Bangkok retail market q1 2010
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Bangkok retail market q1 2010 Bangkok retail market q1 2010 Document Transcript

  • c o l l i e R s i n T e R n aT i o n a l | THailanD The Knowledge Report B a n g Ko K R e Ta i l M a R K e T | 1 s T Q U a RT e R | 2010 executive summary The retail market remained stable for Q1 2010 due to growing consumer confidence but was adversely affected by protracted political uncertainty. Only one new retail outlet was added to supply in Q1 2010 in the form of a community mall located MaRKeT inDicaToRs in Sukhumvit. 2009 - Q1 2010 Retail is downsizing in Bangkok due to a number of factors. Community malls and convenience stores are becoming a ubiquitous part of the city. But shopping malls still dominate the market. sUPPlY New mass retail development in the centre will be limited due to impending legislation that is expected to curtail new large scale retail projects in the centre. The intention is to protect non mass DeManD retail outlets. Key hypermarket businesses, notably Tesco Lotus and Carrefour, are further expanding their smaller supermarket and convenience store brands throughout Thailand. RenTals The future for new retail developments in urban Bangkok will consist of further downsizing in terms of community malls instead of larger shopping malls and smaller express stores rather than occUPancY hypermarkets. This ironically will lead to greater head-on competition with traditional stores and the large scale players have the advantage of greater pricing power and more sophisticated logistics. www.colliers.co.th
  • The Knowledge Report | 1st Quarter | 2010 | Bangkok Retail Market ReTail locaTions 2 collieRs inTeRnaTional
  • The Knowledge Report | 1st Quarter | 2010 | Bangkok Retail Market ReTail MaRKeT caTegoRies The organized retail market in Thailand can be divided into Note: For the purposes of the report retail refers to organized seven main categories, based on size, characteristics, goods sold, retail services and excludes traditional single proprietor outlets and pricing. often located in shophouses and markets consisting of predomi- nantly small traders. Also supermarkets have been excluded from 1) Shopping Mall / Shopping Centre this report. 2) Department Store (figures for this report include stand alone stores only, those located in shopping For more information regarding retail zoning and market catego- malls are not included) ries please contact Colliers International Thailand Research. 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 HisToRical sUPPlY sUPPlY of ReTail sPace in BangKoK BY caTegoRY, Q1 2010 Source : Colliers International Thailand Research Shopping malls consist of the majority of retail space in In fact the only addition to overall supply in Q1 2010 was in the Bangkok. Apart from these the only significant movement over form of “K Village” with 7,891 sq m which had its official grand the past few years has been the development of community malls. opening on 26 March 2010 and is located on Sukhumvit soi 26. collieRs inTeRnaTional 3
  • The Knowledge Report | 1st Quarter | 2010 | Bangkok Retail Market BReaKDown of ReTail sPace in BangKoK BY caTegoRY, Q1 2010 exclUDing sHoPPing Malls Source : Colliers International Thailand Research The development of community malls can be traced to a there has been an over 70% growth in community mall space number of factors; the move away from large scale retail centres, and they are now becoming an intrinsic part of the lives of many an oil price surge that led to a focus for reduced car usage and the people in Bangkok. development of new residential projects that facilitated a need for smaller retail centres serving these residents. Since 2007 4 collieRs inTeRnaTional
  • The Knowledge Report | 1st Quarter | 2010 | Bangkok Retail Market sUPPlY BY Zone City AreA : BReaKDown of ReTail sPace in ciTY aRea BY caTegoRY, Q1 2010 Source : Colliers International Thailand Research Shopping malls dominate the City area as this is the commer- The new retail legislation will likely curtail new developments cial hub of Bangkok and most have very strong brand identities. to just 300 metres floor space. Therefore the retail landscape will The centre, especially in the Siam area, has come to be defined remain largely unchanged for the foreseeable future. While on by the retail experience provided by shopping malls, therefore the surface this may seem negative it will provide the opportu- the predominance of such malls has become self sustaining. nity for retailers to become more innovative with the design and Siam Paragon and Centralworld are the two largest in terms of configuration of their existing mall space. Retailing offers more leasable space. Supporting retail takes up a significant proportion flexibility than other property sectors in this regard. due to the large number of office buildings located in the CBD. collieRs inTeRnaTional 5
  • The Knowledge Report | 1st Quarter | 2010 | Bangkok Retail Market Outer City AreA : BReaKDown of ReTail sPace in oUTeR ciTY aRea BY caTegoRY, Q1 2010 Source : Colliers International Thailand Research The Outer City area contains a more diverse base of outlets than opment of stand alone department stores and community malls the City area. Cheaper land prices allow hypermarkets to spring filling the void. Many of the malls range from 40,000-60,000 up which require significant car parking space due to volume sq m but none are of the size of the largest malls in the City purchases. While shopping malls are ubiquitous in the centre, area. their greater scarcity in the Outer City opens the way for devel- SuburbAn bAngkOk - eASt AreA : BReaKDown of ReTail sPace in sUBURBan BangKoK - easT aRea BY caTegoRY, Q1 2010 Source : Colliers International Thailand Research Two very large shopping centres, namely Seacon Square role in the area due to number of expressways driving car traffic and Fashion Island make up a significant proportion of total to these locations. shopping mall space in the East. Hypermarkets play an important 6 collieRs inTeRnaTional
  • The Knowledge Report | 1st Quarter | 2010 | Bangkok Retail Market SuburbAn bAngkOk - WeSt AreA : BReaKDown of ReTail sPace in sUBURBan BangKoK - wesT aRea BY caTegoRY, Q1 2010 Source : Colliers International Thailand Research Shopping malls take up a far lower proportion of supply in West ic level, hypermarkets and community malls make up a greater area with only Central Park Rama III taking up a sizable area. slice due to their focus more on non-discretionary purchases. With its high density residential profile and lower socio-econom- SuburbAn bAngkOk - nOrth AreA : BReaKDown of ReTail sPace in sUBURBan BangKoK - noRTH aRea BY caTegoRY, Q1 2010 Source : Colliers International Thailand Research The dominance of shopping malls came about with the recent Crystal Design Center explains the specialty store share. development of Future Park Rangsit and IT Square. The iconic collieRs inTeRnaTional 7
  • The Knowledge Report | 1st Quarter | 2010 | Bangkok Retail Market fUTURe sUPPlY BReaKDown of fUTURe sUPPlY in BangKoK BY caTegoRY, Q1 2010 Source : Colliers International Thailand Research Shopping malls will continue to dominate the retail market in total area of approximately 120,000 sq m. Only community malls the next two years with more than 250,000 sq m and most of show real signs of life in the other categories with around 50,000 them will be located in the Outer City area. About half of the sq m scheduled to be added until the end of 2011. area will be supplied by Central Rama 9 on Ratchadapisek – Rama 9 Intersection, scheduled to be completed in 2011 with a 8 collieRs inTeRnaTional
  • The Knowledge Report | 1st Quarter | 2010 | Bangkok Retail Market BReaKDown of fUTURe sUPPlY in BangKoK BY locaTion, Q1 2010 Source : Colliers International Thailand Research Future changes of the zoning regulations based on the In June 2010 Paradise Park shopping mall will open its doors in upcoming census are likely to curtail retail development in the Suburban Bangkok East after a major renovation and change of suburbs in the short term. It is expected that the higher den- name from Seri Center following the purchase of the property sity of many locations in the suburbs will lead to a relaxation of by MBK plc and Siam Piwat plc. The previous mall struggled current building restrictions and developers are in all probabil- to compete with its neighbour Seacon Square and has boasted ity putting planning on hold until future changes in zoning are 100% occupancy of its 90,000 sq m of leasable area prior to its put in place. Limitations on available land and new legislation is official opening. also restricting future supply in the City area. The lion’s share of future supply will be focused in the Outer City area especially in the form of Central Rama IX shopping mall. collieRs inTeRnaTional 9
  • The Knowledge Report | 1st Quarter | 2010 | Bangkok Retail Market DeManD - TaKe UP BReaKDown of HisToRical TaKe UP RaTe of ReTail sPace BY locaTion, 2000 - Q1 2010 Source : Colliers International Thailand Research Take up rate in city area increased from last year by approxi- economic dislocations such as health scares and global economic mately 3%, although Q1 2010 represented a difficult period for downturns. The sharp drop in take up in 2005 in the City area the retail market in the City area, due to the political situation. was the result of renovations being undertaken in a number of It would be appear that take up in the City is more volatile than shopping malls in order for them to be more competitive. The other areas due to its greater reliance on tourism and discre- subsequent rise occurred on the reopening of these malls. tionary spending which are far more affected by political and TaKe UP RaTe of cURRenT sUPPlY BY caTegoRY, Q1 2010 Source : Colliers International Thailand Research Take up rate of all categories is more than 90% and has remained robust throughout the past turbulent 18 months. 10 collieRs inTeRnaTional
  • The Knowledge Report | 1st Quarter | 2010 | Bangkok Retail Market TaKe UP RaTe of cURRenT sUPPlY BY locaTion, Q1 2010 Source : Colliers International Thailand Research The highest take up rate is in the City area with approximately 94%. This is likely due to the significant amount of existing 97% followed by suburban Bangkok – West area with approxi- supply available at Seacon Square and Fashion Island which mately 96%. The lowest rate is in suburban – East area is at about makes it difficult to maintain full occupancy. DeManD DRiveRs focUs CONSuMER CONFIDENCE The second half of 2009 showed a general rise in the CCI due also been exacerbated by a number of protests being directly to the turnaround of the economy and a more stable political located among prime retail centres in the city. situation. The return of protests in Bangkok from the end of February has dented sentiment for Q1 2010. The situation has Colliers International Thailand Research Source : Ministry of Commerce collieRs inTeRnaTional 11
  • The Knowledge Report | 1st Quarter | 2010 | Bangkok Retail Market cReDiT caRD Colliers International Thailand Research Source : Bank of Thailand There has been a significant increase in credit card usage greater number of shoppers paying by card. In fact about 12.6% of over the past five years that has been instrumental in spurring personal consumption is paid for by credit cars compared with retail spending. The global trend for cashless societies is reach- 8-5% in 2005. ing Thailand and even anecdotal evidence points to an ever gRowTH of ReTail BanKing Along with the development of a sophisticated banking especially in shopping malls, supporting retail and commu- system comes the actual growth in the number of bank branch- nity malls that are more likely to accommodate retail banking es in Bangkok, serving the needs of the local and foreign outlets. residents alike. This trend has helped to support the retail market, Colliers International Thailand Research Source : Bank of Thailand 12 collieRs inTeRnaTional
  • The Knowledge Report | 1st Quarter | 2010 | Bangkok Retail Market RenTals Rental Rate Source : Colliers International Thailand Research The rental rates provided give only a very general indication Paragon, a high end mall which subsequently increased the of pricing trends in the market. Significant differences occur average rates for the area. The fall in rentals two years later was in rental rates depending on floor level, access to BTS stations caused by newly renovated malls coming on stream as well as the and tenant mix. The surge in rental rates was the result of ren- coup. Since then rentals have remained stable up to Q1 2010. ovations at a number of shopping malls creating a squeeze for tenants requiring selling space as well as the opening of Siam collieRs inTeRnaTional 13
  • The Knowledge Report | 1st Quarter | 2010 | Bangkok Retail Market foRecasT As at the end of Q1 2010 a number of shopping malls in the centre of Bangkok have been directly affected by the protests taking place in the capital. Therefore in the short term retail in the City area could come under some stress due to direct affects as well as a reduction in consumer sentiment affecting discretionary spend- ing. In the longer term Colliers International Thailand predicts that rentals will firm in the centre of Bangkok due to the lack of new supply and future renovations leading to a further up scaling of the City area. Over time the centre will be the focus of new retailing concepts both imported from other countries and domesti- cally inspired. The emergence of new community malls throughout Bangkok will be the ongoing trend for years to come as the new mass transit lines weave their way through the suburbs of the city, creating new high density residential areas and community malls servicing them. Administrations are likely to encourage their development to reduce car usage. The scaling down of retail will also occur with the move away from hyper- markets in the urban area to smaller express stores and supermarkets such as Tesco Lotus Express and Carrefour Market. Along with the continual growth of convenience stores throughout Thailand; small independent retailers, nicknamed “Mom & Pop” stores in the west, will be subject to direct competition from large multi-national players. In the suburbs planning is on hold until new zoning restrictions are announced in the next few years. Based on Colliers International Thailand residential analysis it can be predicted that a large area, especially in the east would have a high enough density for looser restrictions on building sizes and usage. Therefore over the course of the new decade new large scale retail developments will spring up. 14 collieRs inTeRnaTional
  • The Knowledge Report | 1st Quarter | 2010 | Bangkok Retail Market collieRs inTeRnaTional THailanD 480 offices in 61 coUnTRies on 6 conTinenTs ManageMenT TeaM Us$ 1.9 Billion in annUal RevenUe 1.1 Billion sQUaRe feeT UnDeR ASSET MANAGEMENT ManageMenT Wasan Rattanakijjanukul | Manager 15,000 PRofessionals Nukarn Suwatikul | Manager CONSuLTANCY Napart Tienchutima | Manager COMMERCIAL / INDuSTRIAL /RETAIL Narumon Rodsiravoraphat | Senior Manager INVESTMENT Nukarn Suwatikul | Senior Manager RESIDENTIAL conTacT infoRMaTion Patima Jeerapaet | Managing Director RESEARCH & ADVISORY THailanD: Antony Picon | Senior Manager Patima Jeerapaet Antony Picon Surachet Kongcheep | Manager Managing Director Senior Manager | Research patima.jeerapaet@colliers.com antony.picon@colliers.com VALuATION Surachet Kongcheep Nicholas Brown | Associate Director Manager | Research Thanussorn Aukkrararerksaponk |Manager surachet.kongcheep@colliers.com Colliers International Thailand Bangkok Office : 17/F Ploenchit Center, Klongtoey Bangkok 10110 Tel: 662 656 7000 Fax: 662 656 7111 Email : info.th@colliers.com Pattaya Office : 492/2 Thappraya Road, Nongprue, Banglamung Chonburi 20150 Tel: 6638 364 411-2 Fax: 6638 364 414 Email : info.pattaya@colliers.com 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. www.colliers.co.th collieRs inTeRnaTional 15