Bangkok Retail Market Sector 2008 by Colliers International Thailand

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.

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• 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

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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

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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

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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

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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:

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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

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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

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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

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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

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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

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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

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}

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

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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

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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

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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.