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Presentation I gave for press conference to Thai press in Bangkok.
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Press Conference2 June 2010 - Bangkok
Our Knowledge is your Property
Press Conference 2 June 2010Thailand – Moving forward
1. Damage after 19 May2. Crisis - How do companies respond?3. Hotel/tourism prospects – Jean Marc Garret4. Overview of Q1 20104. Overview of Q1 20105. Ideas for generating growth in the regions
Our Knowledge is your Property
Damage assessment after 19 May in Thailand
Our Knowledge is your Property
Type Project Name Location Leasable Area (Sq M.)Preliminary estimates
of damageFuture Plan
Shopping Mall Central World Ratchaprasong Road 550,000 (Whole Building)
95,000 (Burned)
Whole of ZEN part and some part of Central World, Isetan
Re Construction(1 Year)
Center One Ratchawithi Road 1,200 Whole building Re Construction(2 Years)
Big C Rajadamri Ratchaprasong Road NA 1st floor Renovation (6 Months)
Cinema (Retail shop) Siam Rama 1 Road NA Whole Building Re Construction
Office Building Maleenon Tower Rama 4 Road NA Some part of building Renovation
Building Damage During the Protest
Stock Exchange of Thailand HQ
Ratchadapisek Road NA 1st floor Renovation
Hotel Dusit Thani Hotel Rama 4 Road NA Some part of building Renovation
Century Park Hotel Ratchaprarop Road NA Some part of building Renovation
Convenience Store 7 Eleven Various branches NA Burned and Robbed Renovation
Tesco Lotus Express Various branches NA Burned and robbed Renovation
Bank Bangkok Bank Various branches 10 Branches Burned Re Construction & Renovation
Kasikorn Bank Various branches 2 Branches Burned Renovation
Krung Thai Bank Various branches 1 Branch Burned Renovation
Siam City Bank Various branches 1 Branch Burned Renovation
Government Office of the Narcotics Control Board
Din Daeng Road NA Some part of building Renovation
Metropolitan Electricity Authority
Rama 4 Road NA Whole Building Re Construction
Crisis How do companies respond?
Our Knowledge is your Property
9/11
�No comparison to Bangkok as far greater in scale and repercussions
�Only to be treated as a guide for how companies responded and how we can learn from this.
Immediate effect of 9/11�Approx 1,245,000 sq m of office space totally
destroyed�Another 1,950,000 sq m damaged and required
renovation�Over 10% of Manhattan office space affected but �Over 10% of Manhattan office space affected but
60% of grade A space in Downtown Manhattan� 100,000 workers displaced to over 1,000 locations
Relocation of office space
� 80% relocated as backfill, new leases or restored buildings in Midtown/Downtown, rest mostly New Jersey
� Smaller companies relocated closer due to ease in finding space due to smaller floorplate
� Large companies moved further out to find right space� Large companies moved further out to find right space� Companies rented 15% less space – effect on economy� Increase in sub-let space 4% to 16%� Downtown vacancy rates increased from 3.2% in Q3 2000 to
9.8% in Q1 2002. Midtown 1.9% Q2 2000 to 7.2% in Q1 2002.� Gross Metro Product of NYC fell by around 15% in Q3 2001 y/y
compared to US GDP fall of 1.3%
Longer term effects
�Half of displaced returned to Downtown in 2 years�Less than 20% outside of Manhattan� “Prestige” buildings not affected except Empire State
and Sears Tower with drop in rental/value�Tall towers not affected�Manhattan CBD remains top drawcard for
clusters/prestige
Business Contingency Planning in USA
�Small sized– Work from home�Medium/Large companies – US often >1 location –
backfilling� Issue in Bangkok – Many medium sized companies
operating in only one location
Business Contingency Planning�Teleworking – Develop as method of operation ½ day
a week�Remote back up for information– Expensive systems
down to free services like google and idrive�Temporary back up office – Availability�Temporary back up office – Availability�Use of supply chain/mutual support as back up�Permanent back up office – Separate grid/transport
connections, mixed use (storage), 2 separate locations for main operations
�Greater use of laptops for mobility�Alert system for preparation – yellow, red (not shirts)
Insurance Issues
�Only six companies whose properties were devastated by arson attacks have insurance that provides coverage against terrorism. (Office of Insurance Commission)
�Terrorism v Riots - definition� Importance of Business Interruption Insurance�UK, riots/terrorism excluded from policies�Foreign equity limit of 25%, increase to 49%?�Cut 7% VAT for non-life premiums
Tourism & HospitalityIntroducing Jean Marc Garret
Our Knowledge is your Property
An overview of Q1 2010
Our Knowledge is your Property
Office: Supply / Regional ComparisonTotal stock of office both CBD/Non-CBD in selected Asia-Pacific countries
4,000,000
5,000,000
6,000,000
Are
a S
q.M
.
Source: Colliers International Thailand Research /Colliers International Country Office
0
1,000,000
2,000,000
3,000,000
Are
a S
q.M
.
CBD Non-CBD
Office: Future Supply
Future Supply By location
80,000
CBD
Source: Colliers International Thailand Research
-
20,000
40,000
60,000
2010 2011
CBD
Outer CBDOuter CBD
Area (Sq M.)
Year
CBD Outer CBD
Office: OccupancyOccupancy rate in 3 locations, 2001 – Q1 2010
80.00
90.00
100.00
Occupancy Rate (%)
Source: Colliers International Thailand Research
50.00
60.00
70.00
80.00
Occupancy Rate (%)
Year
CBD Outer CBD Northern Fringe
Office: Rental rate
Historical rental rate in 3 main locations, 2001 – Q1 2010
400.00
500.00
600.00
700.00
THB / Sq M.
Source: Colliers International Thailand Research
0.00
100.00
200.00
300.00
THB / Sq M.
Year
CBD Outer CBD Northern Fringe
Office: Post May 19th
�Back up offices – One-off/long term�Limited investment –weak demand�Limited investment –weak demand�Q4 2010/2011 – situation, can 70,000 sq m be
absorbed?�New demand drivers – BPO
Retail: SupplyBreakdown of retail space in Bangkok by category, Q1 2010 excluding shopping malls
500,000
600,000
700,000
Source: Colliers International Thailand Research
-
100,000
200,000
300,000
400,000
2007 2008 2009 Q1 2010
Sq M
Year
Department Store Hypermarket Specialty Store
Entertainment Complex Community Mall Supporting Retail
Retail: Future supplyBreakdown of future supply in Bangkok by category, Q1 2010
200,000
250,000
300,000
Source: Colliers International Thailand Research
-
50,000
100,000
150,000
200,000
2010 2011
Sq M
Year
Shopping Mall Department Store Hypermarket
Specialty Stores Entertainment Complex Community Mall
Retail: Take up
Breakdown of historical take up rate of retail space by location, 2000 - Q1 2010
95.0%
100.0%
Source: Colliers International Thailand Research
80.0%
85.0%
90.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1 2010Take Up Rate (%)
YearCity Area Outer City Area Suburban Bangkok Area
Retail: Take upTake up rate of current supply by location, Q1 2010
96.00%
96.50%
97.00%
City Area
Outer City Area, Suburban - West Suburban - North
Source: Colliers International Thailand Research
92.00%
92.50%
93.00%
93.50%
94.00%
94.50%
95.00%
95.50%
96.00%
Suburban - East
Take Up Rate (%)
Location
Retail: Rental rates
Retail: Post May 19th
�Threat of terrorism/violence� Increased security – Philippines� Importance of logistics�Office back up space in retail outlets
Serviced apartment: Future supplyFuture supply
2000
3000
Units
Source : Colliers International Thailand Research
0
1000
2000
2010 2011
Units
Year
About 1,300 units in 2010, 2,000 in 2011
2009-11, about 40% increase in total supply
Serviced apartment: Occupancy
Occupancy in Bangkok
70.00
75.00
80.00
85.00
90.00
95.00
Occupancy Rate (%)
Source : Colliers International Thailand Research
50.00
55.00
60.00
65.00
70.00
2004 2005 2006 2007 2008 2009 Q1 2010
Occupancy Rate (%)
Year
Grade A Grade B
Serviced apartment: Demand drivers
Number of expatriates in Bangkok, Q1 2010
50,000
60,000
70,000
No. of Expatriates
Source : Office of Foreign Workers Administration (Work Permit), Department of Employment of The Ministry of Labor and Colliers International Thailand Research Remark : Above information does not include Lao, Burmese and Cambodian citizens
-
10,000
20,000
30,000
40,000
2004 2005 2006 2007 2008 2009 Q1 2010
No. of Expatriates
Year
Serviced apartment: Rental rateRental rate by room type & location, Q1 2010
80,00090,000100,000110,000120,000130,000140,000150,000
THB / Month
Source : Colliers International Thailand Research
010,00020,00030,00040,00050,00060,00070,00080,000
Studio 1 BR 2 BR 3 BR
THB / Month
Room Type
Central CBD Central Lumpini Early Sukhumvit Late Sukhumvit Southern Fringe Other
Serviced Apartment: Post May 19th
�Uncertainty Tenants stay away from apartment for lease
�Future FDI and expats working�Battle for short term stay market hotels�More niche markets – office/home
Hotel: SupplyLuxury & Upper scale hotel in Bangkok by year & location, 1995 – Q1 2010
Source : Colliers International Thailand Research
Hotel: Future supply
Future supply of Luxury & Upper scale hotel by year, 2010 - 2013
Source : Colliers International Thailand Research
1,650 increase in room in 2010 , 12% from 2009
Hotels: Occupancy
Average occupancy rate of Luxury & Upper scale hotel in Bangkok by grade, Q1 2010
Source : Colliers International Thailand Research
Hotel: ADRAverage daily rate by grade 2005 – Q1 2010
Source : Colliers International Thailand Research
Hotel: RevPAR
RevPAR
Source : Colliers International Thailand Research
Condominium: New launches
Newly launched condominium units during the year 2009 - Q1 2010 by quarter.
10,000
15,000
Q2 2009
Q4 2009 Q1 2010
Units
Source : Colliers International Thailand Research
-
5,000
10,000
Q1 2009
Q2 2009Q3 2009U
nits
About 13,700 units launched in Q1 2010
Condominium: Demand
Nearly 90% of purchasers of new condominium units in Bangkok in 2009 are first time buyers
Condominium: Launches Newly launched condominium units in Q1 2010 by location.
4000
6000
8000
Source : Colliers International Thailand Research
0
2000
4000
City Area Northern
Fringe
Area
Eastern
Fringe
Area
Southern
Fringe
Area
Outer City
- East Area
Outer City
- West
Area
Suburban
Bangkok
Area
Location
Condominium: New supply Supply by Location to Q1 2010
150,000
200,000
Units
Source : Department of Land, Colliers International Thailand Research
0
50,000
100,000
City Area Eastern
Fringe Area
Northern
Fringe Area
Southern
Fringe Area
Outer City -
East Area
Outer City -
West Area
Suburban
Bangkok
Area
Units
Location
Condominium: Future supplyFuture supply scheduled to be completed during the year 2010 – 2013 by location. (As of Q1 2010)
15,000
20,000
25,000
30,000
Units
Source : Colliers International Thailand Research
-
5,000
10,000
15,000
2010 2011 2012 2013
Units
Year
City Area Eastern Fringe Area Northern Fringe Area Southern Fringe Area
Outer City - East Area Outer City - West Area Suburban Bangkok Area
Condominium: Mass transitSelling prices of newly launched projects by proximity to mass transit lines 2009– Q1 2010
80,000
90,000
100,000
110,000
0-200m
201-500m
501-1,000
Baht per sq m
Source : Colliers International Thailand Research
0-200m
201-500m
501-1,000
010,00020,000
30,000
40,000
50,000
60,000
70,000
80,000
City AreaOuter-City
WestNorthern
Fringe Outer-City
East Distance from mass transit
Condominium: Mass transitTake up in proximity to existing mass transit lines
60.00%
80.00%
Take Up Rate (%)
Source : Colliers International Thailand Research
0.00%
20.00%
40.00%
0 - 200 201 - 500 501 - 1,000 > 1,000
Take Up Rate (%)
Distance from BTS / MRT (M.)
Condominium: Pattern of development
�More projects launched from non-listed developers but more units for listed.
�Average number of units Q1 2010�Listed 707 units�Non listed 280 units
Condominium: Post May 19th
�Limited ongoing effect unless protracted�Affordability and mass transit spurring the market�Affordability and mass transit spurring the market�Effect of BRT on condominium development�Some consolidation in the market
NO.Project Name / Building Name
Detail Location Buyers Sellers Value (THB)Duration Period
1 Land at Ratchayothin Land area 5,921 Sq wah Ratchayothin LPN Development Plc. Metrostar Property Plc. 680,915,000 Jan. 20102 Kao - Yai Market
VillageLand area 26 Rais 3 Ngan 14 Sq Wah and Leasable Area 9,970 Sq M
Kao - Yai Market Village
Ek-Chai Distribution Co.,Ltd.
Siam Future Development Plc.
198,000,000 Jan. 2010
3 Land at Bangkae Land area 3,194 Sq Wah Bangkae LPN Development Plc Individual Sellers 102,000,000 Jan. 2010
4 Land on Rama 4 Road Land area 1,704 Sq Wah Phra Khanong LPN Development Plc. Individual Sellers 255,600,000 Jan. 2010
5 Land and Hotel Total land area 3 Rai 1 Ngan 99 Sq Wah, 9 Bldgs 17 fl. and 3 fl. Bldg
Cha Am Zeer Property Co.,Ltd. (Asia Hotel)
TAMC 150,500,000 Feb. 2010
6 Land and Building Total land area 1 Ngan 47 Sq Wahand 8 Bldgs 3 fl.
Cha Am Zeer Asset Co.,Ltd. (Asia Hotel)
TAMC 9,500,000 Feb. 2010
7 Land On Sathorn Road Total land area approximately 3 Rai Sathorn Road Pruksa Realestate Plc. Private Sellers 480,000,000 Feb. 2010
8 Land with Factory Land area 1 Rai 3 Ngan 40 Sq Wahand Factory area 1,125 Sq M.
Bangpa - In IE. METKTEC Manufacturing
Corporation (Thailand)
TICON Property Fund 27,000,000 Feb. 2010
Some Transaction Data in Q1, April and May 2010
Corporation (Thailand) Co.,Ltd.
9 Land at Samutsakorn Land area 107 Rai 3 Ngan 72.6 Sq Wah
Tha - Sai, Muang, Samutsakorn Province
Asia Green Energy Plc. Private Sellers 154,126,125 Mar. 2010
10 Mitr Aree Hotel Land area 4 Rai (1,600 Sq Wah) and hotel building
Soi Aree 4, Phahonyothin
Pruksa Realestate Plc. Private Seller 450,000,000 Mar. 2010
11 Novotel Beach Resort Panwa Phuket
Land area 11 Rai 99 Sq Wah, 139 guestrooms, operated 77 rooms
Panwa Beach, Muang, Phuket
Ton Wassana Co.Ltd. Natural Hotel Panwa Co.,Ltd.
870,000,000 Mar. 2010
12 Sermmitr Tower 34,000 Sq M. for office condo Asoke Road, Bangkok 1,500,000,000 Mar. 201013 Land on PloenchitRoad
(Nearby Wave Place)Land area 2 Rai 3 Ngan 5.7 Sq wah(1,106 Sq Wah)
Ploenchit, Bangkok Thai Summit Grand Estate Co.,Ltd.
Raimon Land Plc. 1,326,840,000(1,200,000/Sq W)
Mar. 2010
14 Land on Wireless RoadLand area 2 Rai 23 Sq Wah(823 Sq Wah.)
Wireless, Bangkok Sansiri Plc. Raimon Land Plc. 1,234,500,000(1,500,000/Sq W)
Mar. 2010
15 Former Harbour View Project
35 floors condominium building with 382 units
Charansanitwong Road, Bangkok
Equity Residential Co.,Ltd.
Siam Commercial Bank 150,000,000 Mar. 2010
16 Land on Ramkhamhaeng Road
Land area 3 Rai 3 Ngan 78 Sq Wah(1,578 Sq Wah)
Ramkhamhaeng Road, Bangkok
TEE International Co.,Ltd. (JV with
Chewathai Co.,Ltd.)
Private Seller 152,270,000 Apr. 2010
17 Land on RatchadapisekRoad (SET)
Land area 9.66 Rai Ratchadapiusek Road, Bangkok
AIA SET 1,600,000,000(430,000 / Sq W)
May 2010
NO.Project Name / Building Name
Detail Property Type Location Value (THB)
1 Land on Pinklao Road Land area 842 Sq Wah Land Pinklao Road, Bangkok 202,080,000
2 Land on Yothin Pattana Road Land area 909 Sq Wah Land Yothin Pattana Road, Bangkok 40,905,000
3 Land and Factory Land area 4,570 Sq Wah Land and Factory 297,050,000
By Investment Department, Colliers International Thailand
TMB Property, Colliers International ThailandNO. Duration Period No. of Property Sale Value (THB)
1 Q1 2010 53 333,994,100
2 April 2010 43 358,476,400
3 May 2010 12 40,930,000
Ideas for generating growth in the regions
Our Knowledge is your Property
Board of Investment ZoningZone 1- Bangkok, Samut Prakan, Samut Sakhon, Pathum Thani, Nonthaburi and Nakhon Pathom
Zone 2 - Samut Songkhram, Ratchaburi, Kanchanaburi, Ratchaburi, Kanchanaburi, Suphanburi, Ang Thong, Ayutthaya, Saraburi, Nakhon Nayok, Chachoengsao, Chon Buri, Rayongand Phuket
Zone 3 – (36 provinces) [3a]
Zone 3 – (22 provinces) [3b]
Investment in the regions
Colliers International Thailand Research / BoI statistics
Investment in the regions
Colliers International Thailand Research / BoI statistics
Investment in the regions
Colliers International Thailand Research / BoI statistics
Problem with investment in certain regions
�Lack of infrastructure�Skilled population work in Bangkok�Poor agricultural land�Lower educational attainment�Lower educational attainment�Distance from port facilities�Low level industrial development�Limited natural tourism advantages
�What is the solution?
Hospitality – Open up to investment
�Reduction in minimum number of rooms to develop smaller scale developments in zone 3 (100 rooms to 20)
�Foreign ownership in all hospitality sectors in zone 3�Tax incentives for hospitality sector
Industrial Development
�Approximate occupancy rates for industrial estatesNorth 59% Northeast 30% Southern 35%
�Limited scope due to location�Limited scope due to location� Increase tax incentives for zone 3� Infrastructure for border areas to encourage trade
especially China�Stimulate local crafts
SE Asia. YES to industrial FDI but NO to services
Thailand’s restrictions on FDI-services
Source: UNCTAD
Office space in secondary cities in SE Asia�Cebu (Philippines) 450,000 sq m of office space for
BPO (Business Process Outsourcing) market�Market for 40-60,000 sq m in a number of other
locations in the country (Iloilo, Bacolod, Pampanga) �Da Nang (Vietnam) 60,000 sq m [also 2 main �Da Nang (Vietnam) 60,000 sq m [also 2 main
cities]�Surabaya (Indonesia) About 12 office buildings�Bandung (Indonesia) About 5 office buildings�Penang (Malaysia) Over 1 million sq m office
space�Johor Bahru (Malaysia) Approx 560,000 sq m�Thailand?
Professional/Commercial ServicesDevelopment for Thailand’s regions�Foreign ownership of service industry sectors�Make policies clear and promote them�Open BPO to engineering/architecture�Open BPO to engineering/architecture�Review other areas that can be included�Tax incentives for zone 3, especially 3b�Specific training requirements – languages, skills�More focus on FDI services
Potential for Thailand
Advantages
�Prevent people having to leave regions, uniting families�Highly skilled and trained workforce in the future�Localization easier compared to industrial development�Service industry less reliant on infrastructure�Service industry less reliant on infrastructure�Encourage real estate development in all sectors�Sustainable growth better than hand outs�Opening of new markets rather than just existing ones�Opportunity > Greater Equality > Less tensions�Limited foreign ownership in SE Asia - opportunity
Types of Global Services/BPO
� Human Resources � Engineering � Architecture� Medical transcription� Financial� Financial� Customer Support� Software development� R &D� Web design� Billing� Insurance
Rural BPO in India – A growing market
Sarvottom’s Business Technology Services Group
DesiCrew Solutions Pvt Ltd
Drishtee Telecenter Network
Time for Thailand to lead the way in FDI
Three stage process for leasehold changes
1) Automatic leasehold extension to 60 years
2) Revise commercial/industrial land law to include residential property, 50-70 years with option to renew
3) 99 year leaseholds – more competitive than neighbours
�Enable dramatic growth in landed property in all locations as well as easing luxury condo restrictions
�Help encourage retirement communities –domestic and foreign
�Allow greater foreign participation in luxury market
3) 99 year leaseholds – more competitive than neighbours
Other measures
�Visa waivers to target niche tourism markets� Immigration – simplified procedures/ convenient�Support for promoting provinces worldwide� Investment guides to be published and distributed � Investment guides to be published and distributed
worldwide including regional focus
Thank you
Our Knowledge is your Property