Central Pattana Plc (CPN), a SET-listed retail and property developer, has revised its strategy for overseas expansion but confirmed the first Central shopping complex in Asean will still be opened by 2015 as scheduled.
CPN has plans to expand to China but the deal to rent space from an investor there to develop a shopping centre in China is less likely to be finalised, said Naris Cheyklin, senior executive vice-president and chief financial officer.
Besides, many property firms in the world's second largest economy have developed retail projects, intensifying competition.
"The market's oversupplied and there are high risks if we develop a project on our own in China," he said.
As a result, CPN has changed its strategy to forming a joint venture with a Chinese retailer who has already developed a project or to taking over an existing development.
In any case, CPN will wait until the property prices in China go down by 20-30% from current levels.
In its view, Vietnam is as attractive as China but the market is oversupplied as well, Mr Naris said.
CPN is confident it can compete effectively with other retailers in Vietnam because no mall developers there are really successful, he said.
At least one Central shopping complex will be opened in Asean in 2015.
The retail space of the first overseas project will be 50,000 square metres, requiring an outlay of 3-4 billion baht.
At home, Mr Naris said CPN will speed up its expansion in the domestic market because consumers, particularly upcountry, are ready.
Their purchasing power has increased on the back of higher farm prices and the growing middle class.
"People upcountry earn more but they have no place to spend. If Robinson and Central department stores are there, they will benefit," he said.
Mr Naris is optimistic about the country's retail outlook next year because everything is back to normal.
CPN believes it is possible to develop at least three Central shopping complexes every year over the next four years, starting from 2013.
Each year requires an investment of 15 billion baht.
For next year's total investment, 13 billion baht will be used to develop new projects and the remaining two billion for minor renovations for Bang Na, Rama II, and Rama III stores, as well as CentralWorld.
However, Mr Naris expressed concern about the world economy, which will impact the country's export business.
"As tourism is a major growth driver for our economy, the government should support operators in this industry such as subsidising Thai Airways International so it can offer lower ticket prices for European tourists like other countries do," he said.
With some push, the number of European tourists to Thailand will grow, and so will the local retail industry.
Mr Naris also urged the government to organise the Amazing Thailand campaign again or spend more to promote Thai tourism overseas.
Sales of CPN by the end of this year are projected to grow by 30%, well above its earlier projection of 20%, because of higher rental fees and occupancy rates.
Its tenants at Central shopping complexes have been doing well this year, the company said.
Shares of CPN closed on the Stock Exchange of Thailand at 82.75 baht on Friday, up 75 satang baht, in trade worth 142.61 million baht.
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About the author
Writer: Pitsinee JitpleecheepPosition: Business Reporter
Article source: http://www.thethailandlinks.com/2012/12/17/central-shifts-focus-back-home/
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