Interview: Chadatip Chutrakul
How resilient has the Thai retail segment been to the recent economic slowdown, and what is the outlook for retail demand in the medium term?
CHADATIP CHUTRAKUL: Retail space in Bangkok remains under-supplied, even taking into account the 1m sq metres of space added over the past two years. We have seen consistently high demand in terms of expansion plans for local and international retailers in all segments despite the recent economic and political situation. Local retailers, ranging in focus from fashion and lifestyle to food and beverages, have continued to expand and launch new brands. In the central business district, for example, there continues to be a long waiting list for properties covering the entire spectrum of retail, from the luxury segment down.
Thai retail developers are keeping up investment and development projects in Bangkok. Retail segments leading demand include supermarkets, department stores, home improvement products, beauty and wellness, and food and beverages. There has also been strong demand for community malls over the past five to seven years as the residential area has expanded from the centre of Bangkok to its suburbs, along with growth in other secondary cities nationwide. Government infrastructure plans will improve connectivity to neighbouring countries, creating residential and retail potential along the planned free trade zones surrounding the developments.
One reason why retail continues to be so attractive is that Thailand is a nation of almost 70m people, so local consumption, along with rising incomes among the middle class, has provided retailers with ample incentive to continue expanding in the long term. In terms of tourism, with the exception of 2014 Thailand has recorded double-digit growth for the past five years, with the sizeable Chinese market only just now being tapped, contributing further to this demand. Bangkok remains affordable by regional standards, with retail rental rates that are 30-40% lower than in Singapore or Hong Kong. As a result, there is no problem at all for premium quality retail development, which continues to grow.
How would you assess the evenness of retail and property development across Bangkok?
CHUTRAKUL: The large-scale residential and retail projects in the central area of Bangkok that were developed over 40 years ago in effect created the business and retail hub of Bangkok, an area which has continued to expand. One of the major areas outside of the central business district that is set for growth is the riverfront, with projects like the $1.54bn ICONSIAM mixed-use project in the pipeline. As it stands today, the riverfront area already has 50 hotels with 15,000 rooms along the river, as well as upscale residential developments cropping up on the Thonburi side of the river for the past 10 years and spanning from luxury to middle market segments.
With the development of mega-projects such as ICONSIAM, the 10-km area along the riverside will be highly integrated, combining retail and residential in a global destination that can serve as a prototype for truly complete and mixed-use development. The project has been developed in coordination with the Thai government, the Bangkok municipality, the town planning organisation and the local community. Investments include four new piers along the river and the gold monorail line sponsored by ICONSIAM, which will be the first feeder line system connected with automotive, rail, boat and other infrastructure linkages, offering integrated alternative transportation along the length of the 10-km neighbourhood and alleviating traffic in the area. Moreover, ICONSIAM is located on a prized section of the Chao Phraya, which is beautiful and rich with cultural heritage that has preserved its historic authenticity. We are confident of creating an axis of activity that will act as a new focal point for the city, as well as a national landmark.
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