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Siam Future CEO plans to expand with Bangkok

Founded in 1994 and listed on the Stock Exchange of Thailand in 2001, Siam Future Development Plc (SF) has been the leader in open-air shopping centres for 12 years. It provides a range of specialised real estate services such as acquisition, development, management and consultancy on shopping centres, with a focus on Bangkok and other fast-growing areas. CEO Vichate Tantiwanich discusses the company’s strategy and outlook.

Please explain SF’s business model.

SF is a neighbourhood shopping centre/customised community mall developer and management service provider. Today we operate 29 shopping centres with a total lettable space of 224,120 square metres, and we are launching one new project of about 7,700 square metres in a few months. Our business model differs from shopping centre groups such as Central Group and The Mall group in that we have to select a good location that is convenient for the surrounding community to visit, convenient car parking, immediate access to shops _ which translates into our visitors spending less time at each location, allowing for frequent visitors and multiple customers within a specific period. Also, the tenant mix decided upon for each community is customised and matches the lifestyle, while shopping malls are generally always the same.

How is SF’s current portfolio of assets performing?

Our average occupancy rate is 97%, excluding the Mega Bangna project. In addition to this, our recurring revenue is also growing gradually due to additional lettable areas from new projects and increasing rental prices on existing projects, where it is running at a lower rate compared with the overall reference.

How does SF decide on the location of a new community mall?

We expand with Bangkok but focus on the Greater Bangkok area. Our criteria are as follows: First, the location should have heavy traffic and be convenient to access from the surrounding village or office nearby. Because of heavy traffic, people do not want to travel far so they will naturally visit the most convenient mall. Secondly, the surrounding land needs to be difficult to attain, as this naturally prevents competition from entering near our location in the future. And finally, the location needs to be on the side of the road that people drive home by, as this will encourage them to stop and do their shopping before they go home. These reasons explain exactly why our malls are crowded in the evening.

SF has entered into a JV with Ikea to develop the Mega Bangna project. Can you provide more details on the arrangement?

This is a perfect joint venture for us, with the shareholding equally split and four board members from each side. We are able to share our operational and management perspectives, expertise, know-how and so forth; we are very excited with this venture. By this far, we now have a very strong business structure. We have many good customised community malls in one end, while having mega-malls at the other end to secure business growth.

Will SF look to sell more assets to a property fund?

We already sold the 30-year leasehold rights in Suzuki Avenue Ratchayothin Shopping centre, a 50-50 JV between ourselves and Major Cineplex Group Plc, to the Major Cineplex Lifestyle Leasehold Property Fund (MJLF) with a total value of 960 million baht. We are currently not interested in divesting any more assets, because most of our assets are leasehold rights and investors require a higher yield for this when compared with freehold assets; thus, we prefer to source funding via bank loans versus selling assets to the property fund.

Who are SF’s competitors? With CPN, Big C and other developers expanding into community malls, is this hindering SF’s growth?

There are clear differences between an open-air shopping centre and an enclosed shopping centre, as explained earlier. The customers habits are different as well, because we can customise as per the location’s requirements and offer nightlife options as well. Most of the other open-air shopping centre developers are landowners looking to utilise their land but who do not have the intention of expand their business further, so they will lack the economies of scale and expertise of running projects.

Is the Thai (or Bangkok) market saturated, with limited growth?

No, with the infrastructure projects coming, the extension of the skytrain and subway, there is still plenty of room for growth in Bangkok along with the extension of residential and office areas.

Given SF’s small capital basis, how will SF fund future growth?

We fund normal new projects via our own cash flow and corporate loans as we aim to open one new open-air shopping mall per year. But if we plan to invest in a new mega-project in the future, we will have to look at additional sources of funding.

What do you feel are the biggest risks facing your business today?

Our main risk is when new competitors or some landlords enter into our market because there is no barrier to entry, imitate our business model and then execute poorly and fail. This affects the industry and us badly because people, customers, will question the business model of the open-air shopping centre. So we have been promoting our brand to differentiate ourselves from our competitors.

Where do you see SF five years from now?

We will not expand as aggressively as before because business is now stable and solid. We aim to expand with one open-air shopping centre per year and every three to five years look to develop a mega-mall.

The Executive Q&A Series is presented by ShareInvestor, Asia’s leading financial internet media and technology company, and the largest investor relations network in the region with more than 400 listed clients. The interview is conducted by Pon Van Compernolle, vice-president of Merchant Partners. For more information, e-mail or or visit

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