Retail real estate set for major expansion

Retailspace developers and retailers plan to invest up to Bt90 billion to open new retail businesses at the Central Business District and outside Bangkok between this year and 2011.

This investment is sustaining strong demand in the market, inter¬national property company Colliers International Thailand said.

Managing director Patima Jeerapaet said that though business sentiment has turned negative, retailers have not cut back on aggres¬sive expansion strategies, taking the view that the downturn will be a shortterm phenomenon.

He said retailers and retailspace developers will continue to speed up the expansion ahead of the passage of any new retail laws. Thus, various brands have to expand their branches to reduce the business risk.

Research department senior man¬ager Risinee Sarikaputra said retail¬ers will invest more than Bt90 billion by 2011 in Bangkok, to create retail space of 1 million square metres. Approximately 50 per cent of total new retail space will be located in the Bangkok Boundary Area, especially in the Eastern Zone, due to the shifting of the new international airport. The upcountry retail opportunity is estimated at more than Bt14 billion.

Meanwhile, many developers have announced plans to move beyond the domestic market to other places in Asia, such as India, Vietnam and China. Retailers will be able to reduce their business risk from currency fluctuation by open¬ing more outlets abroad through a franchise system.

Of late, developers have been developing more retail space in the East Part of the Bangkok Boundary Area because of the opening of the new international airport. The majority of new retail space is concentrat¬ed in the Bangkok Boundary Area, representing about 2,275,249 square metres. The Outer City Area and the City Area account for 1,351,839 square metres and 1,231,409 square metres, respectively.

The majority of new retail space in Bangkok Boundary Area is under community malls.

The supply of Bangkok retail space is increasing with an additional 256,041 square metres becoming available this year, 252,021 square metres expected next year and about 481,200 square metres to come in 2010.

The research said that because the retail market is continually changing, retail developers plan to renovate their outlets by investing about Bt2 billion this year.

The overall occupancy rate in the retail market is high, averaging 94.23 per cent as of the first half of the year.

With strong demand for retail space, a number of developers and retailers plan to invest about Bt14 billion outside Bangkok by 2010, the research showed.

The major locations for retail business can be divided into three categories.

The first is the city area, which focuses on lifestyle shoppers, tourists and expatriates.

The locations for type include Phloen Chit Road, Wireless Road, Sathon Road, Silom Road, Surawong Road, Phayathai Road, Rama I Road and a section of Sukhumvit Road between Soi 1 and Soi 39 to the north, and Soi 2 to Soi 26 to the south, Phetchaburi Road (both sides) between the Phayathai Intersection and Sukhumvit Soi 39 to the north, as well as Rama IV Road between Sukhumvit Soi 26 and Phayathai Intersection to the south.

The second category is the Outer City Area. This area is convenient because of its proximity to many of the residential areas and some commer¬cial buildings, office buildings and local attractions.

The last category for retail busi¬ness is the Bangkok Boundary Area. This is the area that lies on the border of Bangkok and is crowded with housing projects with easy access to the city area.