Cushman & Wakefield Research

MARKETBEAT
THAILAND

INDUSTRIAL SNAPSHOT
A Cushman & Wakefield Research Publication

Q2 2012

ECONOMY
According to the Office of the National Economic and Social Development Board (NESDB), Thailand's GDP annual growth in 2011 was reported at 0.1% while the growth in 2012 was recently projected to be at 5% to 6%. By the end of 2011, Thailand's industrial sector witnessed a contraction of 9.3% annually in terms of the Manufacturing Production Index (MPI) due to the devastating flood crisis. In the same period, Industrial Capacity Utilization (ICU) index was only at 59.25% compared to a 10-year average ICU at 63.80%. However, the Jan-May MPI growth rate and ICU were reported at 1.8% and 66.30%, respectively, showing an improved sign of recovery from the flood impact.

READY BUILT FACTORY (RBF)
Total rental space of Grade A ready-built factory (RBF) sector in the industrial estate increased by approximately 21.27% or from 1.58 million square meters (sq.m.) in the first half of 2011 to 1.91 million sq.m. in the first half of 2012. Average rents of Grade A RBF slightly dropped from THB189.65 per square meter per month (/sq.m./mo) in the first half of 2011 to THB187.44/sq.m./mo in the first half of 2012, reflecting a 1.17% decrease year-on-year. In terms of US Dollar, it dropped from US$ 6.88 per square foot per year (/sf/yr) to US$6.57/sf/yr. While rental values showed a slightly downward trend in this sector, net take up of Grade A RBF proved that the current market was still very strong. Absorption was approximately at 322,000 sq.m. (3.47 million sf) annually.

SERVICED INDUSTRIAL LAND PLOTS (SILP)
Strong demand of Thailand's industrial hubs resulted in the expansion of total SILP stock from 123,910 rai in the first half of 2011 to 129,405 rai in the first half of 2012. The weighted average SILP price in all zones slightly decreased from THB3.18 million/rai in the first half of 2011 to THB3.15 million/rai in the first half of 2012. However, with the appreciation of the US Dollar, prices slightly decreased from US$261,300/acre to US$250,400/acre. The main reason was the increase of the SILP supply in BOI Zone 2, especially in Chonburi where the land price was around THB2.30 million/rai. On the demand side, net take-up showed the combined higher demand to be at 5,500 rai while the average net take-up of SILP in the last three years was around 1,000 rai per year only. In the same period, new stocks totalled 4,000 rai. Therefore, the availability of total SILP dropped from 21.2% to 20.2%. The Japanese automobile industry is still the main demand driver for land sales. Despite the flood, the three big industrial developers (Amata, Hemaraj and Rojana) combined their land sales in 2011 to about 3,500 rai (1,384 acres), a new record high. In 2012, the combined land sales target was up to 5,700 rai (2,254 acres). SERVICED INDUSTRIAL LAND PLOTS (SILP)
140,000 120,000 3.16 3.13 3.14 Land (Rai) 3.11 100,000 80,000 60,000 40,000 20,000 0
1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 F 1H13 F

OUTLOOK
As of mid June 2012, with help from the government, 657 factories had resumed their operations. These were 78% of the total 839 flood victims. Moreover, 61 operators or 7% of the total had already decided to shut down and relocate to other countries or to the Eastern industrial zone. The total SILP inventory is forecast to grow at approximately 2.4% annually or 3,100 rai (1,240 acres) in the next 12 months while the land price remains stable. The absorption is expected to be at around 5,000 rai (2,000 acres) in the same period. Grade A RBF supply would grow up to 15% from the first half of 2012 to the first half of 2012 or at approximately an increase of 289,000 sq.m. while the net take up would be approximately 327,000 sq.m. The rent would hover around THB187/sq.m./mo (US$6.95/sf/yr). READY BUILT FACTORY (RBF)
1.91 2.05 2.5 Space (Million sqm) 1.54 1.58 2.0 1.5 1.0 0.5 0.0 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 F 1H13 F 1.22 1.30 1.39 1.74 2.20 220 210 200 190 180 170 Rent (THB/sqm/mth)

1.46

1.47

188.2

187.8

189.7

187.4

0.37 187.3

187.8

187.4

0.36 185.8

119k

121k

121k

122k

123k

123k

124k

126k

129k

131k

133k

0.27

0.26

0.29

0.25

0.22

0.23

0.21

3.10

3.14

3.20 3.15 3.10

Price in Million Baht

3.18

3.16

3.17

3.25 3.15 3.14

28k

28k

27k

27k

28k

28k

26k

26k

26k

25k

24k

3.05 3.00 2.95

Total Supply

Available Space

0.13

Grade A Rent

Total Land (Rai)

Available Land (Rai)

Cushman & Wakefield Australia Level 1, 60 Castlereagh St SYDNEY, NSW 2000 (+61) 9223 4888

This report contains information available to the public and has been relied upon by Cushman & Wakefield on the basis that it is accurate and complete. Cushman & Wakefield accepts no responsibility if this should prove not to be the case. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. ©2012 Cushman & Wakefield, Inc. All rights reserved.

0.19

3.30

185.3

187.4

187.4