c o l l i e r s i n t e r n at i o n a l | T H AILAN D

The Knowledge Report

B a n g ko k R e ta i l M a rk 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.

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The Knowledge Report | 1st Quarter | 2010 | Bangkok Retail Market

Retail Locations

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 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.

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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
number of factors; the move away from large scale retail centres,
an oil price surge that led to a focus for reduced car usage and the
development of new residential projects that facilitated a need
for smaller retail centres serving these residents. Since 2007
there has been an over 70% growth in community mall space
and they are now becoming an intrinsic part of the lives of many
people in Bangkok.

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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-
cial hub of Bangkok and most have very strong brand identities.
The centre, especially in the Siam area, has come to be defined
by the retail experience provided by shopping malls, therefore
the predominance of such malls has become self sustaining.
Siam Paragon and Centralworld are the two largest in terms of
leasable space. Supporting retail takes up a significant proportion
due to the large number of office buildings located in the CBD.
The new retail legislation will likely curtail new developments
to just 300 metres floor space. Therefore the retail landscape will
remain largely unchanged for the foreseeable future. While on
the surface this may seem negative it will provide the opportu-
nity for retailers to become more innovative with the design and
configuration of their existing mall space. Retailing offers more
flexibility than other property sectors in this regard.

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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
the City area. Cheaper land prices allow hypermarkets to spring
up which require significant car parking space due to volume
purchases. While shopping malls are ubiquitous in the centre,
their greater scarcity in the Outer City opens the way for devel-
opment of stand alone department stores and community malls
filling the void. Many of the malls range from 40,000-60,000
sq m but none are of the size of the largest malls in the City
area.

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

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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

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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
the next two years with more than 250,000 sq m and most of
them will be located in the Outer City area. About half of the
area will be supplied by Central Rama 9 on Ratchadapisek –
Rama 9 Intersection, scheduled to be completed in 2011 with a
total area of approximately 120,000 sq m. Only community malls
show real signs of life in the other categories with around 50,000
sq m scheduled to be added until the end of 2011.

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Breakdown of future supply in Bangkok by location, Q1 2010

Source : Colliers International Thailand Research

Future changes of the zoning regulations based on the
upcoming census are likely to curtail retail development in the
suburbs in the short term. It is expected that the higher den-
sity of many locations in the suburbs will lead to a relaxation of
current building restrictions and developers are in all probabil-
ity putting planning on hold until future changes in zoning are
put in place. Limitations on available land and new legislation is
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.
In June 2010 Paradise Park shopping mall will open its doors in
Suburban Bangkok East after a major renovation and change of
name from Seri Center following the purchase of the property
by MBK plc and Siam Piwat plc. The previous mall struggled
to compete with its neighbour Seacon Square and has boasted
100% occupancy of its 90,000 sq m of leasable area prior to its
official opening.

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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-
mately 3%, although Q1 2010 represented a difficult period for
the retail market in the City area, due to the political situation.
It would be appear that take up in the City is more volatile than
other areas due to its greater reliance on tourism and discre-
tionary spending which are far more affected by political and
economic dislocations such as health scares and global economic
downturns. The sharp drop in take up in 2005 in the City area
was the result of renovations being undertaken in a number of
shopping malls in order for them to be more competitive. The
subsequent rise occurred on the reopening of these malls.

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.

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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

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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

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Rentals

Rental Rate

Source : Colliers International Thailand Research

The rental rates provided give only a very general indication
of pricing trends in the market. Significant differences occur
in rental rates depending on floor level, access to BTS stations
and tenant mix. The surge in rental rates was the result of ren-
ovations at a number of shopping malls creating a squeeze for
tenants requiring selling space as well as the opening of Siam
Paragon, a high end mall which subsequently increased the
average rates for the area. The fall in rentals two years later was
caused by newly renovated malls coming on stream as well as the
coup. Since then rentals have remained stable up to Q1 2010.

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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.

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 The Knowledge Report | 1st Quarter | 2010 | Bangkok Retail Market

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