Q2 2012 | Retail

BANgkok ReTAIl MARkeT RePoRT

ThAilAnd

Bangkok Retail Market

execuTive SummARy
Thailand is turning in to a shopping paradise for foreign tourists. Retail developers are continuing to build and renovate high-end shopping centres in Bangkok, and are increasingly focusing on other cities as well, especially those near Thailands borders that already see many foreigners coming to do their shopping here. Many laotians, for example, cross the Friendship Bridge from Vientiane to Thailand to shop in malls at weekends, and the number of people seeing Thailand as a shopping destination is set to increase once the ASeAN economic Community is formed in 2015. occupancy and rental rates for retail businesses have shown little change since the start of this year, and there is a steady rise in the amount of retail space coming on to the market. Community malls, which serve local neighbourhoods in the city and suburbs, as well as attracting well-heeled shoppers from further afield, continue to show the highest rate of growth, and will overtake hypermarkets to become the second biggest type of retail business by the end of this year. Renovations of older malls, especially those over ten years old, are planned or underway in many areas and have in some cases been completed. The intense competition for retail business in Bangkok is forcing developers to come up with unique and attractive designs for their malls in order to bring in shoppers and generate buzz on social media networks.

mARkeT indicATORS
Q1 2012 / Q2 2012 new Supply RenTAlS OccupAncy

hiSTORicAl Supply
hiSTORicAl Supply, AS Of Q2 2012

Source: Colliers International Thailand Research Note: F = Forecast

Approximately 60,750 sq m of space was completed in Q2 2012, with around 20,000 sq m located in the City area and more than

30,000 sq m in the Suburban Bangkok area. More than 298,000 sq m is scheduled to be completed in the second half of 2012.

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Bangkok Retail MaRket RePoRt | Q2 2012

The most interesting project is Asiatique the Riverfrontby TCC group located on the bank of the Chao Praya River, with a total land area of around 72 rai. It had its official grand opening on 27 April 2012, although they opened their doors in February. This shopping area has become one of the most fashionable for people in Bangkok over the past few months, due to the very attractive design and location. Another interesting centre is The Promenade on Ramindra Road by Siam Retail Development Co.ltd. This centre is the new shopping mall from the developer of Fashion Island, and it shares the community mall concept.

In addition, many community malls were added to the market in the previous quarter, especially outside the City area, including Vue lifestyle by The River, Ton Soong Avenue Phase 1, Int. Intersect and Park Village Rama 2. Many community malls were opened in the large residential areas of Suburban Bangkok to attract local shoppers.

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Bangkok Retail MaRket RePoRt | Q2 2012

BReAkdOwn Of ReTAil SpAce in BAngkOk By cATegORy, AS Of Q2 2012

Source: Colliers International Thailand Research

Shopping malls represent 60%ofthe market with more than 3.4 million sq m of space; 29% of shopping mall space is in the City area, and approximately 23% is in the outer City area. Hypermarkets form the second largest share with nearly 665,000 sq m, but nearly63% of them is in Suburban Bangkok.

Many community malls have been added to the Bangkok retail market during the past few years, and their total area is now around 625,000 sq m, only 40,000 sq m less than the total area taken up by hypermarkets.

cuRRenT And fORecAST fuTuRe Supply Of ReTAil cenTReS (excluding ShOpping mAllS)

Source: Colliers International Thailand Research

The community mall is becoming ubiquitous in Bangkok and it is forecast that by the end of 2012 their total area will match that of hypermarkets. The extensions of mass transit lines and the development of small clustered residential areas in the suburbs necessitate the need for some

form of shopping complex that can serve the needs of the local community. This is also an advantage for the city as a whole in that people do not need to travel long distances to do their regular shopping, which helps to reduce traffic, fuel consumption and pollution levels.

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Bangkok Retail MaRket RePoRt | Q2 2012 fuTuRe Supply

cumulATive fuTuRe Supply in BAngkOk By yeAR And cATegORy, AS Of Q2 2012

Source: Colliers International Thailand Research

The future supply scheduled to be completed in the second half of 2012 amounts to more than 298,000 sq m, with approximately 206,000 sq m in shopping malls, while the rest is in community malls. Approximately

172,000 sq m is scheduled to be completed in the last six months of 2012 in the outer City area.

cumulATive fuTuRe Supply in BAngkOk By yeAR And lOcATiOn, AS Of Q2 2012

Source: Colliers International Thailand Research

The majority of the future supply will be in the outer City area, with approximately 226,000sq m, or half of the total future supply, scheduled to be completed in 2013. This is primarily from the introduction of a

number of large-scale shopping malls including gateway ekamai, Water Pavilion and In Square.

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Bangkok Retail MaRket RePoRt | Q2 2012 demAnd TAke-up

BReAkdOwn Of hiSTORicAl TAke-up RATe Of ReTAil SpAce By lOcATiOn, Q1 2010 - Q2 2012

Source: Colliers International Thailand Research

The take-up rate in all areas in Q2 2012 made slight gains from Q1. The first half of the year presents many excuses for spending, such as the January New Year holiday, Chinese New Year, Songkran Festival and

Back to School events and this is a strong period for the retail industry which is often reflected in higher take-up rates.

TAke-up RATe Of cuRRenT Supply By cATegORy, Q2 2012

Source: Colliers International Thailand Research

The average occupancy rate of all categories, except supporting retail, is more than 95%, while the take-up rate of supporting retail was nearly

87%, with not much movement during the past few years.

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Bangkok Retail MaRket RePoRt | Q2 2012 demAnd dRiveR fOcuS

cOnSumeR cOnfidence index (cci)

Source: Bureau of Trade and economic Indices, Colliers International Thailand Research

The average confidence index in the second quarter of 2012 continues to grow from the previous quarter, and although it is still lower than the

high of the third quarter of 2011, there are good signs for recovery in the future.

ReTAil SAleS
ReTAil SAleS index By QuARTeR

Source: Bank of Thailand, Colliers International Thailand Research Note: Year 2002 = 100

Retail sales in 2Q 2012 were similar to the previous quarter, although still higher than the past few years. Christmas, New Year and Chinese New Year as well as Valentines Day in the first quarter as well as the

Songkran Festival and Back to School events in the second quarter of 2012 encouraged spending at retail centres.

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Bangkok Retail MaRket RePoRt | Q2 2012 RenTS

RenTAl RATe fROm Q1 2010 TOQ22012

Source: Colliers International Thailand Research

The average rental rates in every area in the second quarter were similar to the first quarter. The City area has the highest rental rate, with most

retail developments in the CBD area and located along mass transit lines as well as in office buildings, which are more convenient for shoppers.

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Bangkok Retail MaRket RePoRt | Q2 2012 fORecAST

Renovations of older malls will continue to be popular with retail developers and operators as they attempt to keep pace with competition from attractive new shopping centres and community malls. Unique, attractive design is now seen as essential for success, thanks in part to the growth of social media, with developers keen to benefit from visitors taking pictures of shopping destinations and posting them online. The main retail developers in Thailand are now focusing more on other main cities across the country, especially in some border provinces, in anticipation of the ASeAN economic Community in 2015. Visitors from neighbouring countries already see Thailand as a convenient shopping destination and the AeC is likely to create even more demand for retail businesses.

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Bangkok Retail MaRket RePoRt | Q2 2012

Appendix

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Bangkok Retail MaRket RePoRt | Q2 2012 ReTAil lOcATiOnS

ReTAil mARkeT cATegORieS

The organized 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 include 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 the report, retail refers to organized retail services and excludes traditional single proprietor outlets often located in shophouses and markets consisting of predominantly small traders. Also, supermarkets have been excluded from this report.

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Bangkok Retail MaRket RePoRt | Q2 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 & 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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