Factory rental rates in Thailand remained stable during Q1 2014 versus the previous three months, according to the latest research from CBRE Research and Consultancy in its Asia Pacific Industrial and Logistics Marketview report for Q1 2014.
Structural changes in the Thai manufacturing industry negatively affected demand for industrial properties, it said, whilst the decline of the hard disk drive business resulted in vacant space coming to the market in the north of Bangkok.
CBRE noted there is a large volume of new supply in ready built factories and modern logistic categories in the east of the country.
It said: “Political uncertainty has affected new entrants but established operators are largely unaffected. New Supply will dampen rental growth and rents will remain at current levels in 2014.”
Throughout Asia-Pacific, CBRE expects logistics rents to continue to see steady growth, but new supply set to impact some markets.
During Q1 2014 CBRE’s APAC Logistics Index rose 0.6 percent quarter-on-quarter and 3.2 percent year-on-year, primarily driven by Guangzhou (2 percent quarter-on-quarter), Shanghai (1.7 percent quarter-on-quarter) and Hong Kong (1.6 percent quarter-on-quarter).
Darren Benson, Senior Director, Industrial & Logistics Services at CBRE, said: “Despite the flat growth outlook, underlying macro themes such as consumer demand, sector themes such as growth of organised retail and expansion of e-commerce, combined with the economic recovery in the developed world form the basis for what CBRE expects will be robust demand for logistics and factory space through 2014.
“Factories are still producing but the share of production for export is diminishing as more goods are distributed into local markets. Nowhere is this more visible than the explosive growth of mega warehouses to cope with the requirements of online retailers as both scale and delivery time are essential for survival.
“This phenomenon has caught the attention of seasoned investors with large amounts of private equity money piling into the logistics property sector chasing above market returns with relatively low risk.”
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg