Bangkok Retail Market Report Year End 2010

The retail market in Bangkok remained resilient in 2010 against the backdrop of the troubles in April and May, according the latest report from the Colliers International Thailand. Rentals remained stable over the year and th ere was even a slight uptick in occupancy in all areas. Around 185,000 sq m of retail space was added to supply in 2010 and in Q4 five community malls came online adding approximately 38,000 sq m. Although these community malls are small in size they represent an increasing feature of people’s daily lives, according to Patima Jeerapaet, Managing Director of Colliers. “They fit into the pattern of condominium development around the city”, he pointed out. “They are also beneficial to the environment as they reduce the need to drive long distances to shop”, he added.

The big story for 2010 was the sale of Carrefour’s hypermarkets to Big C, another hypermarket chain. This will create something approaching a duopoly and the high price recorded for the sale reflects the new reality for the retail sector in Bangkok’s urban area, contends Antony Picon, Senior Manager for Research at Colliers. “Impending legislation restricting large scale retail development in the centre of the city will lead to existing retail centres having a premium attached to them”, he said. Mr Picon believes that the Carrefour episode is unlikely to be last. “Developers are likely to scramble for these increasingly prized assets”, he added.

Future supply for 2011 is expected to be just shy of 300,000 sq m based on current projections. However one of the key stories over the next few years is the renovation of existing centres. Mr Picon referred to the total difference in design of retail centres now and those that are decades old. “Modern centres have designs that entice people to move up its levels by allowing them to see what is above, where older centres just have straight forward ceilings that block the views of the uppers floors”, he explained. Mr Picon pointed out that older retail centres need to be refurbished in order to maintain their customer base. “When a new centre is placed alongside a much older one the difference in appeal can be stark, so developers have no choice but to upgrade in order to remain competitive” he said.

RICS Thailand announces the new appointment of new Chairman and office bearers (2011-2012)

RICS (Royal Institution of Chartered Surveyors) announced today the new Chairman and office bearers for its Thailand board were elected on 13 January, 2011 (Thursday) for a one year term of office with immediate effect.

Patima Jeerapaet, PhD, MRICS, MVAT, MTVA, is Managing Director of CIT (Colliers International Thailand) Property Consultants Co Ltd, a global real estate services firm equipped with more than 23 years of knowledge of Thailand’s property market. In addition, he also chairs the Property Committee of Joint Foreign Chamber of Commerce in Thailand (JFCCT) in monitoring and enhancing Thailand’s property industry’s competitiveness. He also serves as board member of Thai-Singapore Chamber of Commerce and Thai-Swedish Chamber of Commerce to promote Thai properties to Singapore and Swedish investors.

The newly elected office bearers and members of Thailand Board are as follows:


Major Office bearers:
Chairman: Patima Jeerapaet

Honorary Treasurer: Navaporn Wongurai

Honorary Secretary: Nicholas Brown

Elected Members:
Apibarn Ariyakulkarn
Roy Beevor
Sonthaya Vanichvatana
Janet Geddes
Ian Hamilton
Simon Landy
C P Leong
Sutee Sumatanonsak

Dr Patima Jeerapaet, the first Thai elected as Chairman of RICS Thailand, says “I am honoured to take up the post and hope to build on the achievements of Ian Hamilton and the executive team. Having built a presence in Thailand for more than ten years, RICS Thailand has over 100 Chartered Surveyors practicing in the country. I foresee the market of Thailand will continue to grow and become one of the key markets in South East Asia. I am looking forward to further strengthen membership services locally and create a strong RICS brand by working closely with fellow board members and staff of RICS.”


About RICS & RICS Asia

RICS (Royal Institution of Chartered Surveyors) is an independent professional body originally established in the UK by Royal Charter. Since 1868, RICS has been committed to setting and upholding the highest standards of excellence and integrity – providing impartial, authoritative advice on key issues affecting businesses and society.

RICS is the worlds’ leading qualification when it comes to professional standards in land, property and construction. With over 150,000 members globally, RICS represents, regulates and promotes the work of property professionals throughout 146 countries.

RICS Asia supports a network of over 11,000 individual professionals across the Asia region with an objective to help develop the property and construction markets in these countries, by introducing professional standards, best practice and international experience. It promotes RICS and its members as the natural advisors on all property matters. It also ensures that services and career development opportunities are provided to members.

RICS Asia region covers national associations and local groups locating in Brunei, Malaysia, Singapore, Thailand, The People’s Republic of China and the SAR Hong Kong. It also has members working across the region such as Bangladesh, Bhutan, Burma/Myanmar, Cambodia, Indonesia, Japan, Kiribati, Laos PDR, Macao, Mongolia, Nepal, North Korea, South Korea, Taiwan, The Maldives, The Philippines, Timor East and Vietnam.

Investing in Thai property market, be ready for the big changes, AEC 2015!!

Thailand’s property market is considered one of the major business sectors in Thailand which is inevitably on the boom with the economical development of the country.

Thailand has passed its turbulences in year 2010 which is considered one of the most difficult years in the Thai history as well as for businesses in all sectors. Surprisingly, despite the political turbulence, many huge deals were closed during 2010. In fact, some property investment sales did hit the highest record. This is an indication of high confidence in the property sector as investing in a property is a long term investment.

The property market is mainly categorized into 5 different sectors which includes: industrial, commercial, residential, retail and hospitality. But when property is talked or discussed about, the general public will most likely perceive on the residential market or condominiums. So, what about the property market in Thailand? Will prices go up in 2011? Is there really scarcity of land? Is it equilibrium for the property market and what will happen in 2011?

We have so many questions on our minds. There is no doubt that prices of property along the BTS or MRT lines will increase continuously because of the limited amount of land and the high demand. This is a scarcity amongst developers because these are considered the prime locations. However in the future, should these lines expand, I believe that land along the extended lines would then become more attractive for developers.

For year 2011 - the right defined statement would be “Certainty is uncertainty”. We should be ready to surf the changing wave if there is any!! We should plan for uncertainty and be ready to apply all strategies for each challenge and each circumstance.

Judging from the Q4, 2010, I would view the Thai property marketing in each sector for below for 2011.

Industrial
Many key industrial estate developers were able to achieve their targets in 2010. The overall industrial market seemed to have improved and growth is expected by 10% in 2011, especially in manufacturing, automobile and parts, electronics and IT businesses. There are also more demand from foreign and local manufacturers for the expansion of industrial estates. The many concern for the industrial sector would be Environment Impact Assessment (EIA) and Health Impact Assessment (HIA).

Commercial
The office market has improved slightly especially for Grade B office buildings because of the extended mass transit. Many office buildings outside the CBD seem to attract interest from Tenants as well. Within the CBD, many office buildings are adopting the trend of renovating their office buildings with a more modern look to retain existing tenants as well as attract new tenants.
Where Regional Operating Headquarter (ROH) is concerned, no clear movement can be seen as yet but can expect to see results with 2011. This year should be a brighter year for the office market.


Residential
The overall residential market in 2010 mainly condominium was on the rise. In 2011, this will rather be stable. Condominium prices ranging between 80,000 – 120,000 baht per square meter will still be available within the city while on the outskirts prices would range between 50,000 – 75,000 baht per square meter. Upper-end condominiums for foreign investment have slowed down because of the strong Thai currency there are still some investors who look for quality products at bargained prices. This year we can expect for developers to gear their interest to building town houses or detached houses along the new mass transit extension lines.


Retail
The retail market has shown continuous improvement. Local demand continue to grow strongly but for tourists, this might be a little hesitant because of the strong Thai currency. There are many newly launched retail projects, for example supporting retail space in residential projects and community malls along the new mass transit lines.


Many big retailers and department stores are also adopting the trend to renovating / face lift / re-branding their stores to attract shoppers both in the capital and upcountry. There are also a number of new shopping centers which is likely to be completed in 2011.


Hospitality
For hotels industry in 2011, we can expect that there will be approximately 1,662 new rooms for the upper scale and luxury hotel. Hotel investors look for long term investment. Please do not perceive this to be an oversupply because the expected payback period for hotel investors in between 10 – 12 years. Hotel investors invest with an objective for capital gain in the future. The low labor costs, low material costs and low import cost since 2010 are striving hotel investors to seize the opportunity for construction.


Like other businesses, the property market also has its life cycle. Certain properties within the main business and shopping areas are also starting to rejuvenate their assets such as properties within the Sam Yan area of Chulalongkorn University properties, Bangkok Bazaar and Langsuan of Crown Property Bureau, some old shop house projects along Sukhumvit Roads and other main roads.

Nevertheless, there is another sector that the locals should look into as another choice of property investment. This is the agricultural sector which is rather sensitive, complex and controversial with regards to property rights and cultural rights. This is an opportunity for the local property investors and is a way for life’s sustainability as well.


Another major change in the Thai property market we look towards in 2011, is the possibility of leasehold extension that will encourage and assist Thai developers, Thai investors as well as foreign investors in their property investment. This will also bring in foreign direct investment into the country.


Looking a little bit further, the major change in 2015 would be the Asian Economic Community (AEC) which will positively impact the property market in all sectors as well as transportation and logistics. The high speed trains from China and the roads connecting countries will hugely benefit Thailand. AEC will open up businesses amongst the Asian countries. Geographically with Thailand in the center of many countries, Thailand will have a larger distribution channel. The public may be scared of over supply of condominiums but once AEC is introduced this will no longer be on ‘over supply’ as we will have more demand for residential. There will be a higher possibility and opportunities for Commercial, Industrial, Retail and Hospitality sectors as well..


Some of the property investment tips are:
1. Aim for best price, high return with low risks
2. Be well aware of the rules & regulations
3. Select for good location
Use them wisely and they could make you rich.

Dr. Patima Jeerapaet is the Managing Director of Colliers International Thailand
Please feel free to drop your comments or questions to patima.jeerapaet@colliers.com

Asia Investors Show Greater Optimism Pointing to a Full Upswing in Real Estate Markets

73% Expected to Expand Their Portfolio; 59% of Investors Eye on Overseas Investment
(Shanghai, Hong Kong and Singapore are Preferred Investment Targets in Asia)

Most commercial real estate markets around the world have passed the bottom and are now on the rise, according to the majority of respondents in the Colliers International Global Investor Sentiment Survey for the third quarter of 2010. In Asia, investors appear to be even more optimistic with 91% of respondents expressing a desire to buy property in their domestic region, and 73% considering to expanding their property portfolio in the coming 12 months.

Shanghai in China, followed by Hong Kong and Singapore, were the most-preferred hot spots for Asian investors looking to buy office space over the next 12 months. Shanghai is on its way of recovery; Hong Kong and Singapore are expected to have further upside in the office sector. Individual investors reported their intention to pursue residential investment opportunities in second-tier Chinese cities such as Nanjing and Hangzhou.

Moving from 6 o’ clock on the global property clock in 1Q, the average time today according to Asian investors is slightly past 7 o’ clock. In the coming 12 months, the Asian market is predicted to have moved towards between 8 and 9 o’ clock. And in both cases, the greatest number of respondents sees the market growing at an even faster rate.

“The survey shows that Asian investors are confident on the macro-fundamentals in the region,” said Piers Brunner, chief executive officer, Asia. “Personal and corporate debt levels are low. Interest rates are low and liquidity is high. Optimism in the market is reinforced by 75% of respondents in Asia saying a double-dip recession is unlikely.”

However there are concerns among Asian investors, such as the uncertainties on government policies to cool the overheated markets, change in market liquidity and interest rate increases.

MORE ASIAN INVESTORS EXPECT TO EXPAND THEIR PORTFOLIO
Looking ahead to the next 12 months, the largest group of Asian investors (73%) expect to expand their property portfolio. This figure was higher than the 65% registered in 1Q 2010. The next largest group of respondents (18%) expect to rebalance the size of their portfolio over the coming year.


STRONG DESIRE TO BUY PROPERTY IN ASIA
The desire to buy property in Asia among Asian investors continues to rise. 91% of respondents expressed a desire to buy property in their domestic region, compared to 78% in 1Q 2010. The high percentage can be explained by the growth expectations in Asia, primarily driven by the Chinese market.

While globally only 30% of respondents considered investments outside their domestic markets, 59% of respondents in Asia reported a desire to buy overseas properties. They would prefer Sydney office and Brisbane retail assets in Australia. Others think office properties in New York and Chicago would offer good market entry points amid the prevailing low real estate prices.


NEW OPTIMISM POINTS TO AN UPSWING IN REAL ESTATE MARKETS ACROSS THE WORLD
Globally, the largest group of survey respondents put the Global Property Clock for their particular regions at eight o’clock, with the second and third largest groups at six and seven o’clock, respectively. These responses indicate that most markets globally are on the upswing and are characterized by rising demand, falling availability and vacancy and rising headline rents. This marks a significant move from Colliers International’s last Investor Sentiment Survey conducted in Q1 2010, when most respondents placed their markets at between five and six o’clock.


Some additional key global findings of Colliers International’s Q3 2010 Global Investor Sentiment Survey include:

•90% of respondents said they planned to expand their current level of real estate holdings within a year or maintain them at current levels.
•New York, Chicago, San Francisco, Washington, London, Sydney, Singapore and Hong Kong were listed as key cross-border investment destinations. Emerging markets mentioned include Poland, Ukraine and Brazil.

Nearly 80 percent think debt will be easier to access in the next 12 months. Respondents who said they believe the cost of debt would rise in the next 12 months fell slightly from the first quarter of 2010, with 44 percent predicting an increase versus 52 percent six months ago.

KEY REGIONAL FINDINGS
•In Western Europe, 62% of respondents now intend to make cross-border investments, a notable increase from the figure of 30% for Q1 2010.
•In United States, a significantly greater proportion of investors (65%) indicated they are considering selling property over the next 12 months versus the Q1 2010 response of 23 percent.
•In the next 12 months, fewer Pacific (Australia and New Zealand) investors (46%) expect to expand their property portfolio compared to the 68% who expected to expand in Q1 2010.
•Among investors from the Middle East and Africa, 63% stated that they would be looking to actively reduce risk levels, with 25% indicating they would look to increase the diversification of their portfolio, implying an overall degree of risk management.
•Across Central and Eastern Europe, the range of locations being targeted by investors was quite diverse, although Warsaw remains the most popular destination, notably for office product. Other popular targets quoted were Kiev, Prague, Moscow and Bucharest.
•Among Latin American investors, 69 percent of those surveyed reported they will not reduce their risk levels.
•67 percent of the investors surveyed in Canada think that prime effective rents for the office market will either hit bottom by Q2 2011 or have already hit bottom. In the industrial market, 78 percent of investors think the bottom has either been reached or will be reached by Q2 2011 and that percentage jumps to 83 percent for retail.

The Colliers International Q3 2010 Global Investor Sentiment Survey was conducted from August 15 to September 7, 2010. Major institutional and private investors across the globe participated. The primary purpose of the survey is to better understand global investor attitudes in the current marketplace at a global and regional level, including investors’ outlook for the coming 12 months.

Embassy of Japan appoints Colliers to sell former Bangkok Embassy site

The Embassy of Japan has appointed Colliers International Thailand as its Sole Agent to sell the former location of The Embassy of Japan in central Bangkok.

Having now relocated to Wireless Road, the Japanese Embassy is putting the prime CBD site that housed the Embassy for some 40 years on the market. The former Embassy site, located at 1674 New Petchaburi Road, Huay Kwang, Bangkok, covers an area of 8 rai 3 ngan 13 square wah (14,052 sqm) on a major intersection in the heart of Bangkok. Colliers will sell the land by way of tender.

This valuable property is located approximately 20 meters from Petchaburi MRT station and approximately 200 meters from Airport Rail Link Makkasan main station. The property is located in an area with very high potential for the commercial development of office buildings, large shopping centres, high-end hotels, serviced apartments and residential projects with its convenient access to both the MRT and the Airport Link, giving direct access to Suvarnabhumi Airport. The surrounding area along Sukhumvit 21 (Asoke) Road is fully developed with high end office and residential buildings and constitutes one of the busiest business districts of Bangkok.

The sale represents the most significant disposition of prime land by tender since the British Embassy sold part of its former premises on Ploenchit Road to Central Group in 2006. That transaction achieved record high prices. With confidence in the property market returning, bidding for the former Japanese Embassy site should attract wide interest.

Japan International Cooperation Agency (JICA), which owns approximately 1 rai next door to the former embassy site, is also planning to sell at the same time, subject to receiving formal approval.


“The Bangkok land market has continued to do exceptionally well, even throughout the political disturbances earlier this year,” said Mr. Patima Jeerapaet, Managing Director of Colliers. “We have
no doubt that this transaction will attract wide interest from both local and overseas developers as it represents one of the few remaining large redevelopment opportunities in the prime area of Bangkok.”

Bidding forms for the tender are available from Colliers from November 1, 2010 – February 14, 2011. Bids must be submitted on February 15, 2011.

Thailand Property Market Rebound

2 June 2010, Bangkok – The Bangkok hotel market had a good Q1 2010 on the back of a return of robust tourism figures highlighting the enduring appeal of Thailand and its capital city. Occupancy rates for the Luxury/Upper scale segments came just shy of the 70% mark. Of the four areas in the city centre, The Riverside recorded the lowest rates and the Southern CBD (Sathorn/Silom) the highest.

The future of the market remains unclear due to the considerable new supply of rooms being brought to the market in 2010 and 2011. This year will witness the greatest addition of new supply of Luxury and Upper scale hotels to Bangkok in its history. This is likely to squeeze occupancy levels which in turn will lead to pricing pressures even in a stable political climate. The current situation is a grim time for the industry and we must wait for Q4 until we have a better idea of how much tourism has been affected.

Hotels will still have to cope with increasing competition from serviced apartments for the short stay market. The Bangkok serviced apartment market is facing a difficult 2010 with a significant increase in supply while demand has fallen and is likely to remain down until confidence returns. Conversely the serviced apartments may benefit at the expense of apartments for lease due to uncertainty from foreign residents leading to a requirement for shorter term leasing contracts provided by serviced apartments. However such benefits will be short lived.

From 2009 to 2011 it is expected that overall supply of serviced apartment units will have risen by 40%. This will be difficult for the market to absorb. Average occupancy has continued to fall in Q1 2010 to the 65-70% mark for long term stays. This pattern is likely to continue until supply stabilizes and demand picks up again.

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 in Sukhumvit. Rentals remain stable while only the city centre recorded a small increase in take up of 3% in Q1 q/q.

The current closure of Centralworld and Centre One are unlikely to lead to an increase in rentals due to the limited time they will be inoperable before rebuilding and renovation are completed and lower consumer confidence expected in the wake of the violence. The short term prospects of the retail market in the centre hinge on incentives and special events that can lure shoppers to the main shopping streets again. The severely reduced tourism numbers will also negatively affect the retail sector in the centre.

No new office supply came onto the market in Q1 2010 and only a very limited supply is expected until Q4 2010 with the scheduled opening of Sathorn Square. Occupancy rates fell by 1% in the CBD and Outer CBD while the Northern Fringe recorded a nearly 1% increase in Q1. Rental rates remained more or less the same in the CBD for Q1, although a fall in rates was more pronounced in the Northern Fringe. This was likely to be a correction to the steep rise in 2009.

Companies are still assessing the impact of the recent events and whether further instability will ensue for the rest of the year before making relocation plans. In the shorter term there could be an uptick in demand coming from firms occupying space as back up for reoccurring violence disrupting operations. However any positive effect will be temporary as protracted unrest will cause investment and employment to fall thus negatively impacting the market.

The bright spot in property remains the condominium market. New launches in Q1 2010 continue the breakneck pace set in the last quarter of 2009. Many developers are targeting affordability and selling out in a matter of hours in some cases. Tax incentives remain an impetus to temporarily boosting existing supply and the future expiration of incentives at the end of May are likely to cool the market, allowing for some consolidation. Demonstrations in Bangkok have had only a limited affect on condominium launches as end-user buyers maintain interest in purchasing their first property.

2010 is likely to see the largest influx of new supply since 1997 with an estimated increase of just over 30,230 units compared with approximately 27,430 units in 2009. About 6,940 units were supplied in Q1 2010. Smaller developers are entering the market again but with projects with fewer units than the large listed players.

Overall the property market will enter a period of stasis while the country faces up to its deep divisions. Foreign investment will begin to flow into the market only when these have been addressed and a more liberal business climate is established.



For further information, please contact:

Colliers International Thailand
Dr.Patima Jeerapaet
Managing Director
Tel : 662 656 7000
E-mail : patima.jeerapaet@colliers.com

Mr.Jean Marc Garret
Director of Hospitality Department
Tel : 662 656 7000
E-mail : jean.garret@colliers.com

Mr.Antony Picon
Senior Manager | Research & Advisory
Tel : 662 656 7000
E-mail : antony.picon@colliers.com

Mr.Surachet Kongcheep
Manager | Research & Advisory
Tel : 662 656 7000
E-mail : surachet.kongcheep@colliers.com

Colliers International Thailand appoints new director of hospitality department "Jean Marc Garret"

Colliers International Thailand has recently announced the appointment of Mr. Jean Marc Garret, a French national, as Director of Hospitality Department, to direct the growing business of Hotels and Leisure.

In his new role, Jean Marc in addition of the fundamental hotel brokerage activity of the group in Thailand will be responsible for our Consultancy Services Division, providing.

Hotel Financial Assistance, Corporate Solutions, Project Development Support, Asset Management as well as assisting in the development of investment programs and all related opportunities.

A 30 year group hotel veteran, he brings with him a wealth of experience in the tourism and travel industry. A graduate of the University of Law and Economics of Nice in France, Mr. Garret first arrived in Thailand more than 22 years ago to participate in the opening of Le Meridien in Phuket. He has since become a resident of Thailand where he also served as Honorary Consul of the Principality of Monaco and President of the Franco Thai Chamber of Commerce.

Mr. Garret is particularly well known within the hospitality industry circles for his keen business acumen and foresight in the field of development as well as management of hotel properties. He has diverse records of success in the areas of consulting and operations with global hotel chains such as Accor, Le Meridien and Choice Hotels International in Thailand.

Prior to joining Colliers International Thailand, he was with the Centara Hotels & Resorts group, for the last 12 years with his last position being Senior Vice President Development.

Jean Marc Garret is also Chairman of the Tourism Committee of the Joint Foreign Chamber of Commerce.

Colliers International Thailand believes that with his track records of expertise in the local market, Jean Marc will be an added asset in our Team to accelerating success and contribute to help our clients to make the right choices for their Hospitality business.