Q3 2012 | Retail

Bangkok Retail MaRket RePoRt

Thailand

Bangkok Retail Market

execuTive SummaRy
Bangkoks retail property market shows slow but steady growth, as developers focus on small convenience stores and retailers increasingly compete online. Retail rents and occupancy in Q3 2012 were similar to the previous quarter, with take-up of over 95% for most types of retail, and around 82,000 sq m of new space becoming available. Many local and foreign brands are also looking for expansion opportunities together with opening new stores in Bangkok. new malls were opened this quarter and more will do so by the end of this year, while existing malls are undergoing renovation and changing their mix of brands. Competition is intense, and malls are pushing to keep up with modern consumers tastes and demands. thailands retailers are also adapting, with an increased focus on shopping online. in cooperation with banks, they are encouraging the use of credit cards, offering incentives and using loyalty cards to more precisely target and keep their customers. Big-name retailers are also setting their sights on other provinces in thailand, in particular the border regions, which are popular with shoppers from neighbouring countries. Developers, meanwhile, are increasingly turning to smaller-scale projects, including mini-supermarkets and convenience stores, as planning regulations and the price of land limit the expansion of hypermarkets. Convenience stores have become extremely important for all thailands retail players, and there is still room for growth.

maRkeT indicaTORS
Q2 2012 - Q3 2012 new Supply demand RenTalS Occupancy

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Bangkok Retail MaRket RePoRt | Q3 2012 Supply

addiTiOnal Supply by QuaRTeR

Source: Colliers international thailand Research

approximately 82,000 sq m of retail space was completed in Q3 2012 in Bangkok. the citys total retail supply is now approximately 5,776,400 sq m, with more than 90,000 sq m scheduled to complete in 2012. Four new retail projects outside the City area opened their doors in the third quarter. Community malls continue to open in Bangkok .two that were completed and opened in the third quarter are thanya Shopping Park on Srinakarin Road in the east part of Suburban Bangkok, and the Scene town in town in Suburban Bangkok north. Watergate Pavilion is a new shopping mall on Ratchaprarop Road in the Pratunam area. gateway ekamai, a new retail centre by tCC group, also opened in the third quarter. Seacon Bangkae by Seacon Development Plc. re-opened their centre in September 2012 after closing for total renovation in august 2010. the shopping centres name has changed from Future Park Bangkae to Seacon Bangkae. The return of the popular mall will affect all retail centres on the thonburi side of the river, especially shopping malls. the Mall group have renovated their water park Fantasia lagoon on the rooftop of the Mall Bangkae. they are also gearing up to change their tenant mix in some areas of the centre to provide more of a match to modern lifestyles. this also applies to the Mall thapra.

Siam Centre was closed for renovation and re-decoration from July to november. they are expected to re-open again in December 2012. Siam Piwat Co.ltd. spent around tHB1 billion on major renovations in all areas of the centre.

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Bangkok Retail MaRket RePoRt | Q3 2012

bReakdOwn Of ReTail Space in bangkOk by lOcaTiOn, Q3 2012

Source: Colliers international thailand Research

approximately 48% of the total retail space in the Bangkok is located outside the Urban area. as Suburban Bangkok is very residential, developers tend to focus on retail projects in this area. Many large

shopping malls and hypermarkets are located in Suburban Bangkok, as an abundant supply of land is still available for large-scale retail projects there.

fuTuRe Supply
cumulaTive fuTuRe Supply in bangkOk by yeaR and caTegORy, Q3 2012

Source: Colliers international thailand Research

the future supply scheduled to complete in the last quarter of 2012 totals over 108,300 sq m, with approximately 70,700 sq m in shopping malls and around 37,600 sq m in community malls. approximately 61%

of the supply due to complete in the last quarter of 2012 is located in the outer City in new shopping malls, and more than 19% is accounted for by two new community malls in Suburban Bangkok north.

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Bangkok Retail MaRket RePoRt | Q3 2012 demand Occupancy RaTe

bReakdOwn Of hiSTORical Take-up RaTe Of ReTail Space by lOcaTiOn, Q1 2010 - Q3 2012

Source: Colliers international thailand Research

the take-up rate for retail in Bangkok was similar to the previous quarter, although small increases were registered in all zones during Q3 2012.

Take - up RaTe Of cuRRenT Supply by caTegORy, Q3 2012

Source: Colliers international thailand Research

the take-up rate in all categories, except supporting retail, is more than 95%. Supporting retail commands only 87% and can be explained by the reliance on custom from workers in the offices that the retail component

supports. In addition, supporting retail space in some office buildings in the City area has been converted to office space or used for other purposes, such as educational and training centres.

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Bangkok Retail MaRket RePoRt | Q3 2012 demand dRiveRS fOcuS

cOnSumeR cOnfidence index (cci)

Source: Bureau of trade and economic indices, Colliers international thailand Research

Since the floods in Q4 2011, the CCI has risen continuously. In Q3 2012, it was higher than in the same quarter last year, and was in fact at its highest for over six years.

ReTail SaleS
ReTail SaleS index by QuaRTeR

Source: Bank of thailand, Colliers international thailand Research note: 1. Year 2002 = 100 2. The figure for Q3 2012 is only from July 2012.

Since the last quarter of 2010, the retail sales index has been higher than it was for the preceding five years, due to increasing political stability and retail developers launching new marketing campaigns to promote their centres. Floods in the last quarter of 2011 directly affected the retail

sales index as it dropped dramatically from the previous quarter. However, it significantly increased in the first quarter of 2012 and was on the ascend through Q3 2012.

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Bangkok Retail MaRket RePoRt | Q3 2012 RenTal RaTeS

RenTal RaTeS fROm Q1 2010 TO Q3 2012

Source: Colliers international thailand Research Note: The average rental rate is based on the rental rate for the ground floor of the building

Rental rates in all areas are similar to the previous quarter. Some new retail centres did increase their rental rates causing a marginal effect on the whole market. as many local and foreign brands opening new stores

in high end shopping malls in the City area require large spaces, they receive special rental rates.

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Bangkok Retail MaRket RePoRt | Q3 2012 TRendS | gO SmalleR gO wideR

ShaRe Of cOnvenience STOReS / mini-SupeRmaRkeTS ThROughOuT Thailand

Source: Colliers international thailand Research

Due to regulations and other factors affecting the expansion of largescale hypermarkets, retail developers are trying to maintain their market share with smaller models and friendlier concepts, such as convenience stores and mini-supermarkets. the standard size of a hypermarket is usually around 8,000 to 15,000 sq m, but due to the laws and the increasing land prices in some main cities, as well as opposition from the local people in some provinces, they are unable to expand completely. they have, there for, come up with a new, friendlier concept, using as little as300 sq m, and not over 2,000 sq m, for a convenience store format to expand into the community. 7-eleven has the lions share of the convenience store market in thailand, with around 69%, or more than 6,800 branches, followed by tesco lotus express with approximately 850 branches, which is just 8.6% of the total market share. 7-eleven and tesco lotus express plans to increase their branches by around 500 and 200 per year, respectively. these two brands make up the majority of convenience stores in thailand.

Central Retail Corporation (CRC) overcame Berli Jucker and the Saha group to win franchising rights to operate more than 700 Family Mart convenience stores in thailand, around 7.2% of the total market. in addition, CRC also owns the approximately 120 branches of tops Daily in thailand. CRC also plans to convert all tops Daily outlets to Family Mart starting next year. CRC plans to increase their convenience stores to 1,000 branches by the end of2012, and to approximately 1,500 in the next five years. Big C Supercenter Plc. plans to expand the new Mini Big C from 95 to 125 branches this year and to around 950 branches by 2016. they will open 300 Mini Big C outlets in Bangchak petrol stations around thailand. aeon (thailand) Co.,ltd. also plans to expand their convenience store brand Max Valu tanjai to all areas of thailand, with approximately 20 new branches every year, leading to more than 100 branches within the next three years.

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Bangkok Retail MaRket RePoRt | Q3 2012 fORecaST

all retail centres in Bangkok that are over 10 years old have plans for renovation or re-arrangement of their tenant mix as well as adding new brands to their retail centres. this is because several recently completed retail centres have impressive designs and tenants. old-fashioned retail centres need to improve themselves to become competitive. Retail operators in thailand are focusing more and more on online shopping, and big name players are developing their websites in support. they also co-ordinating with commercial banks to encourage more spending from credit card users with cash rewards or points collection as well as trying to increase the number of loyalty cards. Main provinces in other parts of thailand are becoming new targets for big names in the retail business, with some provinces along the thai border becoming the most fashionable for all retail players. these include Chiang Mai province, for attracting shoppers from laos and Myanmar, Udonthani province for supporting clients from laos and Vietnam, and Hat Yai in Songkhla province for Malaysians. in addition, they are also expanding into some resort destinations and big cities around thailand with different formats. Convenience stores became the new competitive sector in the retail business after CRC took over Family Mart in thailand. although 7-eleven has the biggest share in this sector, there is still room for growth. Many brands are focusing on convenience stores by increasing the number of branches throughout thailand.

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Bangkok Retail MaRket RePoRt | Q3 2012

appendix

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Bangkok Retail MaRket RePoRt | Q3 2012 ReTail lOcaTiOnS

ReTail maRkeT caTegORieS

the organised retail market in thailand can be divided into seven main categories, based on size, characteristics, goods sold and pricing: 1) Shopping mall / Shopping centre 2) department Store (figures for this report includes stand-alone stores only; those located in shopping malls are not included) 3) hypermarket 4) community mall

5) Specialty Stores 6) entertainment complex (this does not include entertainment areas in shopping malls, as these represent an intrinsic part of the shopping mall mix) 7) Supporting Retail
Note: For the purposes of thisreport, retail refers to organised retail services and excludes traditional single proprietor outlets often located in shophouses, and markets consisting of predominantly small traders. Supermarkets have also been excluded from this report.

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Bangkok Retail MaRket RePoRt | Q3 2012 cOllieRS inTeRnaTiOnal Thailand managemenT Team
Retail SeRViCeS asharawan Wachananont | associate Director PRoJeCt SaleS & MaRketing Monchai orawongpaisan | associate Director ReSiDential SaleS & leaSing napaswan Chotephard | Manager ReSeaRCH tony Picon | associate Director Surachet kongcheep | Senior Manager oFFiCe SeRViCeS nattawan Radomyos | Senior Manager inDUStRial SeRViCeS narumon Rodsiravoraphat | associate Director aDViSoRY SeRViCeS | HoSPitalitY Jean Marc garret | Director aDViSoRY SeRViCeS napatr tienchutima | associate Director Real eState ManageMent SeRViCeS Prasert Saiphrawan | Senior Manager inVeStMent SeRViCeS nukarn Suwatikul | associate Director Wasan Rattanakijjanukul | Senior Manager ValUation & aDViSoRY SeRViCeS Phachsanun Phormthananunta | Director Wanida Suksuwan | associate Director PattaYa oFFiCe Mark Bowling | Senior Sales Manager Supannee Starojitski | Senior Business Development Manager / Office Manager HUa Hin oFFiCe Sunchai kooakachai | Senior Manager

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ReSeaRcheR: thailand Surachet kongcheep Senior Manager | Research email surachet.kongcheep@colliers.com

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