year end 2010 | RETAIL
thailand
Bangkok Retail Market REPORT
Bangkok Retail Market Executive Summary Around 185,000 sq m of retail space was completed for the whole of 2010. For Q4 2010, five community malls came online adding approximately 38,000 sq m of space to Bangkok. The big story of Q4 2010 and probably 2010 was the purchase of Carrefour by the Big C hypermarket chain. This will consolidate the hypermarket sector into something resembling a duopoly between Big C and Tesco. market indicators 2009 - 2010 Supply rentals Occupancy
As in the Carrefour bid, some jockeying for position for existing retail centres could occur due to the impending Retail and Wholesale Act which will constrain the development of new large retail centres in urban Bangkok. Older retail centres continue to renovate in order to successfully compete with newer retail centres with modern designs. Small rises in rentals and occupancy were recorded for 2010 despite the dislocations resulting from the protests from March to May. Ongoing demonstrations in the Rajaprasong intersection pose further challenges for retailers in the area and could escalate in what is likely to be a frenetic election year.
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Bangkok RETAIL Market REPORT | Q4 2010 Retail Locations
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Bangkok RETAIL Market REPORT | Q4 2010 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.
Historical Supply Total retail supply 2007-2010
Source : Colliers International Thailand Research
Approximately 38,000 sq m was completed in Q4 2010 and a total of approximately 185,000 sq m was completed in 2010, however some projects have been delayed to next year due to the affects of the protests in Q2 of 2010.
Big C will own 113 hypermarkets in Thailand against Tesco Lotus’s 87 hypermarkets. Big C has no plans to close any of the 42 Carrefour stores although some stores are located in the same area of existing Big C stores.
Forty two stores of Carrefour in Thailand were acquired in Q4 2010 by Big C, a subsidiary of French retailer Groupe Casino. After the acquisition
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Bangkok RETAIL Market REPORT | Q4 2010 Additional supply in 2010 by quarter
Source : Colliers International Thailand Research
Additional supply for Q4 2010 was provided by five community malls with a total area of around 38,000 sq m. Pure Place Ramkhamhaeng 110
was opened on 10 October 2010 and Park Lane Bangkok had its grand opening on 17 November 2010 and is located in the Thong Lor area.
Breakdown of retail space in Bangkok by location, Q4 2010
Source : Colliers International Thailand Research
Since 2007 onwards until 2010, retail space in the Outer City area increased by more than 14% while Suburban Bangkok – North area
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increased more than 36%, due to lower land prices in these zones and the proximity of these locations to a strong customer base.
Bangkok RETAIL Market REPORT | Q4 2010 Total historical supply by location to q4 2010
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 total retail space in Bangkok is located in the suburban Bangkok area; with every department store in Bangkok located in the urban area due to
the attraction, as in most cities, of shopping in the centre. Before the advent of cars for the masses the centre was the area that people flocked to for the retail experience.
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Bangkok RETAIL Market REPORT | Q4 2010 Future Supply Cumulative of future supply in Bangkok by year and category, as of Q4 2010
Source : Colliers International Thailand Research
The future supply scheduled to be completed in 2011 is approximately 290,000 sq m with approximately 185,000 sq m as shopping malls and 85,000 sq m is expected to be completed in 2012. The Outer City area still remains the most popular location for retail. In Q4 2011 Central Rama 9 on Ratchadapisek – Rama 9 Intersection is scheduled to be completed with a total area of approximately 83,300 sq m, increasing the supply of shopping malls.
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Terminal 21 is scheduled to be completed in 2011 nearly 35,000 sq m of shopping mall space in the City area. This is likely to herald the end of large scale retail development in the centre for the foreseeable future due to forthcoming restrictions. The new BTS extension line On Nut – Bearing, planned to commence commercial operations in Q4 2011 will boost residential projects in the area along the line, so retail developers are likely to pay attention to this location, especially for community malls.
Bangkok RETAIL Market REPORT | Q4 2010 Demand – Take up Breakdown of historical take up rate of retail space by location, 2005 – 2010
Source : Colliers International Thailand Research
Small increases were registered in all zones for 2010. The City and Outer City areas up around 0.3 - 0.4% while in the Suburban area an
increase of approximately 0.4% was recorded.
Take up rate of current supply by category, Q4 2010
Source : Colliers International Thailand Research
Take up rate of all categories, except supporting retail, is more than 95%. Supporting retail commands only 85% and can be explained by the reliance on custom from workers in the offices that retail component supports. Lower levels of office occupancy over the past few years
account for this as this means less people using the outlets. In some situations the space for supporting retail is too large for the size of the office it supports and some convert to office use or other functions such as educational centres.
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Bangkok RETAIL Market REPORT | Q4 2010
Take up rate of current supply by location, Q1 – Q4 2010
Source : Colliers International Thailand Research
Take up rates for retail in Q4 2010 increased q/q in every quarter, albeit slightly. The return of consumer confidence is the likely reason.
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 winter
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period of 09/10, this was severely dented following the protests in April and May. However Q3 witnessed a return to the increasing trend and Q4 is the highest quarter in last four years.
Bangkok RETAIL Market REPORT | Q4 2010 Retail Sales retail sales index by quarter
Source : Bank of Thailand, Colliers International Thailand Research Remark : E = Estimated by Colliers International Research Year 2002 = 100
The protests in the previous quarter had impacted the retail market but in Q3 2010 the overall pattern of spending returned and this shows optimism for the future. For Q4 2010 the Bank of Thailand forecast retail
sales that will show the highest levels in the last five years, even compared to previous Christmas and New Year holiday seasons.
Domestic credit card usage volume credit card usage volume by quarter
Source : Bank of Thailand, Colliers International Thailand Research Remark : E = Estimated by Colliers International Research
Credit card usage over the past five years has increased by around 60% and these cards are more often used in organized retail centres. The recent numbers indicate a fall in spending during the protests and a pick
up in Q3 2010. The fourth quarter is the last quarter of the year and includes Christmas and New Year festival, so credit card usage volume in this quarter of every year is usually the highest.
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Bangkok RETAIL Market REPORT | Q4 2010 Trends Digital retails NECTEC reported the number of internet users in Thailand in 2010, based on survey results from www.truehits.com, to be more than 21 million, an increase of nearly 15% from 18.3 million people in 2009; and according to this report the number of internet users is at around 33% of the population in Thailand. Retail developers are therefore looking at opportunities to expand their sales channels, by opening their own online stores. However the number of Thais who shop online is still lower than many countries in Asia.
retail players there are new entrants into the market such as “Uber Mall� the first 3D shopping mall online and www.2010MegaSale.com by Kasikorn Bank. A survey by Master Card Worldwide found that Thai people are interested in shopping online, with an average value of products bought online increasing to 18,150 baht per person, more than last survey of approximately 5,000 baht. However the retail experience is not just one of shopping. For many it represents an important form of entertainment both daytime and in the evening and the internet experience is not able to replace this. In a tropical climate, retail centres allow people to walk in a comfortable environment.
In the last quarter of 2010 two big players in retail business stepped into the online shopping business. The Mall Group officially launched the M Online Department Store (Mods: www.mods.co.th) on December 8 2010 and will promote more than 30,000 products in 11 categories. They also plan to increase the number of products available for online shopping to about 100,000 next year. Central group launched their own shopping online website, www.central. co.th and they coordinated with TNT to deliver products to buyers. Big C also have a website for shopping online www.atbigclick.com, but buyers must go to a Big C outlet to pick up the product. In addition to the major
Rentals Rental rate during the year 2000 - 2010
Source: Colliers International Thailand Research
The rental rates in every area still remains more or less the same from last year, only in the City area was there a very slight fall due to the
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protests in April and May of 2010.
Bangkok RETAIL Market REPORT | Q4 2010 Forecast The retail industry is in its typical ‘winter’ boom season with not only Christmas and New Year shopping but also for Chinese New Year, Songkran and Valentines Day. The increase in the minimum wage and is also likely to spur retail spending during this period and beyond it. Big C won the bidding for 42 stores of Carrefour in Thailand and they plan to keep every store, even those located in the same location of Big C. The hypermarket dynamics now consists of primarily a duopoly between Big C and Tesco Lotus. An issue for the next few quarters will be how the two can target Carrefour’s customer base which tends to be more upmarket. Of the two Tesco Lotus caters more for this market and is therefore likely to have the initial advantage. Renovation and change is the keyword for retail business in the next few years, as many centres need to refurbish to maintain their customer base in light of newer retail centres providing strong competition. The design of retail centres is radically different from 20 years ago with a greater emphasis on driving visitors up into its higher levels which lead to higher occupancy and rental rates above the first few floors.
and in the long term could deter shoppers from visiting the area. Although what is likely to be an election year will lead to an infusion of money the heat of the campaign will also disrupt normal shopping patterns. Retail developers will be focusing more on shopping online and improve their websites with more choice and availability. However for the foreseeable future this is likely to complement rather than challenge the existing retail experience. The future of retail in Bangkok will be affected by the impending Retail and Wholesale Act, which will address the issue of dominance by large retail centres in the urban areas by restricting new development. The value and importance of existing retail in the centre is likely to increase over time and the various players could be involved in bidding/takeover activity over the coming months and years. Carrefour maybe just the beginning.
The ongoing protests in the Rajaprasong intersection could spell difficulties for retailers in this area as such protests that have begun to take place every two weeks during the busy weekend shopping period
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