Bangkok Overall MarketView

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1 F 214F 215F 216F 217F F 214F 215F 216F 217F Bangkok Overall MarketView Q2 213 CBRE Research Thailand CONDOMINIUM Figure 1: Newly Completed Bangkok Condominiums, F Figure 2: Condominium Supply, Demand and Vacancy Rate in Downtown Bangkok, F No. of Units 5, 45, 4, 35, 3, 25, 2, 15, 1, 5, Midtown Downtown 14, 12, 1, 8, 6, 4, 2, Total Supply Total Occupied Vacancy Rate 1% 8% 6% 4% 2% % 1 In the Bangkok condominium market, we see a clear split between the downtown market and the midtown/suburban market with different market dynamics, sizes and quality emerge. The downtown market consists of projects at higher prices while the midtown/suburban market is a mainly a mass market made up of one bedroom units. New supply has continued to increase with approximately 17, units completed in the downtown and midtown markets this quarter. Total midtown and downtown supply is now approximately 35, units where the majority of supply is in the midtown area and the market for downtown condominiums is now a low volume high value market. The number of new launches in the downtown area has decreased by approximately 4% on last quarter and over 9% of the units in the new launches in the downtown area are priced above THB 15, per square metre. The amount of unsold inventory in the downtown continues to fall significantly and prices are rising for the best quality downtown completed projects and for the best located new downtown launches. Developers who want to achieve high prices have to convince buyers that their projects really do offer a higher quality and only the best located, best designed projects with high specifications will succeed. There is a renewed interest from foreign investors accounting for just over 2% of demand for downtown Bangkok condominiums with an increasing proportion of Asian buyers. We have concerns about the midtown and suburban condominium market. The Bank of Thailand has warned banks to be more cautious in their lending to this sector but as yet has not lowered the loan to value requirements and the government has not imposed additional transaction taxes like Hongkong and Singapore. There will be a record level of midtown and suburban condominium completions this year. Developers will be competing to clear unsold inventory with speculators who wish to resell before completion and the need to make final payment, in many cases 8-9% of the total price. We expect that this will result in a slowdown in new launches and an exit of speculators from the market. A market dominated by end users will mean that new projects will have to be both attractive and affordable. This is likely to result in a mixed performance for new mid market/suburban condominium launches and a big push by developers to clear unsold inventory in both completed and under construction developments. 213,

2 24 Q1 213 Q Q1 213 Q F 214F F 214F 215F Q2 213 Bangkok Overall MarketView OFFICE AND APARTMENT OFFICE Figure 3: Bangkok Office Market, 2-215F sq.m. 9,, 8,, 7,, 6,, 5,, 4,, 3,, 2,, 1,, Total Supply Total Take-up Vacancy Rate Vacancy Rate 45.% 4.% 35.% 3.% 25.% 2.% 15.% 1.% 5.% % AIA Capital Centre Bhiraj Tower G-Land Tower No new supply was completed in Q2 213 causing office market occupancy rates to increase to 88.9%, the highest level since the early 199 s. The increasing demand and limited supply have caused office rents to rise in all grades and areas. In Q2 213, average grade A CBD rents increased 1.4% Q-o-Q and 8.7% Y-o-Y. There is limited supply due for completion in with just under half a million square meters of office space under construction. Only 2% of space under construction will be Grade A in the CBD. We expect demand will continue to improve, vacancy rates will fall and rents will rise. APARTMENT Figure 4: Supply, Demand and Occupancy Rate, 24-Q2 213 Figure 5: Supply of Expatriate Apartments, F Units Supply Demand Occupancy Rate Units Existing Supply New Supply 14, 12, 1, 8, 6, 4, 2, 1% 9% 8% 7% 6% 5% 13, 12, 11, 1, 9, 8, 7, 6, 2 In Q2 213 the total number of downtown apartment units increased slightly by.4% Q-o-Q but decreased by.3% Y-o-Y, from 11,685 units in the last quarter to 11,727 units this quarter. Achieved apartment rents in Q2 213 slightly increased from the previous quarter. The Central Lumpini area still posted the highest achieved rents with Grade A rents of THB 436 sq.m./month, an increase of 2.9% Q-o-Q and an increase of 5.% Y-o-Y. Apartments remain a popular choice for expatriates who prefer the single ownership of apartment buildings and the good standards of maintenance. The number of expatriates holding work permits in Bangkok continued to increase by 1.% Y-o-Y, increasing from 64,722 in Q1 213 to 65,42 in Q Most new apartment development has been small in terms of building scale and built on family land where the developer is looking at a return on construction costs and not including a return on the value of the land. 213,

3 Q1 213 Q Q1 Q2 Q3 Q4 Q1 213 Q F 214F 215F HOTEL Figure 6: ADR and Occupancy Rate of Hotels (All Grades) in Bangkok, -Q2 213 THB 4, 3, 2, 1, ADR Occupancy Q % 8% 6% 4% 2% % HOTEL AND HOUSING Figure 7: Future Hotel Supply in Downtown Bangkok, -215F No. of keys 5, 4, 3, 2, 1, New Supply Existing Q2 213 Bangkok Overall MarketView Source: STR Global In Q2 213, 1,854 keys were completed, as six new hotels opened. The total supply of downtown hotel keys is set to increase more than 1% by 215 with the addition of over 4,4 keys. HOUSING Figure 8: New Supply of Residential Units in BMR, 21-Q2 213 Total Units 14, 12, 1, 8, 6, 4, 2, Condominium Self-Built Semi Developer-Built TH Self-Built TH Developer-Built SDH Self-Built SDH Developer-Built Semi Tourist arrivals grew by 17.5% Y-o-Y pushing up the average occupancy rate of hotels of all grades in Bangkok. This could be the year that hotel owners in Bangkok are finally able to start to increase room rates. Figure 9: New Supply of Developer-Built Single-Detached Houses in the BMR, 21-Q2 213 Units 3, 25, 2, 15, 1, 5, In Q2 213, over 13,931 single-detached houses, semidetached houses, townhouses and shophouses were completed, compared to 11,9 units in the previous quarter. 23 new housing projects (5,855 units) were launched by major developers, decreasing from 3 projects (7,914 units) in Q Pruksa and Sansiri were the first and second in terms of new housing units in this quarter. Single detached house projects were mostly developed in the western areas such as Ratchphruek, Pinklao and Bang Yai; while, townhouse projects were largely concentrated in the eastern part of Bangkok, especially Ram Indra, Ramkhamhaeng and Samut Prakarn, followed by the northern areas such as Klong Luang, Pathumthani and Saimai. 213, CBRE believes that the growth of housing market may slow down since many banks have started to be stricter about home loan lending. The Bank of Thailand has asked commercial banks to set strict conditions for property loans to prevent bubbles in the real-estate sector, while considering changing the loan-to-value (LTV) ratio to require a higher down payment for purchase of a second home. Currently, the BOT obliges commercial banks to maintain the LTV at 95% for low-rise homes and 9% for condominiums. 3

4 QHOP LUXF CTARAF MNRF MNIT2 UOB8TF POPF TTLPF MSPF MJLF FUTUREPF MONTRI QHPF MNIT DTCPF M-STOR TNPF SSTPF SPF WHAPF M-AAA BKKCP TIF1 CPNRF TLOGIS TFUND LHPF MIPF GOLDPF TLGF TRIF CPNCG TCIF QHHR TU-PF M-II JCP ERWPF CRYSTAL KPNPF Q1 213 Q2 213 Q1 213 Q2 213 Q2 213 Bangkok Overall MarketView INDUSTRIAL AND INVESTMENT INDUSTRIAL Figure 1: Supply, Demand and Occupancy Rate of SILPs, 22-Q2 213 Total Supply Total Take-up (%) Of Completed SILPS Sold by Developer Rai 14, 12, 1, 8, 6, 4, 2, Occupancy Rate 1% 95% 9% 85% 8% 75% 7% Figure 11: Total Supply of RBFs, -Q2 213 Total Supply Total Take-up Vacancy Rate Sq.m. Vacancy Rate 2,, 3% 25% 1,5, 2% 1,, 15% 1% 5, 5% % 4 In Q2 213 serviced industrial land plot sales totalled 1,45 rai (232 hectares), increasing 15% Q-o-Q and increasing 4% Y-o-Y. Hemaraj s H1 213 land sales have surpassed more than half of Hemaraj s full year target of 1,8 rai (288 hectares). Amata s H1 land sales have been sluggish however Amata expects sales to be much stronger in H2 213 and therefore is maintaining a sales target of 3, rai (48 hectares). A large volume of new SILP supply is being developed in the Asia Industrial Estate Suvarnabhumi and Rojana Industrial Park Prachinburi. INVESTMENT Figure 12: Estimated Gross Freehold Initial Yield, Q2 213 Percentage (%) % 1-Yr Government Bond 5.5% Luxury Residential Most yields for property investments remained stable in Q year government bonds yield decreased from 2.74% in Q1 213 to 2.57%. However, 1-year government bond yield increased from 3.6% in Q1 213 to 3.79% in Q The average yield for property funds increased from 5.45% to 5.73% as the price of investment decreased % 5.5-7% Prime Office Prime Retail 8-9% Industrial Honda has started construction on 1,6 rai (256 hectares) of land in Rojana Prachinburi. The Honda plant is likely to start production in 215 and will employ a work force of approximately 1,2. Honda s overall Thailand production is expected to total 42, units per year with the addition of the new plant. The Industrial Estate Authority of Thailand (IEAT) is reviewing between 28 and 3 new industrial estate projects. Some of these projects are located on Thailand s borders such as Phu Nam Ron which, if it goes ahead, is intended to serve as a logistics hub for Myanmar trade. In Q2 213 the IEAT and Hi-Tech Kabin Logistics Co established an industrial estate in Prachinburi. Figure 13: Dividend Yield of Listed Property Funds 12-Month Trailing (%), Q % 1% 8% 6% 4% 2% % The Crystal Retail Growth Leasehold Property Fund (CRYSTAL) was listed on the Stock Exchange of Thailand on 27th June 213. The fund offered 39 million investment units with a par value of THB 1.6 per unit, raising a total capital amount of THB 4,134 million. Kiatisahamitr Co., Ltd., Benjakit Pattana Co., Ltd. and KE Retail Co., Ltd. sold the 3 years leasehold right of the The Crystal, a suburban community mall (net leasable area 13,754 sq. m, which equates to a price of THB 118,778 per sq. m.) and The Crystal Design Center, a specialty centre for furniture and other home decoration items (net leasable area 29,7 sq. m., which equates to a price of THB 84,715 per sq. m.) to the fund. 213,

5 Q1 213 Q2 213 Q1 213 Q2 213 Q1 213 Q2 213 SERVICED APARTMENT Figure 14: Average Achieved Rents of Grade A Units by Area, -Q2 213 THB/sq.m./ month 1,4 1,25 1, SERVICED APARTMENT AND RETAIL Figure 15: Supply, Demand and Occupancy Rate, -Q2 213 Sukhumvit Silom/Sathorn Lumpini Units Supply Demand Occupancy 18, 15, 12, 9, 6, 3, 1.% 8.% 6.% 4.% 2.%.% Q2 213 Bangkok Overall MarketView The supply of serviced apartments increased.5% Y-o-Y but decreased from 15,61 in Q1 213 to 15,27 in this quarter which was due to some buildings being converted to be hotels, demolished or renovated. The strong inflow of tourists and growth of expatriates living in Bangkok and limited supply has resulted in higher occupancy rates and a slight increase in room rental rate in this quarter. We expect that the daily rate market will continue to be competitive as there will be an increase of 11.9% in the number of hotel rooms in Bangkok by 215. The average achieved rental rate for serviced apartments in downtown Bangkok was just under 1,1 baht per square metre per month. RETAIL Figure 16: Bangkok Retail Supply, Take-up and Occupancy Rate, 2-Q213 Net Area (sq.m.) 7,, 6,, 5,, 4,, 3,, 2,, 1,, Total Supply Total Take-up Occupancy Rate Occupancy Rate 1.% 98.% 96.% 94.% 92.% 9.% 88.% 86.% 84.% 82.% The completion of Nihonmura Mall, Green Plaza, The Walk - Kaset Navamintra and Imagine Village increased total retail supply to over 6,247, sq.m. Construction is progressing in downtown Bangkok with two new major shopping centers; the 7,-sq.m. Central Embassy will be open in Q4 213 and the 5,-sq.m. Emquartier will be open in Q Community mall developers are focusing on residential areas. Upcountry retail sales may be slowing, Tesco s same store sales were down 3% in Q1 where as BIG C s same store sales rose by about 3%, so overall there was limited growth in the superstore sector. The Thai Retailers Association (TRA) reports the retail and wholesale industry grew by 9% in the first half of 213. The overall occupancy rate for Bangkok stayed at 96.5%. The Retail Sales Index remained strong, at as of May 213, increasing by 3.2% Y-o-Y ,

6 Q2 213 Bangkok Overall MarketView Bangkok Property Report The Bangkok Property Report, now in its 15th year, is CBRE Thailand s flagship quarterly subscription publication, with data from a tried and tested database reinforcing its reputation as Bangkok s definitive property sector source. The Bangkok Property Report provides in-depth analysis of the Bangkok real estate market, including property supply and demand, occupancy, take-up, prices, rental trends and other indicators. Phuket Property Report The Phuket Property Report, the latest quarterly subscription report by CBRE Research in Thailand, is an initiative designed to bring professional analysis and transparency to the growing Phuket property market. The report provides detailed information and analysis from CBRE s comprehensive and unrivalled Phuket and overall Thailand database, combined with our own exhaustive market and property surveys. Thailand Hotel Report The CBRE s Thailand Hotel Report provides the most up-to-date and in-depth analysis built on CBRE s comprehensive databases and unrivaled experiences in the hotel market in Thailand available now in a quarterly format. It provides a one-stop access to CBRE s market-leading data and analysis, enabling timely, informed decision-making on management, development, and investment strategies in the hotel market, and offering subscribers a tactical edge. Bangkok Retail Report The CBRE s Bangkok Retail Report is produced quarterly by professional retail research team who closely monitor the complex retail database so that our in-depth analysis will be definitely the most meaningful. The report covers all necessary topics which are able to be a part of your strategic future business plan. Retail supply, demand, take-up, occupancy, and other indicators that have an effect on the retail market such as retail sale index are all provided ,

7 CONTACTS For more information about this Bangkok MarketView, please contact: CBRE Research, Thailand James Pitchon Executive Director CBRE Research & Consulting Bangkok 133 Thailand t: ext 25 e: james.pitchon@cbre.co.th Chotika Tungsirisurp Analyst CBRE Consulting Bangkok 133 Thailand t: ext 69 e: chotika.tungsirisurp@cbre.co.th Q2 213 Bangkok Overall MarketView Nattaporn Kaewviyudth Analyst CBRE Consulting Bangkok 133 Thailand t: ext 614 e: nattaporn.kaewviyudth@cbre.co.th Sakaruth Sangkaew Analyst CBRE Consulting Bangkok 133 Thailand t: ext 615 e: sakaruth.sangkaew@cbre.co.th + FOLLOW US FACEBOOK BLOG Global Research and Consulting This report was prepared by the CBRE Thailand Research Team which forms part of CBRE Global Research and Consulting a network of preeminent researchers and consultants who collaborate to provide real estate market research, econometric forecasting and consulting solutions to real estate investors and occupiers around the globe. Disclaimer 213, confirms that information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt their accuracy, we have not verified them and make no guarantee, warranty or representation about them. It is your responsibility to confirm independently their accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE ,