REVIEW OF BANGKOK PROPERTY MARKET

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REVIEW OF BANGKOK PROPERTY MARKET
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Outline of Presentation

• I. Economic Review
• II. Market Update
• Office
• Retail
• Condominium
• Apartment
• Serviced Apartment
• Hotel
• Industrial

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ECONOMIC REVIEW
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Economic Review
Summary of Economic Indicators
2007F
Sources Actual Preliminary Data (1998-2004)
from BOT, NESDB and NSO Forecast
Data from EIU
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OFFICE MARKET
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Bangkok - All Grade Office Market Overview
Market Summary

Update over the past six months
Jan-06
Jul-05
As at
15,000
5,700
New Completions (sq.m.)
8,800
104,000
Withdrawal
7,074,000
7,068,000
Total Stock (sq.m.)
687,000
625,000
Future Supply (sq.m.)
463,000
315,000
- Under Construction (sq.m.)
141,000

147,000
- Probable (sq.m.)
83,000
164,000
- Suspended (sq.m.)
13.3
14.4
Vacancy Rate ()
79,100
165,700
Net Absorption (sq.m.)
365
341
Rentals (Bt/sq.m./month)
Probable
Annual Supply
U/C
Rentals for All Grade, Bangkok
Average Gross Rentals Per Month
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Boundary of Central Business District (CBD)
1. The Northern Central Business District (CBD
North) Area Encompassing Rajdamri, Wireless,
Langsuan, and Ploenchit Road 2. The Southern
Central Business District (CBD South)
Area Covering areas in Sathorn, Silom,
Surawongse and Si-Phraya Road
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Definition of Prime Quality Office Space

• Factors Used for Grading Buildings
• Column free and centre core
• Size of floorplates and dimension
• Flexibility of layout
• Vertical transportation
• Type of air conditioning (VAV vs CAV)
• Quality of internal and external finishes
  (Glazing/ Type of façade/ Lobby finishing)
• Parking
• Traffic circulation within the development
• Accessibility to public and mass transit systems
• Other amenities provided in the building or in
  the immediate vicinity
• Standard of building management

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CBD Prime Grade Office Market Overview
Update over the past six months
Annual Supply
U/C
Average Gross Rentals Per Month
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Office Market Outlook

• Overall office market sentiment is expected to
  remain strong on the back of the strong
  appreciation in rents despite the slowing pace of
  economy and prevailing political uncertainty.
• This has encouraged more new project
  developments, leading to a gradual pick up in
  level of new supply.
• Over the next 18 months (end 2007), most new
  supply will be located outside CBD. No major
  completion is expected in CBD. Rent in the CBD
  is expected to rise further.
• The lack of choices in the CBD and rising
  occupation cost could draw demand to shift
  towards newer developments located in the City
  Fringe area where improved transportation has
  influenced their choices.

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RETAIL MARKET
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Bangkok- Retail Market Overview





Annual Supply
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Retail Market Outlook

• More intense competition is expected in the
  Rajaprasong area, where two giant retail
  operators, i.e. Siam Paragon and Central World
  Plaza, will be the main players.
• The opening of Siam Paragon will change
  Thailands retail landscape, forcing most players
  to rethink about their approaches. Repositioning
  through store facelifts and offering of various
  retail formats, with an eye on the more upscale
  market are presently witnessed.
• Consumers confidence is not expected to recover
  over 2H06 provided that the political conflicts
  drag on.
• The opening of Suvarnabhumi International Airport
  will be one of the positive factors that could
  boost spending by locals and tourism potential in
  2006.

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CONDOMINIUM MARKET
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Boundary of Residential Central Bangkok Area

• 1. CBD Area
• Encompassing Silom, Sathorn, Surawongse,
  Si-Phraya, Rajdamri, Wireless, Langsuan, and
  Ploenchit Roads
• 2. Sukhumvit Road
• Starting from Sukhumvit Road Soi 1-63 and Soi
  2-42
• City Fringe South
• Encompassing Rama III, Charoenkrung, Chan,
  Nanglinchee, Naradhiwas Rajanakarindra Roads
• Inner North Phaholyothin Area
• 5. Riverside Along Chao Phraya River south of
  Siphaya Road

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Central Bangkok- Condominium Market Overview
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Condominium Market Outlook

• The extension routes of BTS and MRTA will widen
  the potential area for condominium developments
  outside Central Bangkok area.
• More new units will be launched outside Central
  Bangkok area.
• The current political issue will have a greater
  direct negative impact on the level of take-up in
  the high end residential sector.
• Demand level could be dampened by the large
  amount of units completed over the next 3 years
  and higher cost of acquisition due to an increase
  in interest rate.

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APARTMENT MARKET

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Boundary of Residential Central Bangkok Area

• 1. CBD Area
• Encompassing Silom, Sathorn, Surawongse,
  Si-Phraya, Rajdamri, Wireless, Langsuan, and
  Ploenchit Roads
• Sukhumvit Road
• Starting from Sukhumvit Road Soi 1-63
  and Soi 2-42
• 3. City Fringe South
• Encompassing Rama III, Charoenkrung, Chan,
  Nanglinchee, Naradhiwas Rajanakarindra Roads
• Inner North Phaholyothin Area
• Riverside Along Chao Phraya River south of
  Siphaya Road

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Central Bangkok - Apartment Market Overview
Market Summary
Update over the past six months
- Proposed (Units)
0
46
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Apartment Market Outlook

• Sustained economic expansion, though at a slower
  pace, will continue to support growth in demand
  for luxury rental accommodations in Bangkok.
• The leasing market is expected to be active
  towards the end of the year following the
  increase in number of expatriates.
• Given higher competition from condominium units
  for rent in 2006, landlords of existing projects
  are expected to be competitive in their asking
  rentals.
• Limited new completions make new apartment
  projects able to command much higher rents than
  market average.

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SERVICED APARTMENT
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Central Bangkok Serviced Apartment Market
Overview
Market Summary
Update over the past six months
Jul-05 Jan-06
As at
Future Supply (units)
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Serviced Apartment Market Outlook

• Overall demand for serviced apartment in Bangkok
  is expected to remain strong over 2006 following
  the growing number of newly issued work permits
  and the permission to rent units on a short-stay
  basis after obtaining hotel license
• Level of future supply will determine the level
  of competition in each sub-location. In the next
  six months, strong competition is expected in
  Sukhumvit area, resulting in a possible decline
  in the occupancy level as well as a greater
  discount offered by developers to maintain
  occupancies.
• Apart from locations and quality of projects, the
  standard of services and management will be a key
  competitive edge amongst serviced apartment
  projects.

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HOTEL
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International Arrivals to Thailand

• International arrivals to Thailand exhibited
  strong growth between 1997 and 2002 until SARS
  and the Iraq war affected arrivals in 2003
• Strong 16.4 y-o-y rebound in 2004 despite
  unrests in southern provinces and avian flu
  impact of tsunami limited as it occurred during
  last few days of the year
• Impact from tsunami showing in 2005 3.5 million
  visitors during YTD April 2005, down 9.5 y-o-y
• May have difficulty achieving target of 13.38
  million in 2005 due to tsunami impact
• Prospects for 2006 optimistic ambitious target
  of 15.12 million visitors longer term plan to
  reach 20 million arrivals by 2008

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Major International Source Markets in 2004

• Malaysia and Japan remained as Thailands two
  largest international source markets in 2004
• Other major source markets include South Korea,
  Malaysia, Singapore, Mainland China and the UK
• Arrivals from Mainland China expected to increase
  as the Thai government has reached an agreement
  with the Chinese government to encourage tourism
  between countries under the searn-Sukhothai
  accordance
• TAT hopes to target 1.5 million Chinese visitors
  in 2006

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International Arrivals to Bangkok

• As a key gateway to Thailand, international
  arrivals to Bangkok have generally followed a
  similar trend to that of Thailand
• Strong 19.6 y-o-y rebound in 2004 to 11.7
  million visitors backed by recovery in global and
  regional economies growth also driven by higher
  MICE arrivals and growth of budget airline
  industry
• YTD 2005 no official data from TAT but figures
  from the Association of Thai Travel Agents (Atta)
  shows that tourist arrivals handled by its
  members at Bangkok International Airport (Don
  Muang) dropped by 10.25 y-o-y to 1.54 million
• Outlook for 2006 positive supported by
  continued efforts to increase tourist traffic

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Major International Source Markets in 2004

• Mainland China and Japan remain as Bangkoks top
  source markets in 2004 while the US replaced
  South Korea as the third major source market
• Significantly more arrivals from the US,
  Australia and Malaysia
• Strong growth in Mainland Chinese visitors, up
  24.2 y-o-y in line with the growing outlbound
  Mainland Chinese market
• Noticeable decline in South Korea arrivals in
  2004 possibly due to greater preference for
  resort destinations e.g. Phuket (128) and
  Pattaya (75) recorded strong y-o-y growth

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Domestic Tourism in Bangkok

• Huge domestic tourism market
• The number of Thais visiting Bangkok rose 16.3
  y-o-y during 2003 as the SARS outbreak in Asia
  and Iraq war led more Thais to travel within
  their country
• Crossed the 20-million mark in 2004 with TAT
  reporting 21.1 million Thais visited Bangkok

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Bangkok Hotel Market Overview

• Total of 313 accommodation establishments in
  Bangkok with 60,924 rooms in 2004 this
  represents an addition of 6,020 rooms during the
  year
• Overall hotel market is very active in 2004/YTD
  2005 - with announcements of new projects,
  rebranding exercises and refurbishment works
• Statistics from Jones Lang LaSalle Hotels show
  more than 4,500 new rooms in the pipeline (as at
  end Sept 2005)
• Major future supply include Millennium Hilton
  Bangkok (543 rooms), Le Meridien Bangkok (350
  rooms), Crowne Plaza Sukhumvit (342 rooms)

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Five-Star Hotel Performance in Bangkok

• Trading performance improved in 2004 supported
  by growth of tourism sector and the MICE segment
• This continued into YTD Sept 2005, despite the
  persistent troubles in Southern Thailand
• Room demand remained strong, with occupancy
  averaging 74.4 during YTD Sept 2005 up 3
  percentage points y-o-y
• Likewise, average daily rates (ADR) strengthened
  by 10.3 y-o-y to THB 4,768.
• This helped to raise revenue per available room
  (RevPAR) to THB 3,547 for YTD Sept 2005 or 15
  y-o-y

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Bangkok Market Outlook

• Overall tourism and hotel industry outlook
  positive
• Aggressive efforts by the Government to increase
  arrivals
• Phase 1 opening of new Suvarnabhumi International
  Airport in 2006 will allow the airport to handle
  45 million passengers annually
• Growth in higher-yielding MICE segment new
  facilities to be completed at Siam Paragon and
  the Central World Hotel and Convention Centre
• Sustained growth in tourism industry will
  translate into firmer demand levels for citys
  hotels and upside potential in room rates
• However, the substantial supply of new hotels
  lined up over the next few years may exert some
  pressure on occupancy and ADR growth if the
  tourism sectors growth momentum cannot be
  sustained

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INDUSTRIAL MARKET
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Thailand Key Industrial Area
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CURRENT MARKET CONDITION DEMAND
Industrial Projects

• The total sold land in the Eastern Seaboard area
  stood at 33,700 rai, equivalent to a sale rate of
  67.
• Demand grew steadily from 1,800 rai in 2003,
  2,300 rai in 2004 and 2,400 rai in 2005.
• Most of occupied land is located in the
  industrial estate which reflects tenants
  preference for more reliable standard of service
  and infrastructure provisions as offered by the
  IEAT governed industrial projects.

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CURRENT MARKET CONDITION DEMAND
Tenant Profile

• Automotive industry consisting of three main
  groups of industries, i.e. automotive assembly,
  automotive parts and upstream supporting
  industries-
• Auto Alliance (Thailand) Co., Ltd. (FordMazda)
  and General Motors (Thailand) Ltd. in Eastern
  Seaboard I.E., Toyota Motors (Thailand) Co., Ltd.
  in Gateway City I.E. and BMW Manufacturing
  (Thailand) Co., Ltd. in Amata City I.E.
• Electronic industry-
• Distar Electric in Laem Chabang I.E., Mitsubishi
  Electric in Amata Nakorn I.E., and Samsung
  Electronics in Saha Inter-Holding I.P.
• Steel industry and Petrochemical and chemical
  industries.
• BHP Steel (Thailand) Co., Ltd. and Mitsubishi
  Chemical (Thailand) Ltd. in Eastern I.E.
• Recently, a promising trend in demand emanated
  from mini Factory for rent providers. Major
  players are Ticon and TFD.

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CURRENT MARKET CONDITION SELLING PRICE

• Over the last 3 years, average asking price
  stayed relatively unchanged around Baht 2.5-3.0
  Million
• The rigid price adjustment was mainly because
  developers took caution in adjusting prices
  against investors concerns on economic
  uncertainties and there was also a certain amount
  of supply (16,578 rai) still available in the
  market.

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MARKET OUTLOOK FUTURE DEMAND
Factors Affecting Demand-
Demand Level-

• 2006 demand is expected to be stable, in line
  with current political uncertainties and negative
  economic outlooks such as rising oil prices, high
  inflation, and rising interest rates.
• 2007-2008 demand will be stronger with the net
  take-up increasing 5 each year, following
  expanding trading partners economies and the
  completion of SBIA.
• 2009-2010 demand is likely to grow faster, with
  the net take-up increasing 10 each year,
  assuming risks from political and economic
  uncertainties are subdued.

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The Property Clock-Prime Quality
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Jones Lang LaSalle Research Consultancy