Retail in Chiang Mai.

[kalbo123]

Living here now for a long time already, I still can't figure it out.

In my area in a stretch of 200 meters there are 5 pharmacies, and none of them seem to do well.

Restaurants, Souvenir shops, and even shopping malls popping out of the ground like mushrooms, none of them seem to do well anymore.

In a street where my friend owns a bar/restaurant, this year only, 6 new restaurants opened their doors, nobody makes money.

I know some places do still well, but most have hardly any customers, how do these businesses survive?

I my opinion retailers in CM are of such quantity that it is hardly possible that they can make living.

[Dante99]

Is it just your opinion that none of them seem to do well or do you have some facts?

[masuk]

The same seems to apply to condominiums. It's hard to believe how many have gone up in the past 12 months. I read somewhere that in excess of 250 condos are going up around Chiang Mai.

I'm sure the city planners have taken this into account with wider footpaths, better off-street parking, improved public transport .

[bamboozled]

I concur. I'm also curious where all the money comes from to open up these shops or restaurants. Signing a grossly over-priced rental contract is expensive enough…monthly rent, deposit, plus "insurance" sometimes. Then there is the renovation that is often undertaken and these days it is commonly quite an expensive and well-done trendy renovation. The necessary stock must be purchased. Staff. Accounting perhaps. It's not small money. Where does it all come from and how can the investors think to recoup their capital? I can't figure it.

[FolkGuitar]

The same seems to apply to condominiums. It's hard to believe how many have gone up in the past 12 months. I read somewhere that in excess of 250 condos are going up around Chiang Mai.

I'm sure the city planners have taken this into account with wider footpaths, better off-street parking, improved public transport .

Oh, they have! They have! And not just wider footpaths, either! There are plans for a Moving Sidewalk that will extend from CMU down both sides Huay Keaw Rd and Suthep Rd, all the way to the moat, one that will move along Thapae Rd, and another that will go all around the moat. in two directions. The Plaza in front of Thapae Gate is to be turned into a 7-story parking garage. Originally it was planned to be a 10-story garage, but the new city planning rules limited its construction. This will be connected to the Monorail system with routes to Doi Saket, San Kanphang, Hang Dong (with a stop at the airport,) and Mae Rim. There will be a new shopping mall at each terminal end of the system, because right now, Chiang Mai doesn't have enough shopping malls... Construction should be completed, roughly about the same time pigs learn to fly.

[worgeordie]

You did not mention coffee shops,everybody, it seems wants to open one,

some of these businesses renting shop houses,live upstairs so don't have

to earn so much money,

What amazes me,is some of the shops in Central Festival,I am sure some

must not earn enough to pay for electricity ,never mind other expenses.

regards worgeordie

[LivinLOS]

[masuk]

The same seems to apply to condominiums. It's hard to believe how many have gone up in the past 12 months. I read somewhere that in excess of 250 condos are going up around Chiang Mai.

I'm sure the city planners have taken this into account with wider footpaths, better off-street parking, improved public transport .

Oh, they have! They have! And not just wider footpaths, either! There are plans for a Moving Sidewalk that will extend from CMU down both sides Huay Keaw Rd and Suthep Rd, all the way to the moat, one that will move along Thapae Rd, and another that will go all around the moat. in two directions. The Plaza in front of Thapae Gate is to be turned into a 7-story parking garage. Originally it was planned to be a 10-story garage, but the new city planning rules limited its construction. This will be connected to the Monorail system with routes to Doi Saket, San Kanphang, Hang Dong (with a stop at the airport,) and Mae Rim. There will be a new shopping mall at each terminal end of the system, because right now, Chiang Mai doesn't have enough shopping malls... Construction should be completed, roughly about the same time pigs learn to fly.

There are still German-produced maps available in the city, showing the various Metro stations around Chiang Mai. It's but two stops from Maya to Thae Pae gate.

[JaseTheBass]

In Bangkok many malls take rent as a cut of the business's earnings (usually 25%) so I assume the same applies here. But, like the OP, I have no idea how a small business paying high rent makes any money. Some shop houses in Nimman are 45k a month paid a year in advance! No wonder there are a load of empty ones near me.

[worgeordie]

The same seems to apply to condominiums. It's hard to believe how many have gone up in the past 12 months. I read somewhere that in excess of 250 condos are going up around Chiang Mai.

I'm sure the city planners have taken this into account with wider footpaths, better off-street parking, improved public transport .

Also the important things,like Electricity,Water and garbage collection,when/if these Condos

are occupied,but i am sure these things will be taken care of,as Thailand excels in forward planning

regards Worgeordie

[TheSiemReaper]

Many years ago, I can remember when the UK used to have shops opening everywhere. Nobody got rich from shop keeping but it was a nice way to put a roof over your head, build a small but loyal group of customers and generally provide goods (at a fairly costly markup) in an enjoyable and interesting way. Then the supermarkets came along, started selling everything and price competing everybody else out of the market. Service took a secondary consideration to price. Today... things are slowly swinging back into balance with many people willing to pay a premium for service and community and the price conscious flocking to new low-budget supermarket chains. That's how it should be.

Local shopkeepers here won't be broke. Rents are pretty cheap on most shop units (outside of malls and certain high-volume traffic spots). There are usually rooms above where the owner (and family) can live. They don't need to do a roaring trade to survive. In the future, they will probably all be gutted by greedy corporations but that future isn't here today - most malls here offer dreadful value for money compared to the street side shop keeper and people aren't rich enough (in general) to pay a premium for bright lights with equally abysmal service. Lots of small businesses suggests rapid economic activity. Money comes in. Money goes out again. It's the sign of a healthy local economy.

[elgordo38]

I concur. I'm also curious where all the money comes from to open up these shops or restaurants. Signing a grossly over-priced rental contract is expensive enough…monthly rent, deposit, plus "insurance" sometimes. Then there is the renovation that is often undertaken and these days it is commonly quite an expensive and well-done trendy renovation. The necessary stock must be purchased. Staff. Accounting perhaps. It's not small money. Where does it all come from and how can the investors think to recoup their capital? I can't figure it.

Yes I find it truly puzzling each time I walk by. A couple years ago a store opened in the bottom of our condo renovations, air cons new shelving the whole nine yards. They seemed to be busy but the numbers did not add up even with the slightly higher prices. Then they did a 50% expansion and added a laundry store outside with water machine they also have another empty unit as a warehouse. I gave it 6 months 2 years ago so what do I know. Another Thai miracle.

[elgordo38]

The same seems to apply to condominiums. It's hard to believe how many have gone up in the past 12 months. I read somewhere that in excess of 250 condos are going up around Chiang Mai.

I'm sure the city planners have taken this into account with wider footpaths, better off-street parking, improved public transport .

Oh, they have! They have! And not just wider footpaths, either! There are plans for a Moving Sidewalk that will extend from CMU down both sides Huay Keaw Rd and Suthep Rd, all the way to the moat, one that will move along Thapae Rd, and another that will go all around the moat. in two directions. The Plaza in front of Thapae Gate is to be turned into a 7-story parking garage. Originally it was planned to be a 10-story garage, but the new city planning rules limited its construction. This will be connected to the Monorail system with routes to Doi Saket, San Kanphang, Hang Dong (with a stop at the airport,) and Mae Rim. There will be a new shopping mall at each terminal end of the system, because right now, Chiang Mai doesn't have enough shopping malls... Construction should be completed, roughly about the same time pigs learn to fly.

Ha ha ha good one. Then I realized that Bangkok would have to pony up the money and at that point I realized you were spoofing us. If I were you I would post this one again on April 1st. You should catch quite a few.

Edited March 13, 2016 by elgordo38

[elgordo38]

In Bangkok many malls take rent as a cut of the business's earnings (usually 25%) so I assume the same applies here. But, like the OP, I have no idea how a small business paying high rent makes any money. Some shop houses in Nimman are 45k a month paid a year in advance! No wonder there are a load of empty ones near me.

Time to put the rent up that should fill up the empty stores.

[elektrified]

I concur. I'm also curious where all the money comes from to open up these shops or restaurants. Signing a grossly over-priced rental contract is expensive enough…monthly rent, deposit, plus "insurance" sometimes. Then there is the renovation that is often undertaken and these days it is commonly quite an expensive and well-done trendy renovation. The necessary stock must be purchased. Staff. Accounting perhaps. It's not small money. Where does it all come from and how can the investors think to recoup their capital? I can't figure it.

Then there is also the yearly fee. I can't think of the word in Thai but it is an agreed upon fee that business owners must pay the property owners. They all have to pay it and it's not a small sum of money.

[cyberfarang]

I have often looked at those shops and numerous restaurants and thought, if I were running one of those businesses I couldn`t make it pay so how can they?

What does cross my mind is they must be on some kind of fiddle. May be they belong to big companies for tax purposes or types of money laundering schemes or fronts for something else? I would love to see their annual accounts books, if they keep any, would be an eye opener I`m certain.

[Torrens54]

New Shop Houses keep springing up along Hangdong Road but no one ever seems to buy them.

Can't say I blame them, little business prospect, no parking for customers. Total waste!

[mr chow]

Answer: they are the worst business people in the world. No reason why they do what they do. Also, they can eat for 100 baht a day.

[mr chow]

I have often looked at those shops and numerous restaurants and thought, if I were running one of those businesses I couldn`t make it pay so how can they?

What does cross my mind is they must be on some kind of fiddle. May be they belong to big companies for tax purposes or types of money laundering schemes or fronts for something else? I would love to see their annual accounts books, if they keep any, would be an eye opener I`m certain.

"Fiddle"? Speak English. You think these people keep books? Lay off the chiles.

[LivinLOS]

I concur. I'm also curious where all the money comes from to open up these shops or restaurants. Signing a grossly over-priced rental contract is expensive enough…monthly rent, deposit, plus "insurance" sometimes. Then there is the renovation that is often undertaken and these days it is commonly quite an expensive and well-done trendy renovation. The necessary stock must be purchased. Staff. Accounting perhaps. It's not small money. Where does it all come from and how can the investors think to recoup their capital? I can't figure it.

Yes I find it truly puzzling each time I walk by. A couple years ago a store opened in the bottom of our condo renovations, air cons new shelving the whole nine yards. They seemed to be busy but the numbers did not add up even with the slightly higher prices. Then they did a 50% expansion and added a laundry store outside with water machine they also have another empty unit as a warehouse. I gave it 6 months 2 years ago so what do I know. Another Thai miracle.

I have often looked at those shops and numerous restaurants and thought, if I were running one of those businesses I couldn`t make it pay so how can they?

What does cross my mind is they must be on some kind of fiddle. May be they belong to big companies for tax purposes or types of money laundering schemes or fronts for something else? I would love to see their annual accounts books, if they keep any, would be an eye opener I`m certain.

Debt..

A decade ago Thais had little access to credit.. Vehicles were hard to purchase and second hand prices were close to new ones.. Land values were fractions (Some places really have gone >10 fold in a decade or so) etc etc..

Then along came the great debt bubble.. Thanks to Greenspans policies and the rest of the world trying to race to the bottom to keep currencies on par for export dominated economies.. It in a way exported inflation from the reserve currency trade deficit countries to the trade surplus countries.. In turn the trade surplus countries have had to rapidly expand the monetary base.

So now you have this cheap money sloshing around.. Anyone can buy a car on the drip.. You have people making 25k a month, buying a house and a new ranger.. The debt loads here, doubly so as the debt load is far more spent on depreciating assets then debt loads of developed nations which are usually spent on appreciating homes, all add up to a very fragile growth. Should china splutter, the US acknowledge it never truly left the great recession and this fiscal alchemy really isnt turning lead into gold.. And look out below !!

[LivinLOS]

I concur. I'm also curious where all the money comes from to open up these shops or restaurants. Signing a grossly over-priced rental contract is expensive enough…monthly rent, deposit, plus "insurance" sometimes. Then there is the renovation that is often undertaken and these days it is commonly quite an expensive and well-done trendy renovation. The necessary stock must be purchased. Staff. Accounting perhaps. It's not small money. Where does it all come from and how can the investors think to recoup their capital? I can't figure it.

Then there is also the yearly fee. I can't think of the word in Thai but it is an agreed upon fee that business owners must pay the property owners. They all have to pay it and it's not a small sum of money.

I guess your confusing key money ??

Which isnt paid yearly, paid one time at business takeover and depending on contract either kept or paid again at the 3 year renewal (most contracts being 3 years as thats the legal max that is valid unless recorded on the land deed).

Thai businesses far less likely to pay key money, or significant key money, than farangs in tourist hotspots.

[anto]

I concur. I'm also curious where all the money comes from to open up these shops or restaurants. Signing a grossly over-priced rental contract is expensive enough…monthly rent, deposit, plus "insurance" sometimes. Then there is the renovation that is often undertaken and these days it is commonly quite an expensive and well-done trendy renovation. The necessary stock must be purchased. Staff. Accounting perhaps. It's not small money. Where does it all come from and how can the investors think to recoup their capital? I can't figure it.

Then there is also the yearly fee. I can't think of the word in Thai but it is an agreed upon fee that business owners must pay the property owners. They all have to pay it and it's not a small sum of money.

The yearly fee my wife had to pay for her hair saloon in Pattaya .No such fee in the Suburb of C.M.where we live ,but it exists the closer you get into the City center.

[arunsakda]

I asked this a while back regarding the tourist oriented "tailor" shopfronts. Dozens of them, nary a customer to be seen, Outside of Chiang Mai Night Bazaar

and lower Moon Muang not even touting. Just a few gentlemen inside reading magazines.

Edited March 14, 2016 by arunsakda