Central Embassy to become 83bn baht luxury landmark

Central Embassy, the high-end shopping centre on Bangkok's Witthayu (Wireless) Road, is set to become a super-luxury mixed-use landmark after Central Group and Central Pattana Plc (CPN) agreed to invest more than 83 billion baht together. The plan joins the existing mall with its planned extension, Central Embassy 2, into one 600,000-square-metre complex of luxury shops, offices and homes.

The two companies announced the deal in a joint press release on 13 November, as reported by the Bangkok Post and Khaosod English. They said more details on the design and timing will be shared later.

How the Central Embassy deal works

Central Group and CPN will form a joint venture, with Central Group holding 51% and Central Pattana holding 49%. That venture will carry out two main moves:

• It will buy all the shares in the extension project that are held by a subsidiary of Hongkong Land, raising its stake in that project from 51% to 100%.
• It will invest in a 30-year leasehold interest in the existing Central Embassy, not including the Park Hyatt Bangkok hotel that sits in the tower.

The extension is planned for land along Witthayu Road and Soi Somkid, next to the current centre.

Size of the new complex

Once combined, the development will cover about 600,000 square metres of gross building area. Around 150,000 square metres is in the existing building, while the new phase will add roughly 450,000 square metres. The mix will include luxury retail, office space and residences, the companies said.

That would make it one of the largest luxury-focused projects in central Bangkok, in a district that already holds embassies, five-star hotels and some of the city's most expensive condominiums.

Why the partners are betting on luxury

The companies pointed to the mall's track record as the reason for the investment. According to their statement, the centre has:

• operated for more than 12 years;
• kept occupancy above 90%;
• grown revenue by more than 10% a year over the past five years;
• earned more than half of its rental income from luxury brands;
• produced positive operating cash flow throughout.

They said the decision took into account the site's prime location, its valuation and expected returns, after reviews of corporate governance and shareholder interests. The aim, they added, is to grow both firms' luxury property portfolios and to strengthen Bangkok's position as an international luxury shopping destination.

Two Central businesses, one project

The deal pairs two closely linked Central businesses. Central Group runs luxury retail businesses in more than 18 countries and 140 cities, the companies said. Central Pattana develops and manages large shopping centres across Thailand, among them Central Phuket on the island.

For CPN, which is listed on the Stock Exchange of Thailand, the project follows a steady run of results. Phuket Times readers can catch up on the company's recent figures in our report on Central Pattana revenue.

What it means for Thailand and Phuket

Luxury retail has been one of the brighter spots in Thailand's tourism economy. Big-spending visitors from China, the Middle East, Europe and the region often split their trips between Bangkok and beach destinations such as Phuket, shopping in the capital before heading south.

A larger luxury cluster in Bangkok could help the country compete with Singapore, Hong Kong and Tokyo for that spending. Phuket already has its own upscale malls and villa market, and our guide to luxury shopping in Phuket covers the main options on the island.

The investment also comes as other big Thai retailers push into new formats, from digital platforms to mixed-use towers, as seen in moves such as CP Axtra's digital launch.

What happens next

No opening date or construction schedule for the combined project was given. The partners said further development details will be announced later, and the deal sits alongside the mall's normal operations, which continue as usual.

Image: the Central Embassy building on Witthayu Road, Bangkok. Photo by Pixabay user Picaidol via Wikimedia Commons, released under CC0.