Thai retail property sector picks up a bit:
Good tidings of things to come?
By Jon Fernquest |
Today's Bangkok Post business section has an article on the resurgence of retail in Bangkok.
Retail sales have been below normal levels but rental rates for retail space exceeded forecasts.
Neighbourhood malls dotting the landscape are another new positive development, spelling fuel savings for people shopping near their homes.
Here is the article in full:
Gloom lifts as people begin to shop
JLL sees promising retail sites in pipeline
NINA SUEBSUKCHAROEN
Thursday March 20, 2008
The Thai retail industry seems to be shaking off the gloom that persisted most of last year with consumer sentiment now turning around amid optimism that economic stimulus measures from the elected government will indeed work, says Caroline Murphy, the national director and head of commercial markets with Jones Lang LaSalle (JLL). JLL said retail sales only increased 5% in 2007, which is low for Thailand as it normally posts double-digit growth. "So domestically in Thailand things look good, but on a macro level, globally there are things that are happening that could indirectly affect Thailand in terms of tourism and other things," she said. "But I still believe this year is going to be a much better year than 2007. That is pretty much across the board for the office market as well as the retail market."
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Despite the tough environment last year, JLL research showed that average net rent for prime ground-floor space in central Bangkok rebounded by 2.3% from 1,829 baht per square metre per month at end-July 2007 to 1,871 baht by year-end. It forecast that rents would increase only slightly over the next two quarters.
Consumers have some exciting new shopping centres to look forward to. Ms Murphy pointed to The Horizon, a small mall of only 1,900 square metres in Ekamai. Pacific Star's Eight Thonglor, which has more than 5,000 sq m of retail space with condominiums and serviced apartments above it, is another promising one. It is leasing quite well and will offer lifestyle, fashion, beauty services and food, she said.
"As for Chamchuri Square (on Rama IV Road), people are waiting to see what is going to happen there," she said. "Purely because the building has been constructed for more than 10 years, the university will have a bookstore."
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Interchange 21, a mixed-use office and retail tower at the Asok intersection marketed by JLL, has the advantage of a prominent location with access to both the skytrain and the subway. "There is not too much retail space," Ms Murphy said. "It's well designed and it has access from Sukhumvit Soi 23 as well, so we are confident about that project."
While these new centres will thrill shoppers, the biggest retail drama is set to take place in the neighbourhood mall segment, with retail giant Central Retail Corporation (CRC) gearing up to grab a share of this business by developing the 5,000 sq m Market Park Udomsuk on Sukhumvit soi 103. This segment is dominated by Siam Future Development Plc which has developed a string of open-air shopping centres. They include J Avenue Thonglor, The Avenue Chaeng Watthana, The Avenue Pattaya and Esplanade in the Ratchadaphisek area.
"They (Central) have two more on the drawing board," Ms Murphy said. "Essentially they are going to roll out these in as many locations as they feel it merits."
Hypermarket operators Tesco Lotus and Carrefour are also planning to expand into the neighbourhood mall segment. Tesco Lotus will itself anchor any such outlet and build a mall around it. Ms Murphy added that Carrefour was looking at a smaller size format in many locations but was uncertain how many locations it would open.
The Central group is also going to begin construction of Central Rama IX, which it obtained on a 30-year lease, in the fourth quarter of this year with completion targeted at early 2011. The group has yet to reveal its plans for the 40-rai Suan Lum Night Bazaar, for which it plans to sign a 30-year lease with the Crown Property Bureau when the tenants now occupying the site leave.
Regarding the British embassy plot that Central bought not too long ago, Ms Murphy said she heard the group was planning to expand the Chidlom store and perhaps add a hotel or serviced apartment building.
These additional centres should add zest to the retail business. JLL research showed that another 267,000 sq m of space are now under construction and scheduled for completion this year. Retail supply will rise above five million sq m by year-end.
Looking back, even though 2007 was a tough year for retailers, the increase in international shoppers helped.
"I think Thailand as a shopping destination has transformed itself. It used to be, 'I have to go to Hong Kong, I have to go to Singapore'. But now Thailand has in some respects overtaken our regional neighbours in terms of the offers that we have here because we have everything from luxury right down to Chatuchak ... which is really appealing for shoppers to come to Thailand."
While it is true that branded goods are cheaper in Hong Kong and Singapore, Ms Murphy noted that even though Thailand has import duties, operating costs are lower here. "Thailand is no longer uncompetitive except for the luxury sector, which is only one portion of the shopping offered in this city," she said.
JLL research shows that prime retail centres in central Bangkok continue to focus on international shoppers, offering incentives such as discounts for tourists.
(Source: Bangkok Post, business section, 20-03-08, page B4, NINA SUEBSUKCHAROEN, temp-link)
Vocabulary:
gloom - a feeling of hopelessness and despair
the gloom lifts - the feeling of hopelessness ends
shaking off the gloom - end the gloom
in pipeline - already planned or begun (See glossary)
persisted - kept doing it without stopping
consumer sentiment - how positive or negative households and consumers feel about the future of the economy
economic stimulus measures - actions taken by the government to increase economic activity and well-being
double digit - 10 or over
posts double-digit growth - reported growth of over 10% in financial reports
on a macro level, globally - in the world economy (of all countries combined)
rebounded - recovered, bounce back, return to a better level and situation
to look forward to - feel happy and excited about what will happen in the future
serviced apartments - a furnished apartment for short-term stays with maid service and other services found in a hotel
waiting to see - waiting to see what happens before make plans and decision
a prominent location - an important and very noticeable location
thrill - causing sudden feelings of excitement (with a little fear mixed in)
a segment, a market segment - a small part of a larger market that a company targets, the customers have speciailised needs and perhaps a typical age, income, and lifestyle (See Wikipedia)
the neighbourhood mall segment - the real estate market for retail space in smaller shopping malls located in residential neighborhoods near peoples' homes
this segment is dominated by Y - Y Y controls or plays an important role in this market segment (small specialized market)
Central Retail Corporation (CRC) - the largest retailer in Thailand, owning the Central Department Store chain, as well as its former rival, Robinson, and has an interest in the BigC chain of hypermarkets (See Wikipedia on Central Retail Corporation)
gearing up to grab a share of this business -
Y on the drawing board -project Y being planned, in the planning stage
roll out - introduce a new product to the market
X merits Y - X deserves action Y
as they feel it merits - as they feel it deserves
smaller size format - the smaller version of a product that has many sizes
Crown Property Bureau - the Thai government agency responsible for managing the personal wealth of the King of Thailand and his immediate family (See Wikipedia)
occupying the site - doind business at this location
add zest to - add excitement and energy to
overtaken - passed by
a brand - the customer experience associated with the name of a product, the images and ideas associated with the product, more narrowly refers to symbols such as the name, logo, slogan, and design scheme of a product (See Wikipedia)
branded goods - products with a brand (not "generic" products without a brand)
import duties - taxes paid to the government on foreign goods entering the country
the luxury sector - products that people consumer more of when they become rich such as luxury cars (BMW, Mercedes, Jaguar, Ferrari), designer label clothes, five start restaurants and hotels, or luxury condos and villas (See Wikipedia on luxury goods)
incentives - rewards for acting in a certain way
