MARKETVIEW Consumer confidence improves but retailers remain prudent Bangkok Retail, Q3 2020 QUARTERLY HIGHLIGHTS The uncertain outlook on the Thai tourism industry and weakening domestic purchasing power had inevitably slowed the pace of recovery of the retail sector in Q3 2020. In Q3 2020, the total retail supply in Bangkok increased to 7.8 million square metres, an increase of 1.7% Y-o-Y. Thailands consumer confidence index (CCI) decreased to 50.9 in October 2020 or a decline of 28.01% Y-o-Y amid political unrests and slow economic recovery. The latest available data for the retail sales index, according to the Bank of Thailand, was at 249.05 in August 2020, or a 5.67% Y-o-Y decline. Thailands retail industry remained slow in Q3 2020 due to Thais lower purchasing power and high household debt. Bangkoks retailers, especially the ones situated in the Downtown area, continued to struggle to generate their pre-crisis revenue. However, the change in consumer behaviour has been benefitting the e-commerce industry, resulting in the phenomenal growth of online retail sales in Thailand. In Q3 2020, the total retail supply in Bangkok increased to 7.8 million square metres, an increase of 1.7% Y-o-Y . The overall occupancy rate in Q3 2020 was 96.1%, increasing 1.3 percentage points Y-o-Y . As of Q3 2020, 0.5 million square metres of net leasable retail area was under construction in Bangkok. By the end of 2020, more than 15,000 square metres of retail space is expected to be completed. Q 2020 CBRE Research 3 | 2020 CBRE (Thailand) Co., Ltd. 1 Supply +1.7% Y-o-Y Demand (Take-up) +3.1% Y-o-Y Source: CBRE Research, Q3 2020 TABLE 1: TOTAL SUPPLY, DEMAND AND VACANCY BY AREA, Q3 2020 Total Market Downtown Midtown Suburbs Total Supply 7.8 million 1.8 million 2.1 million 3.8 million Total Take-up 7.5 million 1.7 million 2.0 million 3.7 million Total Vacancy 0.3 million 0.1 million 0.1 million 0.1 million % Vacant 3.9% 6.1% 3.5% 2.9% Retail Sales Index (August) -5.7% Y-o-YMARKETVIEW 2020 CBRE (Thailand) Co., Ltd. | 2 BANGKOK RETAIL Major retail developers reported decreases in their revenue during Q3 2020. Most retail developers claimed the decrease can be mainly attributed from rent discount to tenants at appropriate levels and on a case- by-case basis. As domestic consumption has continued to weaken since 2019 together with the impact from the COVID-19 outbreak at the end of Q1 2020, major food retailers also reported negative same-store-sales growth (SSSG) in Q3 2020. Due to concerns over the second wave of the COVID-19 pandemic together with the slow improvement in the Thai tourism situation, CBRE has seen that many retail landlords have considered cautiously extending rental discounts during this quarter. To mitigate high vacancy risk, many tourist malls quickly repositioned their retail centres to draw more traffic from Thais instead of foreigners. Many landlords and retailers also have called off or postponed their investment plans and focused on cost-saving measures. The change in consumer behaviour towards online channels, which grew dramatically since the country was put into lockdown, together with stimulus measures by the Thai government could be the key factors for the revival of the Thai retail market. According to Priceza, a shopping search engine and comparison platform with presence in six countries in Southeast Asia, the value of Thailands e-commerce market in 2020 is expected to reach THB 220,000 million, growing by approximately 35% compared to the previous year. Figure 1: Bangkok Existing and Future Retail Supply by Format Figure 2: Bangkok Retail Supply, Take-up and Occupancy Rate Source: CBRE Research, Q3 2020 Source: CBRE Research, Q3 2020 Q3 2020 CBRE Research Going forward, the pace of the retail recovery will mainly rely on how effective the stimulus measures by the Thai government are and how fast they can bring back international tourists as it is obvious that domestic demand alone couldnt support the massive retail market in Bangkok. Department Store On-Site Retail Superstore Community Mall Enclosed Mall 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 10,000,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q3 2020 2020F 2021F 2022F 2023F 2024F&Beyond sq.m. Total Supply Occupancy Rate Total Take up 80% 82% 84% 86% 88% 90% 92% 94% 96% 98% 100% 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020 Q2 2020 Q3 2020 Net Area (sq.m.MARKETVIEW QUARTERLY REPORTS BANGKOK RETAIL All materials presented in this report, unless specifically indicated otherwise, is under copyright and proprietary to CBRE. Information contained herein, including projections, has been obtained from materials and sources believed to be reliable at the date of publication. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. 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Bangkok Retail Report The CBREs Bangkok Retail Report is produced quarterly by a professional retail research team who closely monitor the complex retail database so that our in-depth analysis will definitely be the most meaningful. The report covers all necessary topics which could be a part of your strategic future business plan. Retail supply, demand, take-up, occupancy, and other indicators that have an effect on the retail market such as retail sale index are all provided. Bangkok Property Report The Bangkok Property Report, now in its 23 rd year, is CBRE Thailands flagship quarterly subscription publication, with data from a tried and tested database reinforcing its reputation as Bangkoks definitive property sector source. The Bangkok Property Report provides in-depth analysis of the Bangkok real estate market, including property supply and demand, occupancy, take-up, prices, rental trends and other indicators. CONTACTS FOR MORE INFORMATION ABOUT THIS BANGKOK RETAIL MARKETVIEW, PLEASE CONTACT: Research & Consulting, Thailand Rathawat Kuvijitrsuwan Associate Director 46 th Floor, CRC Tower, All Seasons Place, 87/2 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 t: +66 (0)2 119 1500 ext. 2930 e: Retail Services, Thailand Jariya Thumtrongkitkul Associate Director 46th Floor, CRC Tower, All Seasons Place, 87/2 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 t: +66 (0)2 119 1500 ext 2799 e: Research & Consulting, Thailand Mayurachat Tipparat Manager 46th Floor, CRC Tower, All Seasons Place 87/2 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 t: +66 (0)2 119 1500 ext. 2913 e: