MarketResearchPATTAYA RETAIL MARKET OVERVIEW | 1 sT hALf | 2009

PAT TAYA R E TA I L M A R K E T

The Knowledge Reportc o l l i e R s i n T e R n aT i o n a l | T H a i l a n D

PaTTaYa ReTail MaRKeT oVeRVieWShopping is sometimes done as a recreational activity, especially when we travel to many places. Recreational shopping often involves window shopping (just looking, not buying) and browsing, and does not always result in a purchase. However, shopping generally refers to the act of buying products and this is done to obtain necessities, such as food and clothing. During the pinch of the global economic downturn in 2008, the successful retail outlet should provide the necessary goods and foods since people always need convenient sources of basic foodstuff and household goods, and are willing to pay for that convenience. We have examined the recent trends in consumer spending, discovering that products and services that fulfill such needs as escapism, inexpensive luxury and stress relief are reaping the most benefits.

The successful retail outlet in Pattaya should be in a good location with very high traffic. The anchor tenant is the key success factor for the retail outlet since this tenant is one of the larger stores/names and will be able to attract traffic to the retail outlet. The anchor tenant is generally a department store, supermarket or a major retail chain.

Retail in Pattaya is designed to meet the demands of local and international tourists, although it is noticeable that air-conditioned malls in Pattaya seem to serve local rather than international demand since retail business in Thailand is famous for its open-air markets, with small stalls selling a myriad of products, mostly locally made, and often what one would consider handicrafts. Pattaya has fewer of this type of shopping than most of Thailand’s other major tourist destinations.

MaRKeT inDicaToRs

1H 2009 2H 2009F

sUPPlY

DeManD

occUPancY RaTe

RenTal RaTe

www.colliers.co.th

PaT TaYa R e Ta i l M a R K e T | 1 s T H a l F | 2 0 0 9

community malls or lifestyle shopping complexes still have the potential to grow in the Jomtien area because retailers and retail developers gravitate towards growing residential communities. it would be interesting to develop retail space in Pattaya as a Thai-style market.

collieRs inTeRnaTional2

The Knowledge Report | 1st Half | 2009 | Pattaya Retail Market

sUPPlY TRenDs

Retail Market Categories

The retail market in Pattaya can be divided into four main categories, based on size, characteristics, goods sold and pricing. The different formats serve shoppers in different locations depending on the availability of land and retail space, as well as investment opportunities. These four categories are: 1) Shopping Mall: this is a building or set of buildings that contains a variety of retail units, with interconnecting walkways enabling visitors to easily walk from unit to unit. Many shopping malls consist of department stores, kiosks, shops and supermarkets. Shopping Malls are sizable buildings, providing various goods and services. A new shopping mall in Pattaya is Central Festival Pattaya. 2) Hypermarket Mall: this is a retail establishment combining a department store and a supermarket. Superstores provide a wide range of products, from food to non-food items. The result is a very large retail facility that offers a wide range of products under one roof, including full lines of groceries and general merchandise. The ideal hypermarket is able to fully serve customers’ basic needs. The hypermarket’s typical business model focuses on high-volume and low-margin sales. Because of their large footprints - a typical Tesco Lotus covers 6,000-30,000 sq m and a typical Carrefour 8,500-10,000 sq m - they serve the needs of shoppers demanding large quantities of goods. However, retailing is also provided with affordable prices. In addition, several hypermarkets are located on highways, making them easily accessible by car. A hypermarket mall in Pattaya is located off the highway before entering the city.

3) Community Mall: this is a relatively new, small retail format that is designed to meet the changing customer needs and lifestyles. Their customers prefer to shop at retail stores that provide one-stop shopping near their homes. The community mall, where all of the space has been rented out, emphasizes easy access for people in its neighbourhood, usually within a 2-5-minute drive. The mall offers a casual feeling where customers can shop, drink coffee or eat snacks and dine in a relaxing atmosphere, and is normally located in the centre of community areas or near residential projects, such as The Avenue Pattaya, located on Second Road. 4) Specialty Stores: these are stores that specialise in a specific range of merchandise and related items. Most have an extensive breadth and depth of stock of the items in which they specialise, and provide a high level of service and expertise. The pricing policy is generally in the medium to high range, depending on such factors as the type and exclusivity of merchandise and ownership. This also depends on the type of stores - whether they are owner-operated or a chain operation, which has the advantage of bulk purchasing and a centralised warehousing system. The wide range of merchandise also distinguishes specialty stores from department stores and supermarkets, such as Home Pro, Home Works, Index and Boonthavorn Mall.

collieRs inTeRnaTional 3

The Knowledge Report | 1st Half | 2009 | Pattaya Retail Market

Total Current Supply

The total supply of retail space in Pattaya as of 1H 2009 was 320,123 sq.m. In the first half of 2009, only one shopping Mall

covering 54,793 sq.m, namely Central Festival Pattaya, was added to the current supply.

The majority are shopping malls, accounting for 181,520 sq m of the total Pattaya retail supply, followed by hypermarkets and

community malls, accounting for 76,000 sq m and 34,403 sq m, respectively.

FigURe 1 : sUPPlY oF PaTTaYa ReTail sPace, 2003-1H 2009

FigURe 2 : sUPPlY oF PaTTaYa ReTail sPace bY ReTail caTegoRY, 1H 2009

Source : Colliers International Thailand Research

Source : Colliers International Thailand Research

collieRs inTeRnaTional4

The majority of retail supply is in Central Pattaya, accounting for 62% of the total, followed by South Pattaya and North

Pattaya, accounting for 15% and 14%, respectively. It is interesting to see that there is no retail supply in Jomtien area.

Table 1 : FUTURe neW ReTail sPace sUPPlY, 2009-2012 (F)

PRojecT NaMe LocaTioN ReTaiL caTegoRy LeTTabLe aRea (sq M) esTiMaTed coMPLeTioN

The Jomtien Plaza Jomtien shopping Plaza 6,000 1Q 2010

ocean one Jomtien community Mall 3,000 2012

Source : Colliers International Thailand Research

The Knowledge Report | 1st Half | 2009 | Pattaya Retail Market

FigURe 3 : sUPPlY oF PaTTaYa ReTail sPace bY locaTion, 1H 2009

Source : Colliers International Thailand Research

Future Supply The future supply of retail space in Pattaya is limited, with only two projects in the planning stage. They will cover an estimated 9,000 sq m.

collieRs inTeRnaTional 5

DeManD TRenDs

Although customers have been spending less money because of the global economic crisis, which has affected the Thai economy and contributed to a decline in consumer purchasing

power, the retail market continues to expand, as indicated by the projected new supply from 2009, as well as an increase in branches planned by various brands, especially in 2009.

The Knowledge Report | 1st Half | 2009 | Pattaya Retail Market

Table 2 : PlanneD bRanD bRancH exPansion in PaTTaYa, 2009-2010 (F)

bRaNd PRoducTNuMbeR of bRaNcHes LauNcHed iN 2009-2010

geox shoes 1

aa Footwear shoes 1

ootoya Japanese Restaurant 1

Wawee coffee coffee shop 2-3

bread brasserie bakery shop 2-3

burger King Fast food 1-2

starbucks coffee shop 3-4

loft gift shop 1

adidas sports 1

xoxo Fashion 1

nafnaf Fashion 1

Miss sixty Fashion 1

g2000 Fashion 1

Pena House Fashion 1

bookazine bookstore 1

boots cosmetics and Pharmacy 1

black canyon Restaurant 1

K T optic eyeware 1

Mango Tree bistro Restaurant 1

Watson cosmetics and Pharmacy 1

Source : Colliers International Thailand Research

collieRs inTeRnaTional6

occUPancY anD RenTal RaTes

The overall occupancy rate of retail space is still high, averaging 93.18%, with the average occupancy rate in the Sukhumvit area the highest, averaging 98.94%.

The average occupancy rate in specialty malls in Pattaya is the highest, at 100% in the 1st half of 2009.

The rental rate of retail centres varies depending on location, with both vehicular and foot traffic being major determinants. The rental rate of retail space in Pattaya is in the range of THB600-2,600 per sq m per month. While location is the most

important factor in determining the rental rate, the rent that different types of retail business can afford and the size of the space are also important.

FigURe 4 : aVeRage occUPancY RaTe oF PaTTaYa ReTail sPace bY locaTion, MaY 2009

FigURe 5 : aVeRage occUPancY RaTe oF PaTTaYa ReTail caTegoRies, MaY 2009

Source : Colliers International Thailand Research

Source : Colliers International Thailand Research

The Knowledge Report | 1st Half | 2009 | Pattaya Retail Market

collieRs inTeRnaTional 7

Outlook:

Due to the scarcity of retail space in Jomtien Beach, coupled with the condominium and hotel development in that area, the retail trend in Jomtien looks bright. Rents of retail space in Jomtien are estimated to be high since there is a surplus of demand.

Our survey showed that the residential projects located from Pratumnak Hill downward to Jomtien Beach are favoured by expatriates, European retirees, especially Scandinavians, and high-end Thais. Thus, the retail space in this area should offer international products and groceries so that there is no need for residents of this area to drive into Pattaya to buy high-standard food and products that meet their lifestyle needs.

Community malls or lifestyle shopping complexes still have the potential to grow in the Jomtien area because retailers and retail developers gravitate towards growing residential communities. It would be interesting to develop retail space in Pattaya as a Thai-style market. The open-air shopping mall with a warren of small shops offering a variety of locally made products might attract tourists, but the food and delicates would have to be of international standard.

Notes

The retail rating used in our research is based solely on property ratings and the rates achieved obtained from market research. The rating system used in our report is not that of Colliers International.

conTacT inFoRMaTion

www.colliers.co.th

294 oFFices in 61 coUnTRies on 6 conTinenTs

Usa 94 canaDa 22laTin aMeRica 17 asia PaciFic 64 eMea 97

Us$ 1.6 billion in annUal ReVenUe 1.1 billion sQUaRe FeeT UnDeR ManageMenT 12,700 PRoFessionals

The Knowledge Report | 1st Half | 2009 | Pattaya Retail Market

THailanD: Patima Jeerapaet Managing Director colliers internationalbangkok office:17/F Ploenchit CenterKlongtoeyBangkok 10110Tel: 662 656 7000Fax: 662 656 7111 Pattaya office:492/2 Thappraya Road NongprueBanglamungChonburi 20150Tel: 6638 364 411Fax: 6638 364 414

Risinee Sarikaputra Director | Research

This report and the figures shown herein has been prepared by colliers international as a guide only. any interested party seeking to rely on the contents should undertake its own enquiries as to the accuracy of the information. colliers international does not guarantee, warrant the accuracy or represent the information contained in this document, and excludes unequivocally all inferred and implied terms, conditions and warranties arising out of this document, as well as all liability for loss and/or damage arising therefrom, including any loss of profits, business or anticipated savings.

www.co l l i e r s . co. th

This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.