopping habits, such as personal behaviour, product purchases, purchasing power, age group etc. and they are able to offer promotions or marketing campaigns directly to members.
Rentals Rental rate from 2000 - 2011
Source: Colliers International Thailand Research Remark: The average rental rate is based on the rental rate located on G Floor of the building
There were small or no increases in rents in every area compared with the previous year, with the increases up about 5 – 10% depending on location. Although from Q3 – Q4 2011 some parts of Bangkok were
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flooded, some new retail centres still opened which lead to rental rates becoming slightly higher than last year.
Bangkok RETAIL Market REPORT | Q4 2011 Forecast Many retail centres in Bangkok were affected by floods in Q4 2011, especially in the suburban areas. Some of them had to close for more than a week, and then had to dry out and renovate the stores. For 2012 retail developers are still concerned about further flooding and are taking measures to protect their property, and preparing alternative logistic systems and distribution centres. The retail business in 2012 should do better than in 2011, although natural disasters are still the main concern. All operators launched marketing and promotion campaigns to attract shoppers during the Christmas and New Year holidays, but some shoppers, affected by the floods, had little money to spend.
Retail developers / operators will be focusing more on loyalty cards and trying to increase membership, so they can analyse shopper’s behaviour and make promotional offers to them directly. Community malls are still expected to be the major players in 2012, due to the number of new projects under construction and in the pipeline. In addition, numerous developers have plans to develop community malls in Bangkok.
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Bangkok RETAIL Market REPORT | Q4 2011
APPENDIX
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Bangkok RETAIL Market REPORT | Q4 2011 Retail Locations
Retail Market Categories The organized retail market in Thailand can be divided into seven main categories, based on size, characteristics, goods sold, and pricing: 1) Shopping Mall / Shopping Centre 2) Department Store (figures for this report include stand-alone stores only; those located in shopping malls are not included) 3) Hypermarket 4) Community Mall
5) Specialty Stores 6) Entertainment Complex (this does not include entertainment areas in shopping malls, as these represent an intrinsic part of the shopping mall mix) 7) Supporting Retail Note: For the purposes of the report, retail refers to organized retail services and excludes traditional single proprietor outlets often located in shophouses and markets consisting of predominantly small traders. Also, supermarkets have been excluded from this report.
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Bangkok RETAIL Market REPORT | Q4 2011 COLLIERS INTERNATIONAL THAILAND MANAGEMENT TEAM RESIDENTIAL SALES & LEASING Napaswan Chotephard | Manager PROJECT SALES & MARKETING Monchai Orawongpaisan | Senior Manager RESEARCH Tony Picon | Associate Director Surachet Kongcheep | Senior Manager OFFICE & INDUSTRIAL SERVICES Narumon Rodsiravoraphat | Associate Director RETAIL SERVICES Asharawan Wachananont | Associate Director ADVISORY SERVICES | HOSPITALITY Jean Marc Garret | Director ADVISORY SERVICES Napatr Tienchutima | Associate Director REAL ESTATE MANAGEMENT SERVICES Patima Jeerapaet | Managing Director INVESTMENT SERVICES Nukarn Suwatikul | Associate Director Wasan Rattanakijjanukul | Senior Manager VALUATION & ADVISORY SERVICES Phachsanun Phormthananunta | Director Wanida Suksuwan | Manager
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