press conference june 2010

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


Damage assessment after 19 May in Thailand


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?


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


An overview of Q1 2010


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 (%)


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.


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


-

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


-

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%


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


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 (%)


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


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


Hotel: Future supply

Future supply of Luxury & Upper scale hotel by year, 2010 - 2013


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


Hotel: ADRAverage daily rate by grade 2005 – Q1 2010


Hotel: RevPAR

RevPAR


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


-

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


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


-

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


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 (%)


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


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

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


press conference june 2010

Documents

manhattan office space

right space companies

space effect

ratchawithi road

sublet space

right space large companies

downtown manhattan

renovationgovernment