Bangkok Retail Market Report Q4 2010


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Bangkok Retail Market Report Q4 2010
Current trends in retail market, take up, rentals, supply.

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Bangkok Retail Market Report Q4 2010

  1. 1. year end 2010 | reTaILthailandBangkok Retail MaRketRePoRt 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 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 2009 - 2010 centres in urban Bangkok. Supply older retail centres continue to renovate in order to successfully compete with newer retail rentalS centres with modern designs. Occupancy 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
  2. 2. Bangkok reTaIL MarkeT rePorT | Q4 2010retail lOcatiOnSCOLLIERS INTERNATIONAL | P. 2
  3. 3. Bangkok reTaIL MarkeT rePorT | Q4 2010retail market categOrieSthe organized retail market in thailand can be divided into seven maincategories, based on size, characteristics, goods sold, and pricing.1) Shopping mall / Shopping centre2) department Store (figures for this report include stand alone storesonly, those located in shopping malls are not included)3) hypermarket4) community mall5) Specialty Stores6) entertainment complex (this does not include entertainment areas in note: For the purposes of the report retail refers to organized retailshopping malls as these represent an intrinsic part of the shopping mall services and excludes traditional single proprietor outlets often locatedmix) in shophouses and markets consisting of predominantly small traders.7) Supporting retail also supermarkets have been excluded from this report.hiStOrical Supply tOtal retail Supply 2007-2010 Source : Colliers international thailand Researchapproximately 38,000 sq m was completed in Q4 2010 and a total of Big C will own 113 hypermarkets in thailand against tesco lotus’s 87approximately 185,000 sq m was completed in 2010, however some hypermarkets. Big C has no plans to close any of the 42 Carrefour storesprojects have been delayed to next year due to the affects of the protests although some stores are located in the same area of existing Big Cin Q2 of 2010. stores.Forty two stores of Carrefour in thailand were acquired in Q4 2010 byBig C, a subsidiary of French retailer groupe Casino. after the acquisition COLLIERS INTERNATIONAL | P. 3
  4. 4. Bangkok reTaIL MarkeT rePorT | Q4 2010 additiOnal Supply in 2010 by quarter Source : Colliers international thailand Researchadditional supply for Q4 2010 was provided by five community malls was opened on 10 october 2010 and Park lane Bangkok had its grandwith a total area of around 38,000 sq m. Pure Place Ramkhamhaeng 110 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 ResearchSince 2007 onwards until 2010, retail space in the outer City area increased more than 36%, due to lower land prices in these zones andincreased by more than 14% while Suburban Bangkok – north area the proximity of these locations to a strong customer base.COLLIERS INTERNATIONAL | P. 4
  5. 5. Bangkok reTaIL MarkeT rePorT | Q4 2010 tOtal hiStOrical Supply by lOcatiOn tO q4 2010 Source : Colliers international thailand ResearchRetail developers are trying to develop projects closer to their catchment the attraction, as in most cities, of shopping in the centre. Before theareas in the suburban areas, where more people live. However only half advent of cars for the masses the centre was the area that people flockedof total retail space in Bangkok is located in the suburban Bangkok area; to for the retail experience.with every department store in Bangkok located in the urban area due to COLLIERS INTERNATIONAL | P. 5
  6. 6. Bangkok reTaIL MarkeT rePorT | Q4 2010future Supply cumulative Of future Supply in bangkOk by year and categOry, aS Of q4 2010 Source : Colliers international thailand Researchthe future supply scheduled to be completed in 2011 is approximately terminal 21 is scheduled to be completed in 2011 nearly 35,000 sq m of290,000 sq m with approximately 185,000 sq m as shopping malls and shopping mall space in the City area. this is likely to herald the end of85,000 sq m is expected to be completed in 2012. large scale retail development in the centre for the foreseeable future due to forthcoming restrictions. the new BtS extension line on nut –the outer City area still remains the most popular location for retail. Bearing, planned to commence commercial operations in Q4 2011 willin Q4 2011 Central Rama 9 on Ratchadapisek – Rama 9 intersection is boost residential projects in the area along the line, so retail developersscheduled to be completed with a total area of approximately 83,300 are likely to pay attention to this location, especially for communitysq m, increasing the supply of shopping malls. malls.COLLIERS INTERNATIONAL | P. 6
  7. 7. Bangkok reTaIL MarkeT rePorT | Q4 2010demand – take up breakdOwn Of hiStOrical take up rate Of retail Space by lOcatiOn, 2005 – 2010 Source : Colliers international thailand ResearchSmall increases were registered in all zones for 2010. the City and increase of approximately 0.4% was recorded.outer City areas up around 0.3 - 0.4% while in the Suburban area an take up rate Of current Supply by categOry, q4 2010 Source : Colliers international thailand Researchtake up rate of all categories, except supporting retail, is more than 95%. account for this as this means less people using the outlets. in someSupporting retail commands only 85% and can be explained by the situations the space for supporting retail is too large for the size of thereliance on custom from workers in the offices that retail component office it supports and some convert to office use or other functions suchsupports. lower levels of office occupancy over the past few years as educational centres. COLLIERS INTERNATIONAL | P. 7
  8. 8. Bangkok reTaIL MarkeT rePorT | Q4 2010 take up rate Of current Supply by lOcatiOn, q1 – q4 2010 Source : Colliers international thailand Researchtake 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 Researchthe slump in consumer confidence for much of 2008 and 2009 was the period of 09/10, this was severely dented following the protests in aprilresult of the global Financial Crisis that caused thailand’s gDP to shrink. and May. However Q3 witnessed a return to the increasing trend and Q4While confidence began to take on a sustained upward path in the winter is the highest quarter in last four years.COLLIERS INTERNATIONAL | P. 8
  9. 9. Bangkok reTaIL MarkeT rePorT | Q4 2010retail SaleS retail SaleS index by quarter Source : Bank of thailand, Colliers international thailand Research Remark : e = estimated by Colliers international Research Year 2002 = 100the protests in the previous quarter had impacted the retail market but sales that will show the highest levels in the last five years, evenin Q3 2010 the overall pattern of spending returned and this shows compared to previous Christmas and new Year holiday seasons.optimism for the future. For Q4 2010 the Bank of thailand forecast retaildOmeStic credit card uSage vOlume credit card uSage vOlume by quarter Source : Bank of thailand, Colliers international thailand Research Remark : e = estimated by Colliers international ResearchCredit card usage over the past five years has increased by around 60% up in Q3 2010. the fourth quarter is the last quarter of the year andand these cards are more often used in organized retail centres. the includes Christmas and new Year festival, so credit card usage volumerecent numbers indicate a fall in spending during the protests and a pick in this quarter of every year is usually the highest. COLLIERS INTERNATIONAL | P. 9
  10. 10. Bangkok reTaIL MarkeT rePorT | Q4 2010trendSdigital retailS retail players there are new entrants into the market such as “Uber Mall” the first 3D shopping mall online and by kasikorn Bank. a survey by Master Card Worldwide found that thaineCteC reported the number of internet users in thailand in 2010, people are interested in shopping online, with an average value ofbased on survey results from, to be more than 21 products bought online increasing to 18,150 baht per person, more thanmillion, an increase of nearly 15% from 18.3 million people in 2009; and last survey of approximately 5,000 baht. However the retail experienceaccording to this report the number of internet users is at around 33% is not just one of shopping. For many it represents an important form ofof the population in thailand. Retail developers are therefore looking at entertainment both daytime and in the evening and the internetopportunities to expand their sales channels, by opening their own online experience is not able to replace this. in a tropical climate, retail centresstores. However the number of thais who shop online is still lower than allow people to walk in a comfortable environment.many countries in the last quarter of 2010 two big players in retail business stepped intothe online shopping business. the Mall group officially launched the Monline Department Store (Mods: on December 8 2010and will promote more than 30,000 products in 11 categories. they alsoplan to increase the number of products available for online shopping toabout 100,000 next year.Central group launched their own shopping online website, and they coordinated with tnt to deliver products to buyers. Big Calso have a website for shopping online, but buyersmust go to a Big C outlet to pick up the product. in addition to the majorrentalS rental rate during the year 2000 - 2010 Source: Colliers international thailand Researchthe rental rates in every area still remains more or less the same from protests in april and May of 2010.last year, only in the City area was there a very slight fall due to theCOLLIERS INTERNATIONAL | P. 10
  11. 11. Bangkok reTaIL MarkeT rePorT | Q4 2010fOrecaStthe retail industry is in its typical ‘winter’ boom season with not only and in the long term could deter shoppers from visiting the area. althoughChristmas and new Year shopping but also for Chinese new Year, what is likely to be an election year will lead to an infusion of money theSongkran and Valentines Day. the increase in the minimum wage and is heat of the campaign will also disrupt normal shopping patterns.also likely to spur retail spending during this period and beyond it. Retail developers will be focusing more on shopping online and improveBig C won the bidding for 42 stores of Carrefour in thailand and they their websites with more choice and availability. However for theplan to keep every store, even those located in the same location of Big foreseeable future this is likely to complement rather than challenge theC. the hypermarket dynamics now consists of primarily a duopoly existing retail experience.between Big C and tesco lotus. an issue for the next few quarters willbe how the two can target Carrefour’s customer base which tends to be the future of retail in Bangkok will be affected by the impending Retailmore upmarket. of the two tesco lotus caters more for this market and and Wholesale act, which will address the issue of dominance by largeis therefore likely to have the initial advantage. retail centres in the urban areas by restricting new development. the value and importance of existing retail in the centre is likely to increaseRenovation and change is the keyword for retail business in the next few over time and the various players could be involved in bidding/takeoveryears, as many centres need to refurbish to maintain their customer activity over the coming months and years. Carrefour maybe just thebase in light of newer retail centres providing strong competition. the of retail centres is radically different from 20 years ago with agreater emphasis on driving visitors up into its higher levels which leadto higher occupancy and rental rates above the first few floors.the ongoing protests in the Rajaprasong intersection could spelldifficulties for retailers in this area as such protests that have begun totake place every two weeks during the busy weekend shopping period COLLIERS INTERNATIONAL | P. 11
  12. 12. Bangkok reTaIL MarkeT rePorT | Q4 2010cOllierS internatiOnal thailandmanagement team 480 offices in 61 countries on 6 continentsRetail SeRViCeS United States: 135 • the third largest commercialasharawan Wachananont | Senior Manager real estate services company in Canada: 39 the world latin america: 17ReSiDential SaleS & leaSing • the second most recognised asia Pacific: 194nuttaya Junhasavasdikul | Manager commercial real estate brand eMea: 95 globallyPRoJeCt SaleS & MaRketing • US$2 billion in annual revenueWasan Rattanakijjanukul | Manager • over 2 billion square feet under managementaDViSoRY SeRViCeS • over 15,000 professionalsnapatr tienchutima | ManageroFFiCe & inDUStRial SeRViCeSnarumon Rodsiravoraphat | Senior ManagerReal eState ManageMent SeRViCeS CoLLIerS InTernaTIonaL ThaILand:Bandid Chayintu | associate Director Bangkok office 17/F Ploenchit Center,aDViSoRY SeRViCeS | HoSPitalitY 2 Sukhumvit Road, klongtoey,Jean Marc garret | Director Bangkok 10110 thailand tel +662 656 7000inVeStMent SeRViCeS fax +662 656 7111nukarn Suwatikul | Senior Manager email Pattaya officeReSeaRCH 519/4-5, Pattaya Second Road (opposite Central Festivalantony Picon | Senior Manager Pattaya Beach), nongprue, Banglamung, Chonburi 20150Surachet kongcheep | Manager tel +6638 427 771 fax +6638 427 772ValUation & aDViSoRY SeRViCeS email info.pattaya@colliers.comnicholas Brown | associate DirectorPhachsanun Phormthananunta | ManagerPattaYa oFFiCeMark Bowling | Sales ManagerSupannee Starojitski | Business Development Manager reSearcher: reSearcher: thailand thailand antony Picon Surachet kongcheep Senior Manager | Research Manager | Research email email this report and other research materials may be found on our website at 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. accelerating