Bangkok Retail Market

Q1 2012 | Retail

thailand

Bangkok Retail Market REPORT

Bangkok Retail Market Executive Summary Supply growth slowed QoQ in Q1 2012 with only around 3,100 sq m completed. All of the new supply was designated for community malls.

market indicators Q4 2011 / Q1 2012 new Supply RENTALS Occupancy

Most of the shopping malls are located in the city and outer city areas, while hypermarkets account for most of the supply in suburban Bangkok areas.

More than 341,000 sq m are scheduled to be completed in 2012 and approximately 162,000

sq m are expected to be launched next quarter.

The average rental rate and take-up rates in all locations are still close to those of 2011. Some retail centres did increase their rates but this did not affect the market as a whole.

The consumer confidence index in Q1 2012 was about 15% higher than that of the previous quarter, but was still lower than that of Q3 2011.

Historical Supply Historical Supply, Q1 2012

Source: Colliers International Thailand Research

Approximately 3,100 sq were available in Q1 2012 and nearly 341,800 sq m more are scheduled to be completed by the end of 2012.

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The total supply is estimated to be around 5,663,600 sq m at the end of Q1 2012, and more than 6,005,000 sq m at the end of 2012.

Bangkok Retail Market REPORT | Q1 2012 Additional Supply by Quarter, Q1 2012

Source : Colliers International Thailand Research

Mille Malle Sukhumvit 20 is a new lifestyle community mall with a total area of around 3,100 sq m located in front of the Millennium Residence on Sukhumvit 20 Road and within the Bangkok City area. This is the first project in Bangkok to be completed by Phuket Square Co., Ltd., which also owns Jungceylon in Phuket.

Many shopping and community malls are scheduled to open next quarter, with a total area of more than 160,000 sq m. Some of them have partially opened already, but the official openings are scheduled for next quarter.

Breakdown of retail space in Bangkok by location, Q1 2012

Source: Colliers International Thailand Research

Retail developers are trying to develop projects closer to their catchment areas in the suburban areas where more people live. However, only half of the total retail space in Bangkok is located in suburban Bangkok areas.

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Most department stores in Bangkok are located in urban areas due to the appeal of shopping in the city centre. The vast majority of luxury shops are located in the city area.

Bangkok Retail Market REPORT | Q1 2012 Future Supply Cumulative of future supply in Bangkok by year and category, as of Q1 2012

Source: Colliers International Thailand Research

The future supply scheduled to be completed in 2012 amounts to more than 341,000 sq m, with approximately 226,000 sq m for shopping malls

and approximately 115,000 sq m for community malls. More than 162,000 sq m are scheduled to open next quarter.

Demand – Occupancy rate Breakdown of historical occupancy rate of retail space by location, Q1 2010 – Q1 2012

Source: Colliers International Thailand Research

Minor increases occurred in all zones in Q1 2012 due to the fact that many brands and shops are looking for new space to accommodate their plans for expansion into existing retail centres, and given that new retail centres are under construction and are scheduled to open later during

this year. New retail centres are letting out space prior to completion, and most are already fully occupied. Local demand is strong within the Bangkok retail market but there are also some retail centres in the city area focusing on foreign tourists, especially those along Rama 1 Road.

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Bangkok Retail Market REPORT | Q1 2012 Occupancy rate of current supply by category, Q1 2012

Source: Colliers International Thailand Research

The occupancy rates in all categories are above 95% except for supporting retail which weighed in at less than 87%. Most retail centres in Bangkok have achieved a high take-up rate, and especially those retail

centres in the city area. The average take-up rate of specialty stores is the highest because many of these stores own their own space and rent out portions of it to other tenants.

Demand Drivers Focus Consumer Confidence Index (CCI), Q1 2012

Source: Bureau of Trade and Economic Indices, Colliers International Thailand Research

Flooding during the last quarter of 2011 led to a dramatic decrease of around 28.4% starting in Q3 2011. Although the Consumer Confidence Index (CCI) in Q1 2012 was higher than Q4 2011 by approximately 15%,

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it was still lower than the figure for Q3 2011 which was the highest CCI of the past six years.

Bangkok Retail Market REPORT | Q1 2012 Retail Sales Retail sales index by quarter, Q1 2012

Source: Bank of Thailand, Colliers International Thailand Research Remark: Year 2002 = 100

Flooding had a substantial effect on the Retail Sales Index in Q1 2012.

This index decreased by more than 20% from Q3 2011 onwards before immediately increasing in Q1 2012. Retail centres in Bangkok tried to

bolster the market after the floods by launching special campaigns and promotions in the first quarter of 2012. In addition, the New Year and Chinese New Year festivals helped boost shopping activity.

Rentals Rental rates during the year Q1 2010 – Q1 2012

Source: Colliers International Thailand Research Remark: The average rental rate is based on the rental rate located on the ground floor of the building.

Rental rates in the city area posted a slight but marked increase QoQ for Q1 2012, reflecting the growing confidence of retail centres in the city

area. Other locations performed similarly to the previous quarter.

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Bangkok Retail Market REPORT | Q1 2012 Forecast The retail business in Bangkok is very successful. Local demand is still strong for the Bangkok market and keeps growing in every area of the city. As there are mass transit extension lines under construction in the suburbs, many residential developers are starting up new projects along these extensions, which in turn increases demand for retail centres in the area. Many retail developers have plans to develop new projects along the new extension lines.

Individual supermarkets continue to grow in 2012. As it is difficult for

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hypermarkets to expand in Bangkok and in the city areas of other provinces on large land areas, their new strategy is to open small individual supermarkets all around Bangkok and Thailand in order to maintain their market share and increase revenues.

Online shopping is still a new market for all retail developers. The target group for online shopping has continued to grow since 2011. The big name players in retail businesses seem to focus more on online shoppers, launching new campaigns or promotions online.

Bangkok Retail Market REPORT | Q1 2012

APPENDIX

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Bangkok Retail Market REPORT | Q1 2012 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

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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.

Bangkok Retail Market REPORT | Q1 2012 COLLIERS INTERNATIONAL THAILAND MANAGEMENT TEAM RETAIL SERVICES Asharawan Wachananont | Associate Director PROJECT SALES & MARKETING Monchai Orawongpaisan | Senior Manager RESIDENTIAL SALES & LEASING Napaswan Chotephard | Manager RESEARCH Tony Picon | Associate Director Surachet Kongcheep | Senior Manager OFFICE & INDUSTRIAL SERVICES Narumon Rodsiravoraphat | Associate Director ADVISORY SERVICES | HOSPITALITY Jean Marc Garret | Director ADVISORY SERVICES Napatr Tienchutima | Associate Director REAL ESTATE MANAGEMENT SERVICES Prasert Saiphrawan | Senior Manager INVESTMENT SERVICES Nukarn Suwatikul | Associate Director Wasan Rattanakijjanukul | Senior Manager

522 offices in 62 countries on 6 continents • A leader in real estate consultancy worldwide • 2nd most recognized commercial real estate brand globally • 2nd largest property manager • 1.25 billion square feet under management • Over 12,300 professionals COLLIERS INTERNATIONAL Thailand: Bangkok Office 17/F Ploenchit Center, 2 Sukhumvit Road, Klongtoey, Bangkok 10110 Thailand tel +662 656 7000 FAX +662 656 7111 Email info.th@colliers.com Pattaya Office 519/4-5, Pattaya Second Road (Opposite Central Festival Pattaya Beach), Nongprue, Banglamung, Chonburi 20150 tel +6638 427 771 FAX +6638 427 772 Email info.pattaya@colliers.com Hua Hin Office 27/7, Petchakasem Road, Hua Hin, Prachuap Khiri Khan 77110 Thailand tel +6632 530 177 FAX +6632 530 677 Email info.huahin@colliers.com

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researcher: Thailand Surachet Kongcheep Senior Manager | Research email surachet.kongcheep@colliers.com

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