Last year was a poor one for Thailand’s industrial property sector, according to CBRE in its latest research report.
Total land sales of 1,730 Rai recorded by the real estate firm was 64 percent down year-on-year, and the firm attributed this to a combination of the political turmoil in Thailand during the first six months of 2014, a drop in industrial confidence among Thai manufacturers and a weak global economy reducing foreign direct investment.
In the last quarter of 2014, the Board of Investment (BOI) announced new policies and criteria for investment promotion. The new policies will grant incentives based on industry type rather than geographic location. The policies will be effective for applications submitted after 1 January 2015 and until 31 December 2021.
In 2014 some 3,469 projects were submitted to BOI with a combined value of THB 2,192.7 billion – increasing 117 percent year-on-year. There was a rush to submit applications before the change of the investment promotion incentives at the end of the year.
To highlight this point December saw 65 percent of total investment value of projects for the whole year submitted.
At the end of 2014, total supply of RBFs was 2,400,000 sqm with new supply of 173,000 sq
As of Q4 2014, the occupancy rate of Ready Built Factories (RBFs) was 67 percent, decreasing nine percent year-on-year. At the end of 2014, the total supply of Modern logistics Properties (MLPs) was 2,300,000 sqm.
Total occupied space was 1,700,000 sqm and net take up over 12 months was 400,000 sqm. In fourth quarter of 2014, the occupancy rate of MLPs was 75 percent, decreasing from 80 percent during the same period of last year.
With lower occupancy in both RBFs and MLPs, we found that developers have started to offer discounts on asking rental rates for large new tenants. Rental rates of RBFs and MLPs could fall more as more new supply increases the amount of vacant space and demand remains weak.
“We think demand for industrial property in Thailand in 2015 will be better than 2014 because 2014 was such a poor year, but there are many challenges such as a weak global economy and some local issues such as the shortage of labour which makes Thailand less attractive as a manufacturing centre.”
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
