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Strong Demand for Eastern Seaboard Industrial Land in Thailand Continues to Rise Featured

Strong Demand for Eastern Seaboard Industrial Land in Thailand Continues to Rise Strong Demand for Eastern Seaboard Industrial Land in Thailand Continues to Rise

As the leading real estate service provider in Thailand, Knight Frank Thailand’s latest research shows how demand for industrial land on the Eastern Seaboard in Thailand has continued to increase long after the floods of 2011.

“Locations that enjoy the best labour availability and logistics infrastructure will continue to be the most preferred areas, especially if they did not flood in 2011.” Marcus Burtenshaw, Executive Director, Head of Commercial Agency, Knight Frank Chartered (Thailand) Co., Ltd said.

According to Knight Frank Thailand Research, the total supply of serviced industrial land parcels (SILPs) in Q4 2012 reached 125,325 Rai, representing an increase of 2.07% Y-o-Y. 5,288 Rai of industrial land was sold over the course of 2012, an increase of 1,104 Rai from 2011, or 26%.

However, positive absorption has been seen in the market for the past 8 consecutive quarters, reflecting strong demand derived from record FDI (foreign direct investment) flows, especially from Japan. Some of this can attributed to flood recovery and relocation, however new Japanese investors have also switched their attention to Thailand in the wake of rising labour costs at home and continued political tensions with China.

Industrial land prices throughout Thailand range from 1 million baht per Rai (625 baht/sqm) to over 16 million baht per Rai (10,000 baht per sqm). During 2012, prices across the country increased by around 5% on average, however it was the serviced industrial land in the provinces that did not flood that experienced the greatest growth.

Prices on the Eastern Seaboard and the area described as the Central Eastern Zone, which incorporates the provinces of Prachinburi and some of Chachoengsao, increased by 6.34-6.43%, respectively. Some major developers on the Eastern Seaboard were even able to increase prices by 15-20% in response to such increased demand.

By contrast, asking prices in estates to the north of Bangkok fell, whilst prices in the western industrial estates remained stable.

The total supply of ready built factories increased 17.82% in 2012 to 2,654,537 sqm, increasing 3.72% in the final quarter as developers responded to increased demand.

The factory rental market’s occupancy rate stood at 89.76% in Q4 2012, which increased from 88.99% in the previous quarter, despite new product being added to the market. The positive net absorption has been constant over the last 6 quarters, showing the continuous growth in demand for factory space, even in the wake of the floods.

Mr. Burtenshaw forecasts that “Foreign Direct Investment is likely to continue to flow into Thailand in 2013, and we expect that the locations that enjoy the best labour availability with good logistics infrastructure to continue to be the most preferred, especially if they did not flood in 2011.”

Last modified onFriday, 03 May 2013 00:15

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