Demand for industrial property in Thailand grew significantly in 2005, according to international property consultants CB Richard Ellis.
The total amount of industrial land sold in 2005 was 4,008 rai (1,603.2 area), which is the highest record of industrial land sales 1999. Since no new supply was added to the market after the second quarter, the vacancy rate dropped to 15.6 per cent, the firm said.
The total number of projects that have started operations from the Board of Investment (BOI) in 2005 was 359 projects, a 28 per cent increase from the 281 projects the year before. The total value of investment in these projects increased by 23 per cent to Bt 102 billion baht, compared to Bt 83 billion in the same period last year.
Mr. James Pitchon, executive director of CB Richard Ellis Thailand, reported that the industrial property market in 2005 continued to grow as a result of both international and national markets starting a new investment cycle, as shown by the Manufacturing Production Index (MPI) and Industrial Capacity Utilization (ICU), despite the generally slowing economic growth. The majority of the foreign investment is still from Japanese companies.
The MPI averaged 148.9 points in January to November 2005, which was 6 per cent higher than the same period in 2004. The ICU rate average 70.8 points in the fourth quarter, 2.4 per cent higher than the rate registered for the same quarter in 2004. The highest growth for both MPI and ICU was for electronics and electronic products.
“There has been no change in the asking price at most industrial estates and parks, quarter-on-quarter. However, we expect Serviced Industrial Land Plot (SILP) prices to increase, because developers are purchasing additional land for future expansion at higher prices. Increasing construction costs will also act to drive prices higher. Presently, some developers are trying to provide a discount against the market by maintaining their prices,” added Mr. Pitchon.
Many developers are developing more SILP and Ready-Built Factories (RBFs) in the market to maintain an inventory of land for new industrial estates and expansion. Demand for RBFs is growing, as foreign companies seek to relocate or set up new production facilities in Thailand. It is expected that there will be a strong growth rate in 2006 for Thailand’s industrial property market.