US$ 500 M Bangkok's Home Renovation Market

Investment thesis

• Robust factors supporting home renovation market growth:
  • New government measures, such as cutting ownership transfer fees to 0.01% for properties valued up to THB 7M, have lowered barriers to property transactions to boost home ownerships
  • Gross rental yields for residential properties in Bangkok have increased to 5.07%, encouraging homeowners to invest in renovations to maximize returns
  • Foreign interest driving renovated property sales; Condo units worth ~THB 18B (US$ 497.7M) were transferred to foreign buyers in Bangkok
  • Significant rise observed in demand for smart-home technology and green upgrades, with ~15% of renovations in 2023 focusing on solar panels and energy-efficient appliances
• Growing organized retail market for home renovation:
  • Organized retail in home improvement has grown rapidly in Thailand from 12% to 25% from 2014 to 2023; highest growth rate compared to peer countries like Indonesia
  • Large companies and developed manufacturing supply chains have helped in the growth of organized retail market in Thailand
• Changing needs of key customer persona: Target’s relevant customer persona over the years has become more design-conscious and is seeking innovative designs and renovation solutions, favoring Target's scope for increasing its share of wallet
• Target’s extensive capability: Target has private label for most categories along with contractor tie-ups for fulfilling projects, making them one-stop solution for all renovation needs
• Key risks we have analyzed:
• Regulatory uncertainty and delays in building permits
• Susceptibility to economic downturns and consumer spending behavior
• Growing pressure for eco-friendly designs without supply readiness