Market Research B A N G KO K R E TA I L M A R K E T S E C TO R B A N G KO K R E TA I L M A R K E T o v erv ie w
| august | 2008
c o l l i e r s i n t e r n at i o n a l
| T H AILAN D
B AN G KO K RETAIL M AR K ET o v e rv i e w
| Augu s t
|
2008
BANGKOK RETAIL MARKET HIGHLIGHTS • Despite strong evidence that consumer confidence has been hit by skyrocketing oil prices, the unstable political situation, and the rising cost of living, retail business has not cut back on aggressive expansion strategies, taking the view that the downturn in sentiment will be a shortterm phenomenon.
Market Indicators 2007
2008
SUPPLY DEMAND rental rate occupancy rate
• Because of the scarcity of land in the city area and higher petrol prices leading more shoppers to prefer to shop near home, the trend of retail developers is to develop more community malls in the area of Bangkok Boundary Area and Outer City Area. • The new supply of retail space added in the 1st half of 2008 was approximately 151,584 sq m. The majority of the retail space in Bangkok is shopping mall, accounting for 49%, followed by the community mall, accounting for 44% of the total Bangkok retail supply. • Recently, retail developers have been developing more retail in the East Part of Bangkok Boundary Area due to the opening of the new international airport. The majority of the new retail space is concentrated in the Bangkok Boundary Area, representing about 2,275,249 sq m. The Outer City Area and the City Area account for 1,351,839 sq m and 1,231,409 sq m, respectively. In addition, the majority of new retail space in Bangkok Boundary Area is community mall. • The supply of Bangkok retail space is increasing with an additional of 256,041 sq m in 2008, 252,021 sq m in 2009 and approximately 481,200 sq m from 2010. • As the retail market is continually changing, retail developers plan to renovate their outlets by investing some THB 4.4 billion in 2008. • The overall occupancy rate in the retail market is high, averaging of 94.23% as of 1H 2008.
Under The increasing normal circumstances, interest of real estate from the will retailers Scandinavian move cautiously market when is directly connected sentiment is poor and to the consumer upsurge in tourism to confidence is Thailand. low. But The this flow year has of Scandinavian been an exception. interest All modernin Thai property trade operators startedhave fromstuck Sweden to their and later spread expansion plans and to Denmark some areand movNorway. ing at an Earlier even faster people pace, of these with a countries new retail tended law acting to buy as aresort catalyst. properties in Spain and France.
www.colliers.co.th
• The retail developers / retailers plan to invest some THB 14 billion outside Bangkok by 2010.
The Knowledge Report | August | 2008 | Bangkok Retail Market Overview
RETAIL MARKET OVERVIEW
Due to the strong evidence that consumer confidence has been hit by skyrocketing oil prices, the unstable political situation, and the rising cost of living, retailers are concerned that consumers have reduced their purchasing power due to the higher cost of living since consumers lack confidence in the economic and political situation. Under normal circumstances, retailers will move cautiously when sentiment is poor and
consumer confidence is low. But this year has been an exception. All modern-trade operators have stuck to their expansion plans and some are moving at an even faster pace, with a new retail law acting as a catalyst. Apart from the rapid expansion, chains stepped up their marketing campaigns and focused on a “green architecture� concept, with wooden materials, open roofs, potted plants, fountains and trees.
RETAIL MARKET CATEGORIES
The majority of the retail space in Bangkok is shopping mall, accounting for 60%, followed by community mall, accounting for 13% of the total Bangkok retail supply. Lifestyle community malls have become the buzz-phrase for retail operators looking to gain a greater presence in Bangkok and also get closer to communities.
The retail market in Thailand can be divided into seven main categories, based on size, characteristics, goods sold, and pricing. The different retail formats serve shoppers at different locations depending on the availability of land and retail space as well as investment opportunities. These seven categories are: 1) Shopping mall / Shopping center is a building or set of buildings that contain a variety of retail units, with interconnecting walkways enabling visitors to easily walk from unit to unit. Many shopping malls consist of department store, kiosk, shops and supermarkets. Shopping malls are sizable buildings, providing various goods and services, and normally placed in the core and subcentre areas of Bangkok. FUTURE SUPPLY OF SHOPPING MALLS
Project Name
Location
Leasable Area (sq m)
Completion
China World
Wang burapha
14,000
Q4 2008
Sunday Mall
Kamphangphetch 4 Road
20,000
Q4 2008
Outlet Mall Jeang Wattana
Jeang Wattana Road
NA
Q1 2009
Platinum Fashion Mall (Expansion)
Pratunam
45,000
Q1 2009
Digital Gateway
Rama I Road
4,600
Q2 2009
Central Jeang Wattana
Jeang Wattana Road
64,000
2009
Fashion Island Hybrid Mall
Ramintra
10,000
2009
Cyber World Tower
Ratchadaphisek Road
13,600
2009
Sathon Square
Sathon Road
NA
2009
Gaysorn Plaza (Expansion)
Ratchaprasong Road
NA
2009
L&H Sukhumvit Soi 19
Sukhumvit Soi 19
32,000
2010
Eight Thonglor
Sukhumvit Soi 55
NA
2010
Royal Ratchadamri
Royal Ratchadamri
4,000
2011
Mor Chit Mall
Kamphangphetch Road
NA
2011
Sampheng Trade Center
Samphantawong
80,000
2011
Central Rama IX
Rama IX Road
50,000
2011
Platinum Mall
Pratunam
10,000
2011
Siam Square Block L
Henry Dunant Road
3,000
2011
Seacon Square (Expansion)
Srinakarin Road
42,000
2013
Central British Embassy
Phloen Chit Road
160,000
NA
Samyan Square Centre
Sam Yan
NA
NA
Future Park Rangsit
Rangsit Road
60,000
NA
Central Lumphini Park
Rama IV Road
NA
NA
N/A (Study Stage)
Phloen Chit Road
NA
NA
612,200 Source : Colliers International Thailand Research
2
Colliers International
The Knowledge Report | August | 2008 | Bangkok Retail Market Overview
2) Department Store is a retail establishment which specialises in selling a wide range of products without a single predominant merchandise line. Department stores usually sell products including apparel, furniture, appliances, electronics, and additionally select other lines of products such as paint, hardware, toiletries, cosmetics, photographic equipment, jewelry, toys, and sporting goods. Department stores are sizable buildings, providing various goods and services, and normally placed in the core and sub-centre areas of Bangkok. 3) Hypermarket is a superstore which provides wide range of products from food to non-food items. The result is a very large retail facility which comprises a wide range of products under one roof, including full lines of groceries and general merchandise. The ideal superstore is able to fully serve customer’s basic needs. The hypermarket’s typical business model focuses on high-volume, and low-margin sales. Because of their large footprints — a typical Tesco Lotus covers 6,000 – 30,000 sq m (64,560 – 322,800 sq f), a typical Carrefour 8,500 – 10,000 sq m (91,460 – 107,600 sq f) — they serve the needs of shoppers demanding large quantities of goods. However, retailing is also provided with the affordable price. In addition, several hypermarkets are located in suburban or outer city area, easily accessible by automobile. FUTURE SUPPLY OF HYPERMARKETS
Project Name
Location
Tesco Lotus Rangsit Klong II
Rangsit Road
Leasable Area (sq m)
Completion
10,000
Q4 2008
10,000 Source : Colliers International Thailand Research
Colliers International
3
The Knowledge Report | August | 2008 | Bangkok Retail Market Overview
4) Community Mall is a relatively new small retail format that is designed to meet the changes in customers’ needs and lifestyles. Such customers prefer to shop at retail stores that provide one-stop shopping near their homes. The community mall, where all of the space has been rented out easily, emphasizes easy access for people in its neighbourhood, within two to five minutes’drive. The mall offers a casual feeling where customers can shop, drink coffee or eat snacks and dine in a relaxing atmosphere. FUTURE SUPPLY OF COMMUNITY MALLs
Project Name
Location
Leasable Area (sq m)
Completion
Top Market Place Udomsuk Crystal Design Centre
Sukhumvit Soi 103
6,800
Q3 2008
Ekamai Ramintra
42,447
Q4 2008
Vanness Avenue
Prachauthit Road
2,210
Q4 2008
The Horizon
Sukhumvit Soi 63
1,821
Q1 2009
The Portico
Langsuan
3,119
Q1 2009
Metro Fashion
Pratunam
4,000
Q1 2009
Premiere Place
Srinakarin Road
NA
Q1 2009
Sena Avenue
Kaset - Nawamin Road
23,881
Q2 2009
Noble Remix
Sukhumvit Soi 34
9,000
2009
@Garden Soi Wat Latpradu
Bangbuathong
7,000
2009
@Park Town in Town
Ladphrao Soi 101
7,000
2009
@Park Phetchakasem
Phetchakasem Soi 81
7,000
2009
Impact Education & Lifestyle Centre
Jeang Wattana Road
3,000
2009
NA
Sukhumvit Soi 63
10,000
2010
The Trilogy
Ratchadaphisek & Rama IV
NA
2012
Yes Ratchaphruek
Ratchaphruek
NA
NA
Yes Udomsuk
Sukhumvit Soi 103
NA
NA
NA (Study Stage)
Sathon Road
15,000
NA
142,278 Source : Colliers International Thailand Research
5) Specialty Stores are stores which specialise in a specific range of merchandise and related items. Most stores have an extensive breadth and depth of stock in the items that they specialise in and provide a high level of service and expertise. The pricing policy is generally in the medium to high range, depending on factors like the type and exclusivity of merchandise and ownership. This also depends on the type of stores whether they are owner-operated or a chain operation which has the advantage of bulk purchasing and centralized warehousing system. The wide range of merchandise also distinguishes specialty stores from department stores and supermarkets. FUTURE SUPPLY OF SPECIALTY STORES
Project Name
Location
Leasable Area (sq m)
Completion
Homework Ratchaphruek
Ratchaphruek
7,500
2009
Homework Srinakarin
Srinakarin Road
7,500
2009
Index Plus
Bangna - Trad Road
15,000
2009
30,000 Source : Colliers International Thailand Research
4
Colliers International
The Knowledge Report | August | 2008 | Bangkok Retail Market Overview
6) Entertainment Complex generally comprises entertainment facilities such as movie theatres, bowling alleys, karaoke, retail space, and restaurants. FUTURE SUPPLY OF ENTERTAINMENT COMPLEXes
Project Name
Location
Leasable Area (sq m)
Completion
Major Cineplex (Expansion)
Sukhumvit Soi 63
9,000
Q3 2008
Nihonmura
Sukhumvit Soi 26
NA
Q4 2008
Major Cineplex
Ratana Thibet Road
9,000
1H 2009
18,000 Source : Colliers International Thailand Research
7) Supporting Retail is a retail establishment which comprises shops that serve the demand of people who work in the office building or residential building such as restaurants, laundries, minimarts, supermarkets, etc. Recently, there have been many residential buildings which consist of space for retail mix in the building.
FUTURE SUPPLY OF SUPPORTING RETAILs
Project Name
Location
Leasable Area (sq m)
Completion
Le Luk
Sukhumvit Soi 71
NA
Q2 2009
Bangkok Mediplex
Sukhumvit Soi 63
10,000
2009
Crown Plaza
Sukhumvit Soi 27
NA
2009
The Lighthouse
Charoen Nakhorn Road
3,200
Q3 2010
Bangkhen Condominium
Bangkhen
NA
2010
The Terminal
Sukhumvit
11,300
2011
Somerset Sukhumvit Soi 55
Sukhumvit Soi 55
700
NA
Somerset Grand Sukhumvit Soi 23
Sukhumvit Soi 23
NA
NA
Ideo Udomsuk
Sukhumvit Soi 103
NA
NA
Ideo Phahon Yothin
Phahon Yothin Road
NA
NA
25,200 Source : Colliers International Thailand Research
Colliers International
5
The Knowledge Report | August | 2008 | Bangkok Retail Market Overview
SUPPLY BY LOCATION
Based on our analysis, the Bangkok retail market can be divided into three areas as follows:
6
Colliers International
The Knowledge Report | August | 2008 | Bangkok Retail Market Overview
• CITY AREA
This popular shopping area for Thais, tourists and expatriates includes Phloen Chit Road, Witthayu Road, Sathon Road, Silom Road, Surawong Road, Phayathai Road, Rama I Road and the section of Sukhumvit Road between Soi 1 and Soi 39 to the north and Soi 2 to Soi 26 to the south, Phetchaburi Road (both sides) between Phayathai Intersection and Sukhumvit Soi 39 to the north, as well as Rama IV Road between Sukhumvit Soi 26 to Phayathai Intersection to the south.
SUPPLY ADDED IN THE FIRST HALF OF 2008 IN CITY AREA
Project Name
Category
Location
Leaseable Area (sq m)
Chamchuri Square
Shopping Mall
Rama IV Road
22,300
Fashion Mall
Shopping Mall
Pratunam
4,000
Interchange 21
Supporting Retail
Sukhumvit Soi 21
10,000
Krungthong Plaza II
Shopping Mall
Pratunam
6,000
The Manor
Community Mall
Sukhumvit Soi 39
1,000
Trendy Plaza
Community Mall
Sukhumvit Soi 11 & 13
7,700 51,000
Source : Colliers International Thailand Research
• OUTER CITY AREA
This area is convenient because of its proximity to many of the residential areas as well as some commercial buildings eg. office buildings and local attractions, etc. The area encompasses Sukhumvit Road (from Soi 39 to Soi 71), Phetchaburi Road (from Sukhumvit Soi 39 to Khlongton intersection), Ramkamhaeng Road (from Khlongton intersection to Bangkapi intersection), Ladphrao Road, Vibhavadi Road (from Dindang to Laksi intersection), Ratchawithi Road, Krung Kasem Road, Charoenkrung Road past Chaophraya River to Charan Sanit Wong Road, Ratchadathapra Road, Somdej Phrapinklao Road, the
beginning of Borommarachachonnani Road, Itsaraphap Road and Sirindhorn Road. The area also covers Narathiwatratchanakarin Road, Rama III Road and Rama IV (from Sukhumvit Soi 26 to Sukhumvit Soi 46/1).
SUPPLY ADDED IN THE FIRST HALF OF 2008 IN outer CITY AREA
Project Name
Category
Location
Leaseable Area (sq m)
India Emporium
Shopping Mall
Pahurat
4,000
HappyLand IT Plaza
Shopping Mall
Ladphrao
14,000
SC Plaza
Shopping Mall
Borommarachachonnani
16,000
The Avenue Ratchayothin
Community Mall
Ratchayothin
16,000
Top Market Place (Expansion)
Community Mall
Sukhumvit Soi 55
1,000 51,000
Source : Colliers International Thailand Research
Colliers International
7
The Knowledge Report | August | 2008 | Bangkok Retail Market Overview
• BANGKOK BOUNDARY AREA
This is the area that lies on the border of Bangkok and this area is crowded with many housing projects with easy access to the city area. The Bangkok Boundary Area can be divided into three parts which are Northern Zone, Western Zone and Eastern Zone. Northern Zone is the area that starts from Laksi Intersection on Vibhavadi Rangsit Road to the north, Jeang Wattana Road, KasetNawamin Road, Lad Placao Road, Ramintra Road, Ratana Thibet Road, to Chaophraya River on the west.
Eastern Zone is the area that starts from Sukhumvit Soi 71 to Bangna - Trad Road, Samrong, Theparak and Sukhaphiban I, II and III. Western Zone is the area that encompasses Ratburana Road, Suksawat Road, Prachauthit Road, Rama II Road, Ratchaphruek Road and Phetchakasem Road.
SUPPLY ADDED IN THE FIRST HALF OF 2008 IN BANGKOK BOUNDARY AREA
Project Name
Category
Location
Leasable Area (sq m)
@Oasis @Park Sukhumvit Soi 101/1
Community Mall
Samakkee Road
2,300
Community Mall
Sukhumvit Soi 101/1
7,000
Carrefour Compact Hypermarket
Community Mall
Rangsit Klong 3
4,000
Carrefour Compact Hypermarket
Community Mall
Nongchok
4,000
Carrefour Mini Hypermarket
Community Mall
Sukhaphiban I Road
2,300
Carrefour Mini Hypermarket
Community Mall
Srinakarin Road
2,300
iPlace Lifescape Centre
Community Mall
Ladkrabang
5,259
Nawamin Town Centre
Community Mall
Kaset - Nawamin Road
5,000
Seacon Square (Expansion)
Shopping Mall
Srinakarin Road
8,000
Yes Bangpli
Community Mall
Bangpli
9,425 49,584
Source : Colliers International Thailand Research
8
Colliers International
The Knowledge Report | August | 2008 | Bangkok Retail Market Overview
CURRENT SUPPLY
The total supply of Bangkok retail space as of the first half of 2008 is 4,858,497 sq m. The majority is the shopping mall, accounting for 2,908,665 sq m of the total Bangkok retail supply, followed by the hypermarket and
community mall, accounting for 636,450 sq m and 375,870 sq m, respectively.
RETAIL CURRENT SUPPLY, AS OF 2008
ZONE
CITY AREA (sq m)
OUTER CITY AREA (sq m)
Shopping Mall
893,730
639,472
Standalone Department Store
58,000
231,842
0
Hypermarket
40,000
184,450
142,000
Specialty Store
4,300
60,000
72,000
0
65,200
25,748
Community Mall
45,454
118,530
Supporting Retail
189,925
52,345
TOTAL (sq m)
1,231,409
1,351,839
RETAIL CATEGORY
Entertainment Complex
BANGKOK BOUNDARY AREA (sq m)
TOTAL (sq m)
North
West
East
535,545
164,190
675,728
2,908,665
0
0
289,842
140,000
130,000
636,450
61,000
62,500
259,800
10,000
12,000
112,948
54,726
110,367
46,793
375,870
0
0
32,652
274,922
830,019
485,557
959,673
4,858,497
Source : Colliers International Thailand Research
However, the total supply of department store was 953,493 sq m, of which 289,842 sq m is Standalone department store, while another 663,651 sq m is located in shopping mall, of which 160,600 sq m is in city area, while
172,600 sq m and 330,451 sq m are located in the outer city area and Bangkok boundary area respectively.
• By Retail Category
The majority of the retail space in Bangkok is shopping mall, accounting for 60%, of which 14% of the area is leased by Department Store. The community mall accounts for 13% of the total Bangkok retail supply. Lifestyle
community malls have become the buzz-phrase for retail operators looking to gain a greater presence in Bangkok and also get closer to communities.
Figure 1 : Retail Current Supply By Category, As Of The First Half Of 2008 6% 8% 2% 5%
13%
Shopping Mall Department Store Standalone Department Store Hypermarket Specialty Store Entertainment Complex Community Mall Supporting Retail
46%
14%
6%
60%
Source : Colliers International Thailand Research
Colliers International
9
The Knowledge Report | August | 2008 | Bangkok Retail Market Overview
• By Location
The majority of the retail space is concentrated in the Bangkok Boundary Area, representing about 2,275,249 sq m. The Outer City Area and the City Area account for 1,351,839 sq m and 1,231,409 sq m respectively.
Area due to the moving of the International Airport. We can see that many retail projects will be opened in the Eastern Zone soon.
Recently, retail developers are developing retail in the Eastern Zone of Bangkok Boundary FIGURE 2 : RETAIL CURRENT SUPPLY BY LOCATION, AS OF THE FIRST HALF OF 2008 Bangkok Boundary-West 10%
City Area 25%
Bangkok Boundary-East 20%
Bangkok Boundary-North 17%
Outer City Area 28%
Source : Colliers International Thailand Research
NEW SUPPLY IN THE FIRST HALF OF 2008
The new supply of retail added in the 1st half of 2008 was approximately 151,584 sq m. As we can see from the graph, the trend of retailers and property developers is going to develop more community malls in the area of Bangkok Boundary Area and Outer City Area, due to the changes in the urban economic demographics. This is in line with our internal
survey finding that consumers have adjusted their shopping behaviour to cope with higher living costs, particularly the increase in oil prices. Customers prefer to shop near home. Thus, demand for lifestyle community malls will grow over the next decade.
FIGURE 3 : FUTURE SUPPLY ADDED IN THE FIRST HALF OF 2008 BY LOCATION AND CATEGORY Area (sq m) 60,000 50,000
Shopping Mall Community Mall Supporting Retail
40,000 30,000 20,000 10,000
0
Location City Area
Outer City Area
Source : Colliers International Thailand Research
10
Colliers International
Bangkok Boundary Area
The Knowledge Report | August | 2008 | Bangkok Retail Market Overview
FUTURE SUPPLY
The supply of the Bangkok retail market is expected to increase every year. In 2008, there will be an additional 256,041 sq m. An additional 252,021 sq m will be added in 2009
and approximately 481,200 sq m will be added beyond 2010.
FIGURE 4 : SUPPLY OF BANGKOK RETAIL MARKET BETWEEN 2003 AND BEYOND 2011F Area (sq m) 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0
Year 2003
2004
2005
2006
2007
1st Half 2008
2008F
2009F
2010F Beyond 2011F
Source : Colliers International Thailand Research
FUTURE SUPPLY BY LOCATION
Costly oil in particular has encouraged consumers to shop within their neighbourhoods rather than traveling to the city area of Bangkok to do their shopping as well as the fact that the number of housing developments have come up in the Bangkok Boundary Area. Thus, the key to success in the retailing business is to open outlets very close to shoppers, thus we
can see that a huge supply of retail space will be added in the Bangkok Boundary Area by 2011, with approximately 331,838 sq m, followed by the City Area and the Outer City Area, with approximately 280,719 sq m and 225,121 sq m, respectively.
FIGURE 5 : FUTURE SUPPLY OF RETAIL BY LOCATION ADDED BETWEEN 2ND HALF OF 2008 AND BEYOND 2011F Area (sq m) 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0
Location City Area
Outer City Area
Bangkok Boundary Area
Source : Colliers International Thailand Research
Colliers International
11
The Knowledge Report | August | 2008 | Bangkok Retail Market Overview
RENOVATION OF RETAIL SPACE
the consumers are more sophisticated and fashionable. The following retail developers have planned to renovate their outlets to compete in the near future:
As the retail market is continually changing, the existing retail projects need to be renovated and upgraded to attract more customers. Facelifts would modernise the outlets and make them more attractive to customers. New product lines and brands would also be brought in to increase customers’ choice since
RETAIL PROJECTS RENOVATION IN 2008
Project Name
Location
Cost (THB million)
Fashion Island
Ramintra Road
400
Future Park Rangsit
Rangsit Road
600
Central Wangburabha
Phahurat
100
Central Bangna
Bangna
Central Pin Klao
Pin Klao
Central Ladphrao
Ladphrao
Seacon Square
Srinakarin Road
Total renovation in 2008 Source : Colliers International Thailand Research
12
Colliers International
}
600 2,400 300 4,400
The Knowledge Report | August | 2008 | Bangkok Retail Market Overview
DEMAND
Although, business sentiment has turned more negative due to the political and economic uncertainties in Thailand, the retail market keeps expanding as proved by the additional new supply which will be added in a couple of years as well as the renovation of the existing retailers. The endorsement of the new constitution, which set the stage for the 23 December election, and the belief that state spending on mega projects would resume, has lifted sentiment to some degree. More importantly, large retailers will continue to speed up their expansion plans ahead of the passage of any new retail law. Thus, various
brands have to expand their branches to reduce the business risk due to the expansion of other retailers. With fuel, transport and other costs on the rise, various brands have to expand their stores in order to catch up with the demand. There is an increase of brand expansion in 2008. Various brands have to expand in order to catch up with the demand as they see Thailand as a fiercely competitive market. The key obstacle to expansion is acquiring a good location.
BRAND EXPANSION IN 2008
Brand
Product
Number of Current Stores
Stores to open in 2008
Mos Burger
Fast food
1
6
GFA Corporation (Thailand)
Coffee World, Pizza Corner, The Cream & Fudge Factory, The Donut Baker, Golden Pretzel, Conizza
100
20
Boots
Cosmetics and Pharmacy
141
20
Watson
Cosmetics and Pharmacy
145
10
Chester’s Grill
Fast food
140
25
SE-ED Bookstore
Books, Magazines, Newspapers
268
69
Red Mango
Ice Cream
12
20
Habitat
Furniture
1
1
The Pizza Company
Fast Food
139
8
Iberry
Ice Cream
18
2
KFC
Fast Food
330
20
Mc Drive Thru
Fast Food
7
7-10
Mc Cafe
Fast Food
11
20
S&P
Restaurant
270
30
Swensen
Ice Cream
113
115
Dairy Queen
Ice Cream
205
219
Burger King
Fast Food
20
22
Le Jazz
Restaurant
9
9
Sizzler
Restaurant
29
29
Oishi Group
Restaurant: Shabushi, Oishi Ramen, Sushi Bar, Oishi Buffet
80
20
Cone Pizza
Restaurant
1
3
CRG Group
Restaurant
467
11
Auntie Ann
Fast Food
81
10
Black Canyon
Restaurant
94
15
Fitness First
Sports Club
15
3
True Fitness
Sports Club
2
2
Source : Colliers International Thailand Research
Colliers International
13
The Knowledge Report | August | 2008 | Bangkok Retail Market Overview
The tumbling consumer confidence has been blamed on skyrocketing oil prices and the rising cost of living, while the conflict over constitutional amendments and political party dismemberment have led to an unstable political situation. As a result of lower confidence, consumers still believe this is not a suitable time for purchasing any inferior goods/ products while fast-moving consumer goods and food are still in demand. This is a vital indicator showing consumers have started to adjust to strong inflation and higher living costs
by spending less and saving more. Shoppers, particularly lower medium-income earners, force themselves to tighten their belts as higher oil prices are raising their travel expenses while the economic outlook is bleak due to the rising price of oil. Thus, major shopping malls have launched aggressive marketing campaigns to boost traffic and stimulate spending during this period.
OCCUPANCY RATE
The overall occupancy rate in the retail market is high, averaging 94.23% as of 1H 2008. • CITY AREA
Since the City Area is in the tourist area, this zone attracts both international tourists, business travellers and Thais, thus the overall
occupancy rate in this area is quite high at 95% as of 1H 2008.
Category
Supply (sq m)
Take up (sq m)
Vacancy Rate (%)
Shopping Mall
893,730
849,044
5%
Hypermarket
40,000
38,800
3%
Specialty Store
4,300
4,171
3% 5%
Community Mall
45,454
43,181
Supporting Retail
189,925
180,429
5%
Total (sq m)
1,173,409
1,115,625
5%
Source : Colliers International Thailand Research
• OUTER CITY AREA
The average occupancy rate in this area is approximately 94%, as of 1H 2008. Category
Supply (sq m)
Take up (sq m)
Vacancy Rate (%)
Shopping Mall
639,472
594,709
7%
Hypermarket
184,450
175,228
5%
Specialty Store
60,000
60,000
0%
Entertainment Complex
65,200
61,940
5%
Community Mall
118,530
111,418
6%
Supporting Retail
52,345
48,157
8%
Total (sq m)
1,119,997
1,051,452
6%
Source : Colliers International Thailand Research
14
Colliers International
The Knowledge Report | August | 2008 | Bangkok Retail Market Overview
• BANGKOK BOUNDARY AREA
Even though, there is huge supply in this area, the overall occupancy rate is quite high at 94%. Category
Supply (sq m)
Take up (sq m)
Vacancy Rate (%)
Shopping Mall
1,375,463
1,279,181
7%
Hypermarket
412,000
391,400
5%
Specialty Store
195,500
193,545
1%
Entertainment Complex
47,748
45,361
5%
Community Mall
211,886
199,173
6%
Supporting Retail
32,652
29,387
10%
Total (sq m)
2,275,249
2,138,047
6%
Source : Colliers International Thailand Research
The occupancy rate of shopping mall dropped in 2007, from 94% in 2006 to 93.60% in 2007, whist the occupancy rate of community mall increased in 2007, from just 93.40% in 2006 to 94.60% in 2007. The occupancy rate of
shopping mall and community mall remained unchanged from the year 2007 to the first half of 2008.
FIGURE 6 : OCCUPANCY RATE OF SHOPPING MALL AND COMMUNITY MALL BETWEEN 2006 AND 1H 2008 Occupancy Rate 94.80% 94.60%
94.60%
93.60%
93.60%
94.60% 94.40% 94.20% 94.00%
94.00%
93.80% 93.60% 93.40%
93.40% 93.20% 93.00% 92.80%
Year 2006
2007
Shopping Mall
1H 2008
Community Mall
Source : Colliers International Thailand Research
Colliers International
15
The Knowledge Report | August | 2008 | Bangkok Retail Market Overview
RENTAL RATE
The average rental rate of retail business is similar in terms of location. The developer will charge higher rent for the rental space according to the location determined by the degree of traffic. The average rental rate in the City Area is in the range of THB 1,500 – 3,000 per sq m per month. The average rental rate in the Outer City Area ranges from THB
1,400 – 2,800 per sq m per month, while the average rental rate in the Bangkok Boundary Area ranges from THB 1,000 – 1,500 per sq m per month.
AVERAGE RENTAL RATE BY LOCATION
Location
Average Rental Rate (Baht / sq m / month)
City Area
1,500 – 3,000
Outer City Area
1,400 – 2,800
Bangkok Boundary Area
1,000 – 1,500
*The average rental rate is based on the rental rate located on G Floor of the building, with the average size of 70 sq m. ** The above rate is applied as a medium of the rental rate of experienced brand. Source : Colliers International Thailand Research
The rent varies according to the retail business, as well as the size of the space and the location
in the building. Below is the approximate rental rate in each retail business.
AVERAGE RENTAL RATE BY BUSINESS TYPE
Retail Business
Average Rental Rate (Baht / sq m / month)
Fashion
1,800 – 2,800
Restaurant
800 – 1,400
Banking
1,500 – 3,000
Fitness Centre
300 – 600
Coffee Shop
1,000 – 2,000
Bookshop
500 – 1,000
Beauty Salon
900 – 1,000
Services eg. Mobile, Laundry, Post Office, Flower shop Source : Colliers International Thailand Research
16
Colliers International
1,000 – 1,300
The Knowledge Report | August | 2008 | Bangkok Retail Market Overview
RETAIL D EVELO P M ENT E X PANSION UPCOUNTRY
The investment cost for developing the following retail space by 2010 is valued at THB Company Name
14 billion. The information is illustrated in the table below:
Category
Province
Remarks
CPN
Shopping Mall
Pattaya Chonburi Khon Kaen Ubon Ratchathani Chiang Mai Chiang Rai
Investment amount THB 6.6 billion
Index Living Mall
Specialty Store
Pattaya Kon Kaen
Investment amount THB 1 billion
Yes Bowin
Community Mall
Chonburi
Investment amount THB 300 m
Homework
Specialty Store
Phuket
Investment amount THB 1,000 m
Home Pro
Specialty Store
Ayutthaya Chiang Mai Krabi NA
Completed in March 2008
Department Store
Chonburi Kon Kaen Ubonratchathani Chiang Rai Nakorn Pathom Phitsanulok
Investment amount THB 3 billion. Chonburi, Kon Kaen and Ubonratchathani will be completed in 2009. The rest will be completed in 2010
Robinson Department Store
Source : Colliers International Thailand Research
RETAILERS EXPANDING ABROAD
Recently, many retailers have announced plans to move beyond their home country to other places in Asia eg. India, Vietnam and China. Retailers will reduce their business risk from currency fluctuation by opening more outlets abroad through a franchise system. Vietnam is an interesting country to expand retail since Vietnam is
Company Name
Index Living Mall
Category
Specialty Store
Southeast’s Asia fastest growing economy. There is bright potential in Vietnam because there is no competitor for some kinds of products, for example, Home Furnishing Products. The table below shows the details of some of the retailers planning to expand abroad.
Country
Remarks
Ho Chi Minh City,Vietnam
The company plans to have eight branches in Vietnam within the next 10 years.
China Russia Dubai
In discussions with 10 foreign investors.
India
Central Department Store (CDS)
Major Bowl
Department Store
Entertainment Complex
India
Joint Venture with DLF Group one of India’s largest Real Estate Groups.
Vietnam
Joint Venture
China
Approved budget of THB 20 billion to expand its business in China’s 15 top cities over two years.
Mumbai
Completion in Sept 08
Delhi
Completion in Oct 08
Bangalore
Completion in 2009
Source : Colliers International Thailand Research
Colliers International
17
The Knowledge Report | August | 2008 | Bangkok Retail Market Overview
Outlook: The prospects for the retail business in the second half of the year will depend mainly on local politics and the rise in the cost of living as these will impact consumer confidence and purchasing power directly. Retail complexes providing essential products have not experienced much impact from the slowing economy. Despite the negative factors, most retail segments have continued to expand over the past 12 months. More rapid growth has been seen in some segments, particularly community malls and convenience stores. The future trend of retailers and property developers will be to develop community malls in the Outer City Area and Bangkok Boundary Area as we have seen from the growing amount of new supply of community malls. The move has been made in response to the scarcity of land in the City Area, consumers’ lifestyles, and higher petrol prices leading more shoppers to shop near home. Many retailers and retail developers are also still uncertain of the impact when the new Retail and Wholesale Business Act becomes effective. More importantly, there is strong potential for community malls to grow in the Outer City Area and Bangkok Boundary Area. In the City Area, community malls or lifestyle shopping complexes still have potential to grow, particularly in the locations along the sky train and subway routes.
293 offices in 61 countries on 6 continents USA 99 Canada 19 Latin America 18 Asia Pacific 62 EMEA 95 US$ 2 billion in annual revenue 868 million square feet under management 11,048 Professionals
Contact information THAILAND: Patima Jeerapaet Managing Director
Risinee Sarikaputra Senior Manager | Research
Colliers International 17/F Ploenchit Center Klongtoey Bangkok 10110 Tel: 662 656 7000 Fax: 662 656 7111
This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.
18 Colliers International www.colliers.co.th
w w w. c o l l i e r s . c o. t h
This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.